Their arguments against child labor laws, for example, were never couched in terms of profit maximization, but rather on the basis of their "altruistic" desire to build the childrens' character by keeping them out of mischief in the mines and mills. The present concern of the Puerto Rican Manufacturers Association may well be solely motivated by their desire to continue to provide gainful employment to the needy, but those of us who remember history should be permitted our small reservations. Secondly, wage rates are clearly not the only factor involved in industrial survival or in attraction of investment capital. Governor of Puerto Rico Luis Ferre's Advisory Council last year issued a report on "Industrial Development" which doesn't even mention wage rates in their list of industrial incentives. Reynolds, Gregory and Torruellas, the authors of the best study yet published on wages, productivity and employment in Puerto Rico, observed that capital is attracted or repelled by a complex combination of factors and never "rushes" in or out. Investment money "oozes" was the very descriptive phrase they used. The Puerto Rican labor force is perpetually threatened with spectre of competition with 10 and 40 cents per hour labor in Haiti and the Dominican Republic. I don't believe Puerto Rican workers should be frightened. If employers were looking exclusively for low wages they would have left long ago. What they are looking for, in addition to market considerations, is highly productive labor and we know that this is obtained, not by subsistence wages, but by incomes decently related to the cost of living, to education, to vocational training, to opportunities for growth and advancement. Nevertheless, it is clearly true that U.S. minimum wages, when applied in Puerto Rico, are often the prevailing wages. Let's also grant that for certain marginal enterprises wage rates are crucial and abrupt increases would cause them to be unable to compete. Are low wages, however, the only panacea for industrial survival? I submit that other alternatives exist and that those who choose to ignore them are victims of the vestiges of colonial mentality. What local political leaders, Republicans and Popular Democrats alike are implicitly saying is that Puerto Rico's fate is exclusively in the U.S. Congressional domain and not a thing can be done locally. This is pathetic. Economic development is not an end unto itself but only the method utilized to attempt to achieve the goal of an affluent, just society. Minimum wage legislation is a device employed to accelerate the more equitable distribution of wealth within a society. Those who insist that abrupt wage increases will not achieve that goal must accept the burden of devising other means to redistribute income. The working men of Puerto Rico have been told for thirty years that the Island's future prosperity depends exclusively on their willingness to continue to accept Caribbean wages for their labor while paying mainland prices for what they consume. I suspect they won't stand for this duplicity much longer and that the redistribution had best commence. Puerto Rico is not a "poor country" as some very well-to-do residents constantly insist, but instead is a small island congested by a very large number of people with low incomes, a growing number of persons with middle incomes, and a not so small number of wealthy individuals. Geographically they inhabit the same island. Economically they live in different worlds. There are about 20,000 families at the top of the pile whose combined income is greater than the 200,000 families at the bottom of the scale. The 25 per cent at the top divide up 65 per cent of the income while the other 75 per cent scramble for the remaining 35 per cent. As population grows the group in the middle is also tenuously growing, but evidence exists indicating that the "extremists" one should really be worried about-the extremely poor and the extremely rich-are getting poorer and richer respectively. There is a theoretically simple, but politically difficult, way to redistribute income in addition to increasing wages. It is called taxation. Those in the upper brackets are not paying nearly enough. The consumption of pleasure boats and television sets and cars and jewelry and air conditioners and such is so blatantly conspicuous that statistics are hardly needed, but here they are anyway. Industrially developing countries should be taxing-and redistributing at least 17 to 19 per cent of gross national product. Puerto Rico collects less than 12 per cent. The working man and the middle classes are paying more than their full share because the government's bite is withheld from each paycheck. Not so with self-employed businessmen and professionals. The most recent study I am aware of estimates that taxes are evaded in Puerto Rico to the tune of a whopping 44 per cent! The comparative U.S. figure is 9 per cent. A millionaire Popular Democratic Party Representative, Jorge Bird, recently introduced a resolution directed to the U.S. Congress which pleads that the Puerto Rican economy should not be compared with the "rich U.S. economy." The San Juan Star editorializes that Governor Ferre "must make people like Sen. Williams realize that Puerto Rico cannot be fairly compared economically with New Jersey . . ." The enormous catch to this plea of non-comparability with the mainland is that those in the upper middle and upper economic classes consistently, in practice, do so classify themselves. The salaries of the chief executives of major private corporations in Puerto Rico average $60,000 to $70,000. Even junior vice presidents draw down $20,000 or more and fringe benefits compare favorably with U.S. stipends. Insular physicians and lawyers charge fees fully comparable with those of their mainland colleagues. When the Executive Director of the Puerto Rican Manufacturers Association pleads with Congress it is invariably on the basis of comparison with the poorest states in the Union-Alabama, Arkansas, Mississippi, et al. But, when the Puerto Rican Advisory Council wishes to justify a 40 per cent increase in executive salaries in insular government with which states is Puerto Rico compared? With the wealthiest states, New York, Illinois, California, et al. And which state is singled out for special comparison? That same New Jersey with which the San Juan Star insists Puerto Rico can't "fairly" be compared. (Incidentally, the salary recommended by the Advisory Council for the Chairman of the Insular Minimum Wage Board is $20,000, which would increase his hourly earnings from $7 to about $10, or five times the amount these same people say we can't authorize him to recommend for industrial workers. The Council also recommends a salary of $27,500 for the Secretary of Public Works, just exactly double that received by the Secretary of Public Works of North Carolina.) Prevailing wages in Puerto Rico are, on the average, now a little over half of prevailing U.S. wages. If Puerto Rico insists on maintaining this differential for wage earners then the rest of us should be prepared to have our incomes taxed proportionately. The revenue can be utilized to create jobs by subsidizing low wages and to provide badly needed social services in lieu of cash income. The leaders of Puerto Rican labor, with a few very honorable exceptions, are in their usual state of disunity and with their silence are sanctioning the philosophy that those who earn the least should make the greatest sacrifices on the altar of economic progress. Their apathy may also result from their suspicion that the hearings, as in 1961 and 1966, will culminate in Puerto Rico, at the last minute, again being exempted from coverage. I think their apathy is unfounded. I suspect that abrupt wage increases are really on the way this time and I don't think it will be a disaster. I can't bring myself to believe that paying people $80 a week will break us. I am also convinced that the Puerto Rican leadership will rise to the occasion in non-colonial, truly freely associated fashion, by finally fully accepting the fact that we're operating in the U.S. market-for better or for worse and insisting that we all share democratically in the sacrifices necessary for continued development. PUERTO RICAN CORSET & BRASSIERE ASSOCIATION, GENERAL SUBCOMMITTEE ON LABOR, GENTLEMEN: This statement is respectfully submitted to your Committee on behalf of the Puerto Rican Corset and Brassiere Association. This Association has a membership of ninety firms, all of which are engaged in the manufacture of corsets, girdles, brassieres and related products in Puerto Rico, and all of which are affiliated with companies in the same industry located in continental United States. The members of this Association employ a labor force of approximately 10,000 workers in Puerto Rico, which constitutes the largest number of workers employed in any single industry in that Commonwealth. The Corset and Brassiere Industry is also the largest of the Commonwealth's industries in terms of value of shipments to mainland United States. This Association strongly urges that your Committee, in considering proposed amendments to the Fair Labor Standards Act applicable to the Commonwealth of Puerto Rico, retain and continue the present method of establishing minimum wages for industries in Puerto Rico; namely, the biennial determination of minimum wages for each industry by tripartite committees, representing the public, the employees in the industry and the employers thereof. The members of this Association vigorously oppose the enactment of any legislation which would automatically impose across-the-board increases in minimum wage rates for Puerto Rico, whether by way of flat sums or percentage increases. The imposition of increases in this manner would do violence to the wise and equitable policy evolved by Congress for the development of the Puerto Rican economy. It would do great harm to the general economic life of Puerto Rico which has already been badly affected by the recession of the last two years and would seriously prejudice employer and employee alike. Such legislation might well bring to a halt the fine progress which has been achieved in the industrial development of Puerto Rico through the wise legislation enacted by Congress, as well as through its sympathetic treatment of the problems of Puerto Rico. Politically we believe such legislation would be unwise for it would lend credence to those voices in Puerto Rico who contend that the Puerto Rican people have been deprived of an equitable role in making decisions affecting their economic welfare. The policy of the Fair Labor Standards Act, as applied to Puerto Rico, has been to achieve as rapidly as is economically feasible the statutory objective of the Federal minimum wage without substantially curtailing employment of Puerto Rican workers. Pursuant to the provisions of this Act, the Secretary of Labor, since 1951, has appointed Industry Committees consisting of equal numbers of persons representing the public, the employees and the employers in the Corset and Brassiere Industry-both in Puerto Rico and in mainland United States. Each such Committee has over the years conducted extensive hearings in Puerto Rico, and has each time analyzed statistical and economic data prepared by government economists. investigated economic and competitive conditions in the Industry, and filed with the Administrator of the Wage and Hour Division of the United States Department of Labor, its findings of fact and recommendations as to the highest minimum wage rate which it determined would not substantially curtail employment in the Industry, nor give the Industry in Puerto Rico a competitive advantage over the same industry in continental United States. As a result of the action of these Committees, the minimum wage for the Corset and Brassiere Industry in Puerto Rico has rapidly increased from the 33¢ per hour established by the first Committee in 1951, to the $1.52 per hour fixed by the most recent Committee and made effective on July 10, 1969. The progressive increase in the minimum wage is clearly indicated by the specific wage orders resulting from Industry Committee action: June 4, 1951, 33¢ an hour; Nov. 8, 1954, 55¢ an hour; Mar. 5, 1956, 70¢ an hour; June 24, 1957, 75¢ an hour; May 15, 1958, 80¢ an hour; May 16, 1960, 86¢ an hour; Nov. 3, 1961 (FLSA increase), 99¢ an hour; Dec. 30, 1962, $1.04 an hour; Nov. 3, 1963 (FLSA increase), $1.071⁄2 an hour; Jan. 24, 1965, $1.1221⁄2 an hour; Apr. 2, 1967 (FLSA increase), $1.26 an hour; Apr. 2, 1968 (FLSA increase), $1.44 an hour; and July 10, 1969, $1.52 an hour. In making its recommendations, each Industry Committee weighed the impact which the new minimum wage rate would have for the period of approximately two years between Committee hearings, during which the rate would be effective. It should also be noted that all of the workers employed by members of this Association, who constitute 85% of the workers in this industry in Puerto Rico, are covered by the collective bargaining agreement between this Association and the International Ladies' Garment Workers' Union. Thus, while the legal minimum wage rate is $1.52, the minimum wage required to be paid to workers covered by the Union contract currently ranges from $1.62 for beginning workers to $2.25 per hour, with the majority of the workers in the industry being guaranteed a minimum of $1.75, depending upon the workers' craft. The workers also receive fringe benefits which are equal to an additional cost of 24¢ to 30¢ an hour and which are in many respects superior to the benefits enjoyed by workers in the same industry in continental United States. In addition, Puerto Rico has enacted a variety of social legislation, unparalleled in the American system, which provide for maternity pay, compulsory vacations, dismissal pay and the most expensive of all-a mandatory Christmas bonus of 2% of annual earnings to all workers. There is pending before the Legislature of Puerto Rico a host of proposed bills which would add to the unique labor costs of doing business in Puerto Rico, including an increase in the Christmas Bonus from 2 to 4%, a guarantee of permanency of employment, compulsory profit-sharing and pension plans, the establishment of day care centers and vocational centers at the expense of the employer, etc. The existing special financial burdens and the present climate of legislative activity in Puerto Rico must be given due consideration by your Committee in assessing the impact of minimum wage legislation in Puerto Rico. They cannot be equitably dealt with by across-the-board legislation and they clearly establish the absolute imperative of retaining the industry committee procedure for determining minimum wages and on the local level. The members of this Association feel that each industry in Puerto Rico must be treated on an individual basis. It must not be forgotten that every industry in Puerto Rico faces special problems and costs which are not encountered by its mainland counterpart. Among these are high freight costs, large capital involvement, high managerial expenses, longer cycles required in producing goods, higher labor turnover, training costs and reject rates, shipping strikes. power failures, floods, and many other similar problems. These problems have unequal effects on the various Puerto Rican industries and make essential a careful industry-by-industry consideration of their impact. Increases in minimum wages must similarly be determined on an industry basis because it is clear that the effects of such increases in an industry with high labor costs per unit of product, such as exist in the Corset and Brassiere Industry, would be far different from those in an industry with relatively low percentage labor costs. An automatic across-the-board or percentage increase in the Corset and Brassiere Industry would subject the members of this Association to inordinately high labor costs. It would destroy any possibility of further growth for this industry in Puerto Rico and would accelerate the closing of many existing operations; a process which is already beginning to assume alarming proportions. In the past two years, 17 corset and brassiere firms discontinued operations in Puerto Rico. Average employment of production workers has declined by about one-sixth or 2,000 jobs. The industry has suffered greatly as a result of fashion changes, such as the introduction of panty-hose and the no-bra vogue, but the most serious damage has been wreaked by the ever-growing flood of imports from low-wage countries. In 1967 the General Sub-Committee on Labor under the able leadership of your Chairman, Congressman Dent, conducted an extremely important and thorough investigation into the impact of imports on American industry and employment. The relief proposed by your Committee following its penetrating inquiry to alleviate the injury to our domestic economy was never enacted by Congress. And the tide of imports has risen tremendously. Imported goods do particular damage to the Puerto Rican branch of this industry, which is engaged principally in the manufacture of goods of the popular-priced or low-price variety. This merchandise must compete in the domestic market with imports from foreign low-wage and low-labor-cost areas, such as the Philippines, Hong Kong, Mexico, Jamaica, Honduras, etc., which have shown very significant increases in recent years. The value of imports in this industry rose from $438,700 in 1955 to $21,303,000 in 1970. In the past year alone, the rate of increase has exceeded 25%. In the last four years, the quantity of brassiere imports increased from 2,619,000 dozens in 1966 to 4,149,400 dozens in 1970. Between 1960 and the present, imports from particular low-wage, low-laborcost areas have continued to increase at an alarming rate. From 1960 to 1970, imports from the Philippine Republic rose from 663.600 dozens valued at $2,076,800 to 1,722,300 dozens valued at $8,254,387. In 1960, imports from Jamaica totaled 142,300 dozens valued at $701,000. The figures for 1970 were 411,100 dozens valued at $2,889,400. (U.S. Department of Commerce, Bureau of the Census: Report No. F.T. 110, 125 and 135, United States Imports of Merchandise for Consumption (1960–1970). New names constantly appear in the import reports. Honduras appears for the first time in 1966 with 1,000 dozen which rose to 161,700 dozens in 1969. Mexico with 150 dozens in 1966 shipped 445,100 dozens to the United States in 1970. One can well understand the anger of the President of the International Ladies' Garment Workers' Union who is quoted in the New York Times on March 21, 1971 as stating that the brassiere industry "is being ruined." If Puerto Rican manufacturers are burdened with even higher labor costs, their already weakened ability to compete with producers in the countries mentioned above and the other low-wage areas would be entirely shattered. This Committee must carefully weigh the substantial injury which will be inflicted upon this industry in Puerto Rico and upon the entire Puerto Rican economy by an ill-considered automatic increase in minimum wages. There is one additional element to which this Committee must give consideration in determining whether or not to supplement the hearings held by the Industry Committee and the ordinary processes of collective bargaining by imposing in addition thereto across-the-board minimum wage increases. Today, an accelerated growth of employment opportunity is absolutely essential to the economic survival of Puerto Rico. The Puerto Rican Planning Board in an exhaustive population study for the period from 1964 to 1980 has projected that the Commonwealth will have a population of 3,678,900 persons in 1980, an increase of more than 50% over the 1960 census of 2,349,544 persons. Puerto Rico's unemployment rate, which has fluctuated between 11% and 13%, roughly twice the mainland average, may well exceed 19% by 1975, according to the Planning Board's estimate. Migration from the island, an important safetyvalve during the 1950's has declined considerably in recent years. In the light of the foregoing, we urge this Committee to recognize that higher minimum wages will have a marked deterrent effect upon industry in Puerto Rico. Maintenance of present employment levels will not provide the solution to Puerto Rico's population explosion. The creation of more and more jobs must be the prime objective of the Commonwealth economy. Based upon all of the foregoing, the members of this Association strongly urge your Committee to recommend to the Congress the retention of the present method of fixing minimum wages in Puerto Rico, a method which has faithfully adhered to the objectives of the Fair Labor Standards Act, and at the same time has produced such impressive benefits for the people of Puerto Rico. Respectfully submitted. KLEEBLATT & GLAUBERMAN, General Counsel. FEDERACION LIBRE DE LOS TRABAJADORES DE PUERTO RICO, Hon. JOHN H. DENT, Chairman, Subcommittee on Education and Labor, During last day of session House of Representatives of Puerto Rico adopted resolution asking U.S. Congress to keep special industries committees and socalled flexibility for the island in dealing with amendments to Labor Standards Act. Eleven representatives voted against it. Local legislative action renders disservice to American democracy and toiling masses of Puerto Rico who are entitled to the equal protection of the law and who have to fight inflation with a small buying power. Local House action reiterates error committed by previous legislative assembly adopting Resolution No. 16 asking Congress not to apply Labor Standards Act to farm workers. Organized labor movements reject House measure and hope U.S. Congress will extend economic and social justice to Puerto Ricans in equal footing without any discrimination whatsoever being loyal Americans entitled to the American way of life. When Congress adopted NLSA in 1938 it was extended to Puerto Rico just as it was to fellow Americans in the mainland. |