lieved to be highly desirable in order that United States Government representatives may negotiate for fair and reasonable wage rates with greater latitude, there being removed any basis for contention that the minimum wage rates of the Fair Labor Standards Act should be applicable. The increased costs to the United States, in the event these minimum wage rates are applied on Guam, are stated in the foregoing paragraphs.

I trust the foregoing information will aid in the consideration of this proposal by the Committee.

Sincerely yours,

J. R. CARNES,

Captain, United States Navy, Director, Legislative Division.

Hon. LISTER HILL,

DEPARTMENT OF THE NAVY,

OFFICE OF THE SECRETARY,

Washington, D. C., December 13, 1955.

Chairman, Committee on Labor and Public Welfare,

United States Senate, Washington, D. C.

MY DEAR MR. CHAIRMAN: I am writing with respect to a matter of utmost concern to the Department of the Navy, the legislative proposal to amend the Fair Labor Standards Act of 1938, as amended. The proposal is part of the legislative program for 1956, the draft of legislation and letter of justification having been forwarded to the President of the Senate on June 6, 1955, and introduced in the Senate on July 5, 1955, as S. 2404. The bill was referred to the Committee on Labor and Public Welfare.

This measure would amend the Fair Labor Standards Act of 1938, as amended (29 U. S. C. 201), to provide that its minimum wage, overtime pay, child labor, and recordkeeping requirements shall not apply to employees whose work is performed in certain overseas areas. Excluded areas are foreign countries or territories under the jurisdiction of the United States such as the Canal Zone, the Guano Islands, and numerous small, practically uninhabited islands. Included are the States of the Union, the District of Columbia, Alaska, Hawaii, Puerto Rico, the Virgin Islands, outer Coutinental Shelf lands, Guam, American Samoa, and Wake Island. The proposal provides for special treatment of Guam, American Samoa, and Wake Island, in that it authorizes the Secretary of Labor to establish appropriate minimum wages in these three areas after public hearings.

Under the terms of the Fair Labor Standards Act as now written, and construed by the United States Supreme Court in 1948, it may be necessary to pay native labor employed on defense bases in remote foreign areas in accordance with United States standards for wages and hours of work. The reasons why this is neither practicable nor desirable are fully set forth in the executive communication referred to in the first paragraph above.

The Government of the Philippines for some time has been interested in renegotiating the minimum wage applicable to their nationals used on United States Government work in the Pacific Ocean area and has formally requested the United States Government to enter into such negotiations for the purpose of establishing revised wage rates and other employment conditions for their nationals. The Filipinos currently utilized on Guam are employed under conditions agreed to between the Government of the Philippines and the United States pursuant to an exchange of notes in 1947. The wages established in that agreement are considered fair and in proportion to productivity and the local economy even though they are lower than the present $0.75 minimum of the Fair Labor Standards Act, which is scheduled to be increased to $1 per hour on March 1, 1956. It is understood that the Department of State will attempt to schedule the aforementioned negotiations for sometime in early 1956. The enactment of S. 2404 prior to these negotiations is believed to be highly desir able in order that United States Government representatives may negotiate for fair and reasonable wage rates with greater latitude, there being removed any basis for contention that the minimum wage rates of the Fair Labor Standards Act should be applicable. It is estimated that new wage scales embodying minimum payments of even 75 cents per hour and customary differentials for classification with more skill would increase the cost of defense construction and maintenance on Guam alone by more than $8 million per year.

In view of the foregoing, it is hoped that your committee will find it feasible to give S. 2404 early consideration during the next session. Should the committee require any information in addition to that already furnished, the Department of the Navy will be pleased to furnish it.

Sincerely yours,

THOMAS S. GATES, Jr., Acting Secretary of the Navy.

STATEMENT ON BEHALF OF THE GUAM LEGISLATURE

The legislature and people of Guam are opposed to the enactment of bills S. 2404 and S. 1127 and take this means of submitting their views to the committee, respectfully urging that these bills be rejected. Our opposition has also been expressed in hearings held by the Committee on Education and Labor of the House of Representatives upon H. R. 9129 and H. R. 9144, by A. B. Won Pat and Mrs. Cynthia Torres, members of the legislature authorized and directed to testify in opposition to excluding Guam from the benefits of the Fair Labor Standards Act of 1938, as amended. This act is presently applicable to Guam. The bills before the committee would permit a reduction in the minimum wage in Guam, since they would authorize the Secretary of Labor to establish minimum wage rates below the statutory $1 per hour. The bills would also permit the Secretary of Labor to authorize "variances, tolerances, and exemptions" in connection with the 40-hour week, overtime compensation, and child labor in Guam, thus weakening the existing protection extended to working people in Guam generally and particularly children. There are several reasons for which the legislature and people of Guam oppose any repeal of currently applicable benefits of the Fair Labor Standards Act.

(1) Repeal of such benefits would be discriminatory. By the Organic Act of Guam (Public Law 630, 81st Cong.) Guam was made an unincorporated Territory of the United States and its people became American citizens. By this act, of course, the people of Guam attained the benefits of many United States statutes and the enjoyment of the rights of citizenship. They also became subject to the obligation of citizenship. We do not believe that citizenship can properly be divided into classes-all citizens ought certainly to be subject to the same duties and entitled to the same rights and benefits. No group should be denied the rights and benefits extended to citizens generally, yet this would be the effect of enactment of bills S. 2404 and S. 1127. They would discriminate against citizens who reside in Guam.

Such discrimination would also seriously affect the morale of the people of Guam. It would look to them like a breach of democratic faith and a retreat from the spirit which manifested itself in the Organic Act of Guam. It might well cause them to fear a trend, a pattern of weakening or removing existing protections. The people might very well ask why they should be denied the benefits of such laws as the Fair Labor Standards Act, designed to protect citizens, when they are subject to the proper burdens of citizenship, including the income tax according to the Internal Revenue Code and including compulsory military service.

(2) Wage protection is essential in Guam. Guam has what may be called a "payroll economy," based largely on expenditures resulting from the necessity of maintaining Guam as a major strategic military base. Before World War II, the Guamanians were people of the land. The economy of Guam was agricultural, and money was of relatively little importance. Despite the serious efforts to achieve resettlement and rehabilitation after the reoccupation of Guam in 1944, it has proved impossible to restore the essential agricultural economy. We recognize the strategic importance of Guam and the need for land of the armed services; condemnation of land for military purposes is mentioned only because of its effect on the economy. Of all the limited land area of Guam, approximately 32.78 percent is owned by the United States and 22.94 percent by the government of Guam, leaving only 44.28 percent in private ownership. In addition, 3.73 percent is held by the United States under leasehold. In other words, the military forces, by ownership or lease, control 36.51 percent of all land in Guam. To make matters worse, this 36.51 includes a large majority of the finest prewar farms. A very large part of the land owned privately or by the government of Guam is totally unsuited to agriculture. A disturbingly large part of the best fishing waters are also within areas controlled by the armed forces. The agri

cultural economy is simply gone for the foreseeable future. Only about 700 people now earn their living in whole or in part from agriculture.

Moreover, Guam has practically no valuable mineral resources and hence no mining industry. Manufacturing is extremely limited, also for lack of resources. There is no lumber industry, and exports consist only of scrap iron (the supply is obviously limited) and a small amount of copra. There are no canneries or food processing plants. Commercial agriculture consists only of limited poultry raising and egg production and a very little truck farming. Practically everything must be imported: 95 percent of the foodstuffs, 100 percent of clothing, 97 percent of building materials, 100 percent of household and mechanical equipment, substantially 100 per cent of all household furnishings. Nearly all imports come from the mainland. The cost in Guam, of course, amounts at least to mainland prices plus shipping and handling costs.

In the absence of the agricultural economy, industry, manufacturing, and the like, the people of Guam are clearly dependent upon wages. They must work for the Government, the military, the few construction companies, or retail and wholesale trade establishments. All of these activities are very greatly dependent upon military payrolls and military expenditures for facilities and construction. With such a payroll economy, any weakening of the wage structure would necessarily have serious consequences and might well be disastrous.

(3) The cost of living in Guam is high, and the standard of living cannot be maintained if wages are reduced or the wage structure weakened. The factor of importation and its necessary effect upon living costs have already been mentioned. The high cost of living is well illustrated by the attached schedules: Relative Importance of Consumers Cost of Living Items, Guam, March 1954, and March 1955, and Cost of Living in Guam Survey, March 1955, Limited Available List of Comparative Prices of Food in Guam and in the United States Mainland in March 1955.

We assume that your committee is opposed to action that would reduce the standard of living of United States citizens, whether they be in Guam or elsewhere throughout the country, and on the contrary, consider as of prime importance a progressive and sound raising of that standard. If the present way of life in Guam is to continue, the annual cash income of the head of the family must be $3,000 and this is difficult of attainment even should the minimum wage provided by the Fair Labor Standards Act be continued and enforced.

The facts hereinafter set forth deal with the standard of living, average annual income, and average annual cost of a Guamanian family unit of 5. When referring to Guamanians, we are speaking of United States citizens, residents of the Territory.

Referring to the Cost of Living in Guam Survey, March 1954-March 1955, we find the following statement, “In this report the Cost of Living in Guam, the tentative total amount spent by the average family in the course of a year is used, not the exact figure, but as a calculated average based on statistical data which is checked against and controlled by the known available income of a large number, but not all, of the families in Guam. This control figure helps to keep reported annual living expenditures for the family within reasonable limits. The estimated total value of purchases of the average family in Guam, based on an average of 100 families as shown in this report, is $2,970.37, while the average of 1,093 permanent government of Guam employees earning under $5,000 per year (93% percent of all permanent government employees) is $3,027, take-home pay, with deduction for taxes and retirement is, $2,651.00.

"The average family income of the 8,000 mainland families, excluding those within the $10,000 or more after taxes, in 1952, on which the revised (January 1953) United States Consumers Price Index is based, is $4,160 after taxes." The average size of the family unit on which the United States Consumers Index is based is 3.3 persons in contrast to the family unit in Guam of 5 persons.

It should be noted that the stated average income (take-home pay) is that of a permanent employee of the government of Guam which is well above that of the average Guamanian family.

These facts and figures dramatically demonstrate the urgency of continuing existing wage supports and of effectively enforcing them.

(4) Consideration must also be given to the effects of imported alien labor and to the argument that the Fair Labor Standards Act directly affects only a small percentage of employable Guamanians. These points are closely related. If a part of the total body of working people in an area are paid substandard wages, all will be strongly affected, even though some of the effects may be in

direct. Naturally, substandard wages paid to any part of the working people in an area result in a lesser total of money circulating in the economy. And also the substandard wage scale furnishes an unfortunate yardstick by which employers tend to measure their own willingness to pay for labor even though circumstances warrant higher standards. These effects operate whether the group receiving substandard wages consists of imported alien labor or whether it consists of those members of the citizen working force directly covered by provisions allowing the substandard wages. Of course, the opposite and beneficial effects flow from effective maintenance of adequate minimum standards. In this connection it should also be observed that the importation of alien workmen, particularly under contract at low wages, seriously impairs the competitive position of the resident citizen working people, by introducing large numbers of aliens at low wages, tying up large numbers of jobs, and decreasing the demand for labor as compared with the supply. The importation of alien labor can be justified only when and to the extent that the local labor supply is inadequate to meet the demand; and when importation is necessary, the imported workmen ought to be paid standard wages, for the reasons mentioned above.

We want our position to be entirely clear in this regard. We are speaking for the American citizens and residents of Guam and not for the imported labor. The importation of labor should be reduced now and hereafter to the extent local workmen are available. But we must repeat that payment of substandard wages to any group affects the entire working population.

For these various reasons, what is indicated is not repeal of these wage and hour standards as applied to Guam, not a legalization of the current substandard wages paid some workmen in Guam, but effective enforcement of the wage and hour standards so that the law will function as intended.

(5) Some may argue that the Guam Legislature could enact a local wage and hour law and by doing so protect the local working people. It requires little analysis, however, to show the ineffectiveness of such action in the present circumstances. In view of the large numbers employed directly and indirectly by the United States in Guam, it would seem that a great deal of jurisdictional confusion would certainly result from any territorial wage and hour law. Also in view of the large numbers employed directly or indirectly by the United States, a local law would not be adequately effective because too many workmen would be beyond its reach, and those beyond its reach would find themselves at an unfair disadvantage. It may be that a local law could advantageously complement the Fair Labor Standards Act, but under present circumstances a local law cannot do the job alone.

For all the reasons discussed above, in the interest of equality and fairness, and for the protection of the citizen workmen residing in Guam, we most earnestly request that bills S. 2404 and S. 1127 be rejected and that the existing wage and hour provisions applicable in Guam be effectively enforced.

Respectfully submitted on behalf of the Guam Legislature.

A. B. WON PAT.

Relative importance of consumers' cost-of-living items, Guam, March 1954 and

cultural economy is simply gone for the foreseeable future. Only about 700 people now earn their living in whole or in part from agriculture.

Moreover, Guam has practically no valuable mineral resources and hence no mining industry. Manufacturing is extremely limited, also for lack of resources. There is no lumber industry, and exports consist only of scrap iron (the supply is obviously limited) and a small amount of copra. There are no canneries or food processing plants. Commercial agriculture consists only of limited poultry raising and egg production and a very little truck farming. Practically everything must be imported: 95 percent of the foodstuffs, 100 percent of clothing, 97 percent of building materials, 100 percent of household and mechanical equipment, substantially 100 per cent of all household furnishings. Nearly all imports come from the mainland. The cost in Guam, of course, amounts at least to mainland prices plus shipping and handling costs.

In the absence of the agricultural economy, industry, manufacturing, and the like, the people of Guam are clearly dependent upon wages. They must work for the Government, the military, the few construction companies, or retail and wholesale trade establishments. All of these activities are very greatly dependent upon military payrolls and military expenditures for facilities and construction. With such a payroll economy, any weakening of the wage structure would necessarily have serious consequences and might well be disastrous.

(3) The cost of living in Guam is high, and the standard of living cannot be maintained if wages are reduced or the wage structure weakened. The factor of importation and its necessary effect upon living costs have already been mentioned. The high cost of living is well illustrated by the attached schedules: Relative Importance of Consumers Cost of Living Items, Guam, March 1954, and March 1955, and Cost of Living in Guam Survey, March 1955, Limited Available List of Comparative Prices of Food in Guam and in the United States Mainland in March 1955.

We assume that your committee is opposed to action that would reduce the standard of living of United States citizens, whether they be in Guam or else where throughout the country, and on the contrary, consider as of prime importance a progressive and sound raising of that standard. If the present way of life in Guam is to continue, the annual cash income of the head of the family must be $3,000 and this is difficult of attainment even should the minimum wage provided by the Fair Labor Standards Act be continued and enforced.

The facts hereinafter set forth deal with the standard of living, average annual income, and average annual cost of a Guamanian family unit of 5. When referring to Guamanians, we are speaking of United States citizens, residents of the Territory.

Referring to the Cost of Living in Guam Survey, March 1954-March 1955, we find the following statement, "In this report the Cost of Living in Guam, the tentative total amount spent by the average family in the course of a year is used. not the exact figure, but as a calculated average based on statistical data which is checked against and controlled by the known available income of a large number, but not all, of the families in Guam. This control figure helps to keep reported annual living expenditures for the family within reasonable limits. The estimated total value of purchases of the average family in Guam, based on an average of 100 families as shown in this report, is $2,970.37, while the average of 1,093 permanent government of Guam employees earning under $5,000 per year (93% percent of all permanent government employees) is $3,027, take-home pay, with deduction for taxes and retirement is, $2,651.00.

"The average family income of the 8,000 mainland families, excluding those within the $10,000 or more after taxes, in 1952, on which the revised (January 1953) United States Consumers Price Index is based, is $4,160 after taxes." The average size of the family unit on which the United States Consumers Index is based is 3.3 persons in contrast to the family unit in Guam of 5 persons.

It should be noted that the stated average income (take-home pay) is that of a permanent employee of the government of Guam which is well above that of the average Guamanian family.

These facts and figures dramatically demonstrate the urgency of continuing existing wage supports and of effectively enforcing them.

(4) Consideration must also be given to the effects of imported alien labor and to the argument that the Fair Labor Standards Act directly affects only a small percentage of employable Guamanians. These points are closely related. If a part of the total body of working people in an area are paid substandard wages, all will be strongly affected, even though some of the effects may be in