to raise wages for those that are at the low end of the ladder. Senator BALL. Now, will you proceed, Mr. McComb?

Mr. McCOMB. Both S. 2062 and S. 2386 extend the coverage of the child labor provisions of the Fair Labor Standards Act, though the extension provided by S. 2062 is somewhat broader than that provided by S. 2386.

Senator BALL. On that matter of child labor, can you be specific? What is the difference between the two bills on child labor?

Mr. WEISS. One is on an establishment basis, and the other is on an individual employee basis. That is the principal difference. Senator BALL. You mean S. 2062 is on an individual employee basis? Mr. WEISS. No; the reverse. S. 2386 is on an individual employee basis. I might say, Senator Ball, that the statement will go into these differences a little later on.

Mr. McCOMB. I want to say, Senator, that this is an outline. Later I am going to go into detail and will explain that question, I think, quite clearly.

Senator BALL. Very well.

Mr. McCOMB. S. 2062 carries out my recommendation to eliminate the "area of production exemption" in section 13 (a) (10), the 7 (c) exemption, and the exemption for the fish-processing industries. It goes beyond my recommendation by also abolishing section 7 (b) (3) of the act. I believe that section 7 (b) (3) of the act should be retained and broadened in scope so as to permit industries now qualifying for exemptions under 7 (c), 13 (a) (10), and 13 (a) (5) to be eligible for a limited seasonal overtime exemption. S. 2386, on the other hand, continues in effect all of the above-named exemptions and broadens sections 7 (c) and 13 (a) (10) to some degree.

S. 2062 carries out my recommendation to extend minimum-wage protection to seamen, while S. 2386 continues the present minimum wage and overtime exemption for these workers.

Both S. 2062 and S. 2386 substantially improve the present 13 (b) (1) section of the act by limiting the overtime exemption for certain motor-carrier employees to those for whom effective hours of service regulations are made by the Interstate Commerce Commission.

S. 2386 attempts to clarify the definition of regular rate of pay, which I have recommended, but for reasons which I shall summarize below, its provisions in this regard are seriously defective in several respects. S. 2062 makes no attempt to define the term "regular rate of pay.

S. 2386 also clarifies in part the retail and service exemption in section 13 (a) (2) of the act, which I have suggested needs clarification. In some respects it broadens the character of the exemption. along lines which are unsatisfactory. S. 2062 substantially modifies this exemption by eliminating the exemption for chains with more than three stores and individual establishments selling over $300,000 worth of goods or services per year.

S. 2386 proposes a revision of section 7 (b) (2) to encourage the development of annual wage agreements along the lines I suggested in my 1947 annual report to the Congress, although the suggested revision contains a number of technical defects which I shall discuss in my supplementary statement. S. 2062 does not revise this provision of the act.

S. 2386 grants the Administrator additional rule-making power and direct authority to regulate home work, as I recommend, while S. 2062 does not provide for such additional authority.

Both S. 2062 and S. 2386 contain provisions dealing with other aspects of the act than those which I have listed as most urgent. S. 2062 provides for a substantial extension of coverage to activities which affect commerce but are not in commerce or in the production of goods for commerce, and also provides for the elimination of a number of exemptions, including those for substantial segments of the retail and service field, and agriculture. S. 2386 also contains other changes in the act, but these changes restrict rather than expand the coverage of the act. I shall discuss these proposed changes at a later point in this statement.

Mr. Chairman, I am sorry to say I came up here with a sore throat, and I wonder if Mr. Weiss could finish my statement for me. I am going to have to quit a little later anyway. I can see that.

Senator BALL. Very well.

Mr. WEISS. The next subject in Mr. McComb's statement is the minimum wage, and proceeds:

I do not think that there can be any disagreement with the statement that the 40-cent minimum wage provided for by the Congress in 1938 has long since ceased to have any adequate meaning. There are those few, of course, who did not believe in the principle of the minimum wage then and who do not believe in it now, and who have urged either the minimum-wage provisions of the act be entirely repealed or that the present minimum wage be left alone, because, as they put it, it is harmless. I shall proceed, however, on the premise that the minimum-wage principle has become accepted as a part of the American way of life.

On this assumption, I should like to urge an immediate statutory minimum of 75 cents an hour. Such a minimum represents only about 5 cents more per hour than what is needed to bring the 40-cent minimum rate in line with the cost of living. This 5-cent increase in the real minimum wage is certainly modest, in the light of the very substantial increase since 1938 in real national income.

Senator PEPPER. In short, even if we adopt this 75-cents-an-hour minimum, we are actually, taking into consideration the increased cost of living, raising the maximum standard under the 1938 law only 5 cents an hour.

Mr. WEISS. In real wages, that is correct.

Senator PEPPER. Well, 5 cents an hour is not very much progress in 10 years, is it-at least, not excessive?

Mr. McCOMB. That is the point we are trying to make, Senator Pepper. That is very little, considering the increased wealth of the country.

Mr. WEISS. To continue with Mr. McComb's statement:

In view of this increase and in view of the dynamic character of our economy, I would also recommend that provision be made to increase the minimum wage through the use of the industry committee mechanism now contained in the act so as to achieve a more nearly adequate minimum standard of living for our Nation's wage earners. Congress should establish some higher figure than 75 cents as a goal to be worked for in the immediately foreseeable future on the basis of an industry-by-industry study of economic conditions. In this

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connection, I should like to call attention of the committee to a recent observation of the Council of Economic Advisers that our economicsystem cannot go on progressing or even functioning efficiently unless its expanding products go to all potential consumers.

Senator PEPPER. Before you depart from that point, is it not a fact that there has been a constant increase in man-hour output in this country? Since 1938 has not the individual worker, by the greater skills that have been acquired, the better techniques, and better equip ment has not the individual worker probably increased the output per hour?

Mr. WEISS. The real per capita increase in disposable income, since 1938 is about 50 percent, which is, roughly, a measure of over-all national productivity.

Senator PEPPER. So that the worker to whom we are giving a real wage increase of only 5 cents an hour with the 75-cent minimum has increased his productivity, has made a greater contribution to the economy, is making a greater contribution than he made in 1938!

Mr. McCOMB. That is correct.

Senator BALL. In that connection, I would like to see any factual study of the productivity on which you base such statement. And I have looked for such figures for the past 3 or 4 years. I have seen all the BLS figures, and they are very, very spotty. In a great many in dustries during the war productivity per man-hour actually decreased Mr. WEISS. I was not referring to individual worker productivity in particular industries, but rather the national income, which, when cor rected for the changes in prices, does indicate that, per gainfully em ployed person, we are about 50 percent better off than we were in 1938 That does not mean that any particular group of workers has increased productivity.

Senator BALL. As a matter of fact, the greatest increase in produc tivity has been on the farms, which are not covered by this act.

Mr. WEISS. That may be true.

Senator BALL. There the increase has been 40 percent, and it is fa less than that in most industries.

Senator PEPPER. In our Report No. 4012, part 2, on S. 1349, relativ to the amending of the Fair Labor Standards Act of 1939, we have a section on productivity and wages which reads as follows:

Long-time trend, 1909-44: An examination by the committee on the relation ship of wage raises and the long-run productivity of labor shows that the produc tivity of labor in manufacturing industries increased fairly steadily from 190 through 1933. However, during the years 1919 to 1923, productivity increase more rapidly than in any preceding period, and a similar sharp advance is antici pated in the next few years. This expected rise accounts for the reason why prices probably will not swing up sharply as a result of the passage of this bill Of course, that did not contemplate taking political decisions int consideration.

Between 1919 and 1922 output per man-hour rose approximately 10 percen a year, wage rates were relatively stable, and prices dropped almost 35 percent The reason for expansion of productivity after World War I was evidenced by th rapid increase in machine-tool production, which reflected the inability of in dustry to buy equipment during the war. Productivity from 1919 to 1922 wa more rapid than at any other period in history.

Between 1921 and 1929 the average output per man-hour rose about 43 percent whereas average hourly earnings in these industries rose about 12 percent. Th lag of the increase in wages behind productivity is regarded by many economist

as a major reason for the financial and economical collapse between 1930 and 1933. Had wages increased to such extent in that period that it could have absorbed the productivity of labor during that period, it is quite probable that the depression of 1930-33 would not have taken place. Between 1937 and 1939 output per man-hour rose, roughly, 11 percent, whereas average hourly earnings remained about the same and prices fell sharply.

Between 1941-44, 24 nonmunitions industries producing materials and nondurable consumer goods showed no increase in productivity because of the effect of the war.

I would like to call attention at this point in the record to page 43 of the report, which I mentioned, and ask that it be incorporated in the record.

(The report referred to appears hereafter in the appendix.)

Senator BALL. I would like to make this comment on that incorporation, which is that over the past 50 or 100 years there has been an increase in productivity of American workers. I have seen it placed as high as 3 percent annually; but, as a matter of actual fact, there are no trustworthy studies of the trend of productivity by particular industries in the past 10 years, particularly since the beginning of the war: and so when you try to base this on an increase in productivity, you are dealing with a completely speculative proposition.

Mr. WEISS. I would like to make clear that anything I cited was not as to productivity of workers. It was merely the national income of the Nation in relation to the old price levels, to show that as a Nation-of course, everybody contributed to that, the farmers, industry, and everyone else-we are now producing so much per worker gainfully employed that, as a Nation, we have got an average of 50 percent increase in real income. That does not relate to the productivity of any particular group.

Senator BALL. I agree with you there.

Senator PEPPER. Obviously, the study of the question in relation to averages shows that the workers generally who have contributed this greater wealth have been the producers of it, and generally it must be that somebody has increased productivity or we would not have had the increased wealth.

Mr. WEISS. All we were suggesting is that in the light of that an increase of 5 cents in the minimum since 1938 would be more than justified by the increase in real national income.

To proceed with Mr. McComb's remarks:

With these preliminary remarks, I shall now turn to an analysis of the minimum-wage features of S. 2386. I have already indicated my belief that the rates provided for in this bill are inadequate under present-day conditions. Although I approve of the use of industry committees to raise the wages above a minimum statutory level, I must confess that I do not see a need for the use of elaborate machinery if the upper limit is to be no higher than the 70 cents provided in this bill. In my opinion, such a minimum can readily be achieved now, and there is no need to establish this rate through the industry committee mechanism. In addition to the inadequacy of the rates contained in S. 2386, there are changes made in the industry committee provisions of the act which I find to be unsatisfactory, although some of the provisions are not as seriously defective as others.

The bill provides, first of all, for the immediate appointment of industry committees in all industries subject to the act even though some of these industry committees would have no practical need to

function because the highest rate permitted by the bill would be academic. This would obviously be true in such industries as oil, steel, and automobiles. This is not a serious defect if one accepts the need for a provision, contained in S. 2386, under which one-third of an industry committee can force the Administrator to convene an industry committee "forthwith." This provision is not fundamentally unsound but it may result in requests for the convening of a substantial number of industry committees immediately upon passage of the act, either on the petition of the labor members to raise the rates, or on petition of management to lower the rates. This would involve a substantial burden on the divisions to provide economic, legal, and other services for the committees. In the past, the Administrator has convened industry committees as rapidly as practicable within the resources of the divisions. If Congress finds that this provision is necessary, it must recognize the problems involved when it considers budgetary needs of the divisions."

A more fundamental defect in the provisions of S. 2386 is that it makes the 70-cent upper limit extremely difficult if not impossible to attain under present-day conditions. If this bill were enacted, it would require that the 60-cent statutory minimum remain in effect unless an industry committee and the Administrator should find that economic conditions have changed since the passage of the bill or that "special conditions" exist in the industry which permit its attainment. If it is true, as I contend, that present-day conditions make necessary and permit a minimum wage above 70 cents an hour, it would seem that with respect to the first clause, further inflationary developments would be necessary in order to permit industry committees to raise the 60-cent statutory minimum contained in S. 2386. The other possibility for the raising of rates provided in the bill would be the finding of the existence of "special conditions" in the industry. This seems to me too vague a phrase on which to rest an increase to a level which is now practicable for all industries covered by the act.

Senator BALL. You have stated several times that the 75-cent minimum is practicable for all industries covered by the act, and I wonder just how you justify that, in view of you own statement that there are a million and a half to two million employees covered in industries. who are receiving less than 75 cents, and that at this time we are in a period of full employment, most employers looking for employees; it is a seller's market for labor if there ever was one, and normally any industry would pay the maximum in order to get the best supply of workers available, and yet you say that in spite of the fact that there are nearly 2,000,000 employees receiving less than 75 cents, it is entirely practicable for those industries paying those wages to immediately jump to 75 cents. I do not follow your reasoning. Frankly, I would like to know what you think is practicable as an economic figure.

Mr. WEISS. I think that if you will examine the Bureau of Labor Statistics figure for the industries that would be substantially affected by the 75 cents minimum you would find that the cost of bringing all workers up to 75 cents would amount, in most cases, to an increase of 2, 3, 4, 5, or 10 percent increase in the wage bill, and in terms of prices perhaps less than that. I do not have the figures immediately at hand, but I think that if you examine those figures you will find that the effect on the wage bill, and particularly on prices, would not be great. The greatest effect would be in southern lumber.