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Mr. WILLIAMS. I point out that Secretary Hodgson said in his 1972 report:
On balance, the wage increases granted to 1.6 million workers to $1.60 minimum wage standard had no discernible adverse effect on overall employment levels relatively little impact on overall wage or price trends.
This was Secretary Brennan's predecessor, but I will say that he is the custodian of the most comprehensive national records on the figures dealing with employment and price trends.
Mr. TAFT. As I pointed out earlier, we were dealing with a particular time and with a particular economic situation at that point. We were in a war-time economy.
Also, the Secretary of Labor's 1972 report to Congress, pursuant to section 4(d) of the Fair Labor Standards Act, recognized the need to carefully consider the inflationary impact of minimum wage increases, cautioning against the excessive increases proposed in S. 1861.
Mr. WILLIAMS. We have considered them carefully and they are not excessive. I do not think I am going to convince the Senator from Ohio, and, conversely
Mr. TAFT. This discussion has been going on for some months, and I am delighted to carry on the colloquy with the chairman. I think the colloquy started with the discussion as to why there might be a veto; and I would like to come back to that point. I have learned nothing in the last few days that does not persuade me that that veto is a very likely possibility on a number of points.
Mr. WILLIAMS. That is very likely.
Again, if we try to guess every element that might go into a veto I doubt that we would get our job done as we should. We are a branch of the Government and have our job to do; and if it is vetoed, we know that we have to take other action.
Mr. TAFT. I do not completely agree. I feel that there is a duty on the part of the legislative branch and the executive branch to try to solve problems in a spirit of compromise, not to make a political issue by putting a bill on the desk of the President which he then vetoes.
Mr. WILLIAMS. We are not in quite that close a discussion or negotiation process once the bill is here on the floor. That precedes. But the negotiations here toward meeting the possibility of a veto are not as they were earlier, before we got to the floor of the Senate.
Mr. TAFT. I do not want to say that the reasons I have given would be the only reasons that might result in a veto, and I think the veto would be sustained. There are other provisions.
While I go along with it-and the Senator from Colorado has-I think the Senator from New Jersey knows that this was indicated as an area of disagreement
Mr. WILLIAMS. I do not think it is the rate of the extended coverage. It seems to me that the major problem is the youth differential, and here it is just a matter of adjusting no further. We will vote up or down on that issue.
The problem is that the substitute of the Senator from Ohio takes the whole thing and gives us one vote on all these propositions, and that is one of the regrets I have about that approach.
Mr. TAFT. Am I to understand that the chairman, would support a separate amendment offered if the substitute should fail, regarding the youth differential question?
Mr. WILLIAMS. I have adjusted my thinking on the student differential. We now have an accommodation here, and we have extended the youth differential to students at Institutions of higher learning. This is an extension of a differential, and that is in the bill I have introduced with Senator Javits.
The Fair Labor Standards Act currently permits the employment of full-time students at a wage rate not less than 85 percent of the applicable minimum wage.
This subminimum rate applies to part-time employment during school time or full-time employment during vacations and holidays in retail and service establishments and in agriculture.
The subminimum wage can be utilized by employers upon the issuance of a certificate by the Secretary of Labor.
According to the Department of Labor, almost 50 million hours were authorized for the employment of full-time students at subminimum rates by certificates in effect on June 20, 1972.
A 1970 Department Analysis of Certificate Utilization shows that only 42 percent of the man-hours authorized at 85 percent of the statutory minimum wage were used.
Even more significantly, the analysis shows that one-fifth of the establishments holding certificates did not use them. Evidently, employers did not view the certificate application as a burden when they applied even when they had no immediate need.
Furthermore, the Department of Labor estimates that less than 2 percent of the applications for student certificates were denied in fiscal 1972.
S. 1861 expands the full-time student certificate program to apply to educational institutions, thereby increasing student employment opportunities.
The bill retains the certification procedure because it has proven to be a proper mechanism for insuring that students will not be used to displace other workers.
The youth subminimum contained in the amendment under discussion would violate the basic concept of the act which represents an "economic charter" for the lowest paid workers.
The only exceptions to the wage base concept have been full-time students, learners, apprentices, and handicapped workers.
To achieve its objective the minimum wage must be an irreducible minimum below which wages for workers will not be allowed to fall.
For this reason, the rate has always been set conservatively below the level which could be justified by economic data.
For example, the minimum wage rates specified in S. 1861 are considerably below the $3.55-$3.70 hourly rate which the Bureau of Labor Statistics "lower budget" would have required in autumn 1972.
The $2 an hour minimum wage rate which is set for the effective date of S. 1861 will mean wage increases for only 72 percent of all covered workers.
The $2 an hour minimum rate is only half of the average hourly earnings for production workers in manufacturing.
Obviously, such a rate is intended only for the young, the unskilled and the untrained.
Frequently these workers are members of minority groups. Mature, skilled and trained workers are paid considerably more. In this period of unacceptable unemployment, we should not, in my judgment, jeopardize the employment of adults by a subminimum wage rate for young people.
Secretary of Labor Brennan expressed his views on this problem at the hearing on his nomination.
The Secretary stated:
I believe in a realistic and adequate (minimum) wage.
I am aware of the problem of youngsters, many of whom have to pay their way through school, but I am fearful if we have a difference of wages with the youngsters and their fathers in the area where minimum wage is so important, this could create problems.
If they are going to perform the same duties, the same responsibilities, I do not see why there should be any difference in the rate.
In the hearings on such proposals in 1971, former Secretary of Labor Hodgson said:
I recognize that there may be some concern that a lower minimum wage for young people under age 18, for full-time students, and for young job-starters may reduce employment opportunities for older workers.
There may be some risk in marginal cases.
It is well known that the minimum wage worker is typically regarded as a "marginal" worker.
The Secretary's 1971 statement is hardly reassuring for the minimum wage employee who must bear the risk of losing his job because of a youth subminimum wage.
The proposed amendment would make it the Government's policy to move unemployed 16 to 17-year-olds to the front of the hiring line by allowing employers to pay them substandard wages while placing older unemployed workers at a competitive disadvantage, even though their problems of getting jobs once unemployed are far more serious in family and social terms.
Such a policy simply makes no sense.
The argument that an increase in the minimum wage rate increases youth unemployment is unconvincing.
Although certain economists have concluded that a minimum wage increase would adversely affect teenage unemployment, others have citicized such studies on various grounds.
However, the massive study prepared by the Department of Labor in 1970 concluded that they were unable to establish any relationship between minimum wage increases and youth unemployment.
Mr. TAFT. I am glad that the Senate has studied this problem. But I point out that the problem of youth unemployment is not one that only relates to fulltime students. It also relates to people who are not in school.
Mr. WILLIAMS. I do not know if it is this way in the State of Ohio, but I know that in the State I have the honor to represent, the State of New Jersey, in those areas where we have the highest levels of youth unemployment, we also have our highest levels of adult unemploy
It seems to me that there is a grave risk in going with discriminatory, cheap labor offered to youth. It would encourage teenagers to
drop out. The risk is that the jobs will go to them and that they will replace jobs that might be there for the main breadwinner of the family, the adults.
Mr. TAFT. As I have indicated, there is no evidence that this has occurred in the past, and I do not think there will be any evidence that it would occur in the future. If it should occur, any effect would be maintained by the 6-month limitation which the substitute places on the application of the youth differential and by the power given to the Secretary of Labor to see that a particular employment pattern does not result in job displacement for adult workers.
Mr. WILLIAMS. If there is a better way to deal with it than patterns or practices after the fact, it is to precertify the youth to insure that the youth job does not take a job from an adult.
Mr. TAFT. As the Senator is aware, the reason why the substitute does away with certificate system is that it has not proven to be practical or workable.
The PRESIDING OFFICER. The 1 hour allocated on the Dominick-Taft amendment for this evening has expired. The time will now have to be on the bill.
Mr. ROBERT C. BYRD. Mr. President, I ask unanimous consent that the time during the remainder of the day not be charged to either side. The PRESIDENT OFFICER. Without objection, it is so ordered.
Mr. ROBERT C. BYRD. I ask unanimous consent that the time during the 2 hours of debate on the substitute tomorrow, preceding the vote at 12:30, be equally divided between both sides.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DOMINICK. Mr. President, will the Senator from New Jersey yield?
Mr. WILLIAMS. I yield.
Mr. DOMINICK. I just want to add to what the Senator from Ohio
The Senator from New Jersey will recall that Secretary Brennan's testimony was strongly against the increased coverage of domestics in the bill which the Senator offers; that he was in favor of a youth differential; and that he felt the committee bill would add to the inflationary cycle. This would seem to mean that this bill, as reported by the committee, is not favorably received even by the Secretary of Labor.
I also invite the attention of the Senator from New Jersey to a chart on page 240 of the record which was put in by the Labor Standards of the Department of Labor concerning what an increase in the minimum wage does to employment, I believe this was inserted in the record by the Senator.
The Senator will note that on the effective date of the 1969 increase, there was 11.9 percent unemployment among youth aged 16 to 19. One year later, that unemployment had gone up to 13.3 percent in 1970, when the minimum wage rate went up to $1.45, the same figures are from 13.3 unemployment to 16.6-1 year later. In 1971, when it became $1.60, it went from 16.6 to 18.5.
So it seems to me that if we look at least at those 3 years, following the increase in the minimum wage, there was an increase in teenage unemployment, which is exactly what we have been trying to say.
It does not do any good to tell a kid he can get $2.20 an hour if he does not have a job. We are saying he should be given a chance to have
a job, to get into the workstream all the way through. So, I am delighted the Senator has inserted this chart furnished by the Labor Department into the record. It helps demonstrate what we have been trying to get across-that wage increases, without a meaningful youth differential provision, have adverse effects on teenage employment.
As far as domestics are concerned, for the life of me, as I said earlier today, I simply cannot understand how the Interstate Commerce Clause can be spread sufficiently wide to get that in. For the Record, I wish to read the definition of a domestic worker or private household worker within the Department of Labor, which is backed up so far as domestic workers being household workers in Webster's Dictionary. They include
As maids, housekeepers, practical nurses, domestic workers, day workers, house cleaners, grass cutters, handymen, window washers, chauffeurs, yard workers, cooks, companions, gardeners, laundresses, caretakers, charwomen, butlers, waiters, kitchen workers and babysitters.
Granted the Senator has eliminated babysitters from the domestics, they include everything else. If any housewife, when a young man comes around to mow the lawn, has to pay him the minimum wage, withhold, and all the rest, I think that is going to make liars out of a lot of people. It will be almost as bad as prohibition with respect to disregard for the law.
Mr. WILLIAMS. With regard to unemployment, this chart is further evidence that economic conditions have a great deal to do with unemployment figures, too.
The period the Senator cited was the period during the last administration of economic recession and the unemployment figures generally follow the same trends as the youth unemployment during the period.
Mr. DOMINICK. But did not the Senator put that chart in the Record as indicating there is no increase in unemployment?
Mr. WILLIAMS. Certainly. And following that I will place in the Record a description of the point I am making, that economic conditions have a great deal to do with these levels of employment in all groups, including youth.
The chart shows that before 1969, every time the minimum wage was increased, the teenage unemployment rate, 1-year later was lower than on the date of the increase. Additionally with the exception of 1962 and 1964-where the difference was statistically insignificant-onetenth of 1 percent-the rate 6 months after the date of the increase was also lower than on the date of the increase.
In 1969-71, the years cited by Senator Dominick, the only workers subject to minimum wage increases were those newly covered by FLSA in 1966. This amounted to 10 million workers, out of 45 million then covered by the act. Indeed, the 1969 4(d) report suggests that only 2 million workers were subject to wage increases due to the minimum wage increases that went into effect in 1969. By contrast, in 1968, when 7 million workers were affected, the unemployment rate for teenagers dropped almost 1 percent in the 6 months following the effective date of those increases.
We are all aware of the recession which occurred during 1969-71. As the chart shows, unemployment for both adults and teenagers in