is beyond the capability of motorcycle dealers to schedule working hours as is done, for instance, in manufacturing establishments. I believe that motorcycle dealers meet the two tests for qualification for exemption from the overtime pay provision. First, the establishment must not be engaged in manufacturing. Secondly, the establishment must be primarily engaged in selling certain products to ultimate purchasers. For the reasons outlined above, the Motorcycle Industry Council respectfully urges that either a bill be introduced, as was done in the previous session, to include motorcycles under the provisions of 13(b) (10) or H.R. 7130, of the 92nd Congress, be amended to accomplish the same. I enclose a copy of my statement made before the Subcommittee on July 13, 1970 for further amplification. PAUL L. MCCRILLIS, Executive Director. STATEMENT BY PAUL MCCRILLIS, EXECUTIVE DIRECTOR, Mr. Chairman and distinguished Members of the General Subcommittee on Labor: My name is Paul L. McCrillis, Executive Director of the Motorcycle Industry Council, Inc., a trade association whose membership includes the principal importers and manufacturers of two wheeled motor vehicles marketed in the United States. In addition to vehicle manufacturers and distributors, allied companies such as producers of helmets, batteries, tires, specialized parts, chain and consumer magazines are members of the Motorcycle Industry Council. However, my principal reason for appearing here today is that the trade association includes as associate members more than 250 motorcycle dealers. To the best of my knowledge the Council is the only organization which represents the motorcycle industry on a national basis. My understanding of the Fair Labor Standards Act, as amended to the present time, is that it provides an exemption to certain retail dealers with respect to payment of overtime to certain employees. To illustrate this, may I quote from Section 13(b) of the Act: "The provisions of Section 7 shall not apply with respect to (10) Any salesman, partsman or mechanic primarily engaged in selling or servicing automobiles, trailers, trucks, farm implements, or aircraft if employed by a non-manufacturing establishment primarily engaged in the business of selling such vehicles to ultimate purchasers" HR 6746, the bill on which I seek your support, would add the words "boats, motorcycles" immediately after the words "farm implements" in section 13(b) (10). Thus its net effect would be to afford motorcycle dealers the same treatment now given to others in closely related business ventures. In support of the adoption of this amendment, I believe that I could assert no more compelling reasons than those advanced by Representative Andrews in remarks made in similar hearings during 1966. He stated: "The need for an exemption from overtime as to salesmen, mechanics and parts men arises out of the traditional commission pay basis for these employees. It is impossible to successfully work these employees on a schedule basis because their ability to earn commissions depends on their availability when sales can be made or repairs are needed. In other words, the employer has no control over the customer's needs and cannot anticipate and schedule working hours as in most other industries." Congressional Record, May 24, 1966, page 11289. It seems apparent that the exclusion of motorcycles may well have been an oversight when the Fair Labor Standards Act was amended in 1966. The industry trade association did not include motorcycle dealers at that time and there was no representation made in their behalf. It is doubtful if their needs, interests, or even their existence were made known. I believe that the seasonal nature of motorcycle sales warrants the exemp tion which we advocate. In the central and northern tier of states, adverse weather causes a decline in sales during the winter months because of snowfall. Even in the southernmost states, rainfall and chilling weather make the use of motorcycles less attractive in the winter. With the employees of similar retail establishments for which an exemption 64-566-71- -9 now exists, motorcycle salesmen, partsmen and mechanics share the tradition of commission pay. Good summer weather makes it necessary that they be available when the buying public is interested. Even within a season, an espe cially pleasant weekend will stimulate demand for both sales and service. Under these circumstances it is beyond the capability of motorcycle dealers to schedule working hours as is done, for instance, in manufacturing establishments. In the interpretive rules issued by the Wage and Hour division of the Dept. of Labor two tests must be met in order to qualify for an exemption from the overtime pay provision under section 13(b) (10) of the Act. These tests are set forth in Volume 35, No. 69 of the Federal Register dated April 9, 1970. First the establishment must not be engaged in manufacturing. Secondly, the establishment must be primarily engaged in selling certain products to ultimate purchasers. Typical motorcycle dealers satisfy both of these requirements except that the principal item of sale, i.e. motorcycles are not named in the present act. I believe that the Subcommittee recognizes that there is a general shortage of automotive mechanics throughout the United States. Just recently it was asserted in a newspaper article that the number of mechanics is estimated to be 30,000 short of the number needed. For those of you who have paid repair bills recently I believe you will agree that low wages, or at least the absence of overtime rates, cannot be construed as causative of this shortage. In our belief, making motorcycle dealers eligible for this exemption would make it possible to provide service at a reasonable level at a reasonable cost to motorcycle users. As a related matter, it is noted with concern that HR 10948 would eliminate Sec. 13 (b) (10) in its entirety. It is believed that this exemption, when adopted, was the subject of sound evaluation by the Committee and, that a correct decision was reached. For this reason, our association believes that this provision should be retained and that some consideration be given to the special problems associated with the operation of independent retail enterprises of low to medium dollar sales volume. The Motorcycle Industry Council urges your favorable consideration of HB 6746. Mr. DENT. At this time I would like to announce, for Thursday we have Mr. Biemiller, director of the Department of Legislation, AFL-CIO, Mr. Ira H. Nunn from the National Restaurant Association, Mr. Schachter and his panel for the Meat Cutters and Butcher Workmen union, Mr. David Sullivan, general president of the Service Employees Union, the Honorable Jorge Cordova, Resident Commissioner of Puerto Rico, Mr. Amadeo Francis, executive director of the Puerto Rican Manufacturers Assocation, Mr. William Quinlan, general counsel for the Association of Retail Bakers, Mr. Carmack Cochran, of the American Transit Association, Mr. John Mahaney, the American Retail Federation and the Honorable J. Hardin Peterson representing the Florida fruit and vegetable growers. Thank you all for attending this morning. (Whereupon, at 1:50 p.m. the subcommittee recessed, to reconvene Thursday, April 22, 1971, at 10:00 a.m.) TO AMEND THE FAIR LABOR STANDARDS ACT OF 1938 THURSDAY, APRIL 22, 1971 HOUSE OF REPRESENTATIVES, OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D.C. The subcommittee met at 10:15 a.m. pursuant to recess, in room 2175, Rayburn House Office Building, Representative John H. Dent presiding. Present: Representatives Dent, Pucinski, Gaydos, Biaggi, Mazzoli, Badillo, Erlenborn, Bell, Landgrebe, and Kemp. Staff members present: Bob Vagley, staff director, John Miller, associate minority counsel for labor and Randy Kloetzli. Mr. DENT, The meeting will commence. The General Subcommittee on Labor is meeting to discuss H.R. 7130 and related bills to amend the Fair Labor Standards Act. This morning we are privileged to have with us Mr. Andrew Biemiller, the director of the Department of Legislation for the AFL-CIO. Mr. Biemiller, you have been before this committee on many occasions and you have always given us a great deal of advice, that is accepted in many instances, on legislation that is controversial. This happens to be a controversial piece of legislation. I hope you can help us. Mr. BIEMILLER. Thank you, Mr. Chairman. I am accompanied by Mr. Nathaniel Goldfinger, director of the Department of Research of the AFL-CIO. Mr. DENT. You are welcome, Mr. Goldfinger. STATEMENT OF ANDREW J. BIEMILLER, DIRECTOR, DEPARTMENT OF LEGISLATION, AFL-CIO, ACCOMPANIED BY NATHANIEL GOLDFINGER, DIRECTOR, DEPARTMENT OF RESEARCH, AFL-CIO Mr. BIEMILLER. These hearings to update the minimum wage and broaden the coverage of the Fair Labor Standards Act are among the most crucial of this Congress. The act was last amended in 1966-5 years ago. Since then, inflation has wiped out the additional buying power of the $1.60 minimum wage provided by those amendments. Justice for low-wage workers demands immediate action to raise the minimum wage. The economy needs--and must have-the added purchasing power these increases will provide. The war against poverty-which we contend must never be abandoned until it is wonrequires an increase in the minimum wage. Specifically, I am here to urge important improvements in-and quick action by this subcommittee on H.R. 7130-the bill introduced by Chairman John Dent and other members of the Committee on Education and Labor. The AFL-CIO believes that the minimum wage should be increased immediately at least $2 an hour. We are opposed to an in terim step of $1.80 an hour as proposed in H.R. 7130. We believe the $2 minimum cannot be postponed until 1973. This bill would extend the act's coverage to the largest category of workers still not covered by FLSA-nearly 5 million employees of Federal, State and local governments. In addition, it would make substantial progress toward eliminating some of the numerous unjustified exemptions contained in the law, such as overtime exemptions for agricultural and fish processing and local transit systems. H.R. 7130 is a modest bill. It would still leave outside the protection of the law about 112 million workers. These workers, we believe, are no less entitled to the protections of FLSA than those now subject to it or those who will be brought under its coverage by this bill. H.R. 7130, however, would make a significant start in this direction, and we think it should have the subcommittee's prompt consideration. In 1966, we thought the $1.60 minimum wage was tolerable, but it is utterly inadequate in 1971, in the face of 5 years of inflationary rise in living costs. The major purpose of the Fair Labor Standards Act-as outlined in its declaration of policy-is to correct and, as rapidly as practicable, to eliminate labor conditions "detrimental to the maintenance of the minimum standard of living, necessary for health, efficiency, and general well-being of workers." To fulfill the act's intent, Congress has increased the floor under wages as the cost of living and the Nation's productivity increased. The coverage of the act also has been expanded. In the 33 years since enactment, FLSA has been amended four times-the minimum wage updated four times and coverage extended twice. Modernization of the act in 1971 would be a major step in the effort to eliminate poverty. According to the Government's definition of poverty, nearly twothirds of the 24 million poor in America are members of families headed by a worker in the labor force-be that worker low wage, part time, or unemployed. About one-quarter of the poor-and more than 30 percent of all children growing up in poverty-are in families headed by a full-time, year-round worker whose wages are so low that his family is impoverished. An increase in the Federal minimum wage to at least $2 an hourimmediately is required on the basis of simple economic fact. At $2 an hour, a full-time worker would earn approximately $4,000 a year. This is close to the 1970 Government-defined poverty level of approximately $4,000 for a nonfarm family of four. But $2 an hour represents quite an improvement over the $3,200 such a worker earns at the present rate. In the past decade some progress was made in the reduction of poverty. Millions of Americans at the lower end of the income ladder moved a step or two above the poverty level. We in the AFLCIO are proud to have helped make that possible. But that progress has been halted and reversed as a result of this administration's economic "game plan." Today, millions of working Americans are back again on the lowest rungs. They are the sorriest victims of inflation. And millions more were never moved out of poverty. Inflation hits the lowest income people harder than anyone else. Today's minimum wage of $1.60 buys less than $1.25 bought in 1966. We do not believe any employed worker should be forced to go on welfare in order to survive. These people work hard at useful jobs; struggle to maintain their economic independence and self-dignity; and attempt to achieve self-reliance against overwhelming odds. Yet they are paid less than a subsistence wage. The simplest, most direct and least expensive way to eliminate most poverty is to modernize the Fair Labor Standards Act. That is what we urge the Congress to do. A $2 minimum wage is a floor-and that's all. But it is a floor that will benefit the entire economy by building purchasing power, eliminating some welfare costs and eradicating the blight of poverty from a big section of struggling America. Historically, the Fair Labor Standards Act, and its improving amendments, have raised the wages of most of the Nation's lowest paid workers—raising their standard of living and helping to bring them, and their families, into America's mainstream. Employment increased and business prospered. We say it is time to apply that same remedy again. And to all of those who cry that increasing the minimum wage brings rising unemployment, we point to the record. The Congress requires, by law, reports on the effects of minimum wage. Reports by Secretaries of Labor-in both Republican and Democratic administrations have shown substantial benefits and only rare, isolated instances of adverse effects, involving a few small firms and very few employees. Some opponents of FLSA improvements claim that minimum. wage legislation puts young people out of work. We are concerned about unemployment among teenagers, however, the evidence here indicates that recent high levels of youth unemployment are not due to FLSA provisions. To understand the employment problems of youth, it is important to remember that teenage unemployment has always been higher than the national average for all workers. This is because teenagers are new jobseekers; seek only part-time employment near home; look for temporary summer jobs and then return to school. During the 1960's, the minimum wage increased twice. During the same period, the number of teenagers employed also increased greatly. But employment has not expanded sufficiently to meet the need. The Secretary of Labor stated in his 1971, 4(d) report to the Congress that "it was difficult to prove any direct relationship between minimum wages and employment effects on young workers. There are some who argue that teenagers should receive a lower minimum wage than adults. |