Mr. McCONNELL. Why would you not change it, then, if your cost of living changes, if that is the index that you use to set it in the first place?

Mr. ROTH. I do not think it is necessary to change it.

Mr. McCONNELL. How do you arrive at a figure? We are supposed to set a figure. You say here it should be a constant and not a fluctuating standard, fixed by statute and uniform for all industries, and so on. How do you determine what level to fix?

Mr. ROTH. You gentlemen have gone into this thing much farther than I thought. Maybe you are satisfied that the 75 cents is the amount you would have to arrive at. But I cannot support it on the grounds that the Department of Labor here has suggested, that it does not affect many people, that it will not be reflected in our over-all wage structure. I just say those are danger points that you have to take into consideration. That is all I have argued with.

Now, maybe you have done this. But I say in our policy, those are factors which you should consider.

Mr. McCONNELL. I fear if you set a rate now that is static, any drop in the cycle of business which you now state is occurring would result in a minimum wage, possibly, right up among wages, and if your cycle should drop very sharply and very far, you would need another rate, and yet on your theory you would still have a uniform standard rate. That is what I question.

Mr. ROTH. I admit the difficulty in fixing these things. I know it is difficult; but I am urging that you take these factors into consideration when you do it. Assume that is going to have an inflationary effect which defeat your purpose.

Mr. McCONNELL. Is it not generally true, at least from your own observation, when we get to talking about the amount of earnings of a business running into billions of dollars, that it can be very misleading when we consider setting a minimum wage for the country. The real problem, as I see it, that we encounter occurs when we apply this to small businesses.

Mr. ROTH. That is right.

Mr. McCONNELL. We have had practically no objections coming from big business for the last year in connection with changes in the minimum wage. But we get into difficulty when we get into these little communities and begin applying it to marginal situations. I believe if there was some way of not broadening the coverage so that every corner store and every little person involved is concerned with this thing, we could save ourselves a lot of headaches, and for those who are strong for minimum wage laws, I say it would save their having the law discredited. We will just get disgusted and say, "If you are going to try that, let us not have any law. Let us throw it aside."

We meet that objection frequently. They run into trouble trying to apply these rules to little and absurd situations.

Mr. ROTH. The last thing that any of us wants, I think, would be to influence adversely the opportunity for employment by raising levels in isolated places or smaller places or submarginal industries to a point where there is no job. That is the danger of this thing.

Mr. McCONNELL. Frankly, I think the Administrator was either very brave or very foolish in trying to include millions and millions of people of an undetermined number under this act. I think the

headaches they are going to get will be terrific. I know our headaches here have been unimaginable, trying to figure this thing out during the past year and especially how to apply it to little industries.

Mr. ROTH. That is one reason for objection to the extension of administrative authority, because it is an actual fact that sometimes it requires a year and a half to get a ruling from the Administrator and then you find it changes within a period of 6 months. You cannot conduct a business on that type of instability.

Mr. McCONNELL. That is all.

Mr. LESINSKI. Mr. Smith?

Mr. SMITH. I believe you stated when you read your opening statement that there were about 1,500,000 people in the chamber of

commerce.

Mr. ROTH. A million and a quarter, I think, was the estimate of the Administrator.

Mr. SMITH. A million and a quarter?

Mr. ROTH. Yes; I think that is right.

Mr. SMITH. Will you comment on what you think about this new phrase "activity affecting commerce" and how much that is going to reach down into this?

Mr. ROTH. I think it will reach way down, but nobody will know how far it goes, and nobody will find out what it means. I think we extended the scope without any question. The Administrator himself says that these many increases he has made will add 5,000,000 people. It will add more than that.

Mr. SMITH. Do you know of any time or place in any country where they have had a minimum-wage law that worked successfully, unless there was a stimulus from some other source that made it work?

Mr. ROTH. I do not know. I have not followed it in other countries. Mr. SMITH. We all know that it has not had a fair chance in this country, due to the stimulus of the war.

Mr. ROTH. That is right. We have not had a normal trial. There is no question about that at all. We have had abnormal conditions. Mr. SMITH. And if we continue to have a buyers' market, we have reason to assume that the conditions are going to be subnormal.

Mr. ROTH. They are subnormal. But I believe everybody hopes that prices will come down. They cannot come down unless we can increase productivity in many fields. There will be some margin that will be squeezed out of profit, that is true. But if you go down too much, you are going to see faders, bankruptcies in the very types of businesses where these submarginal people are employed. That is where they come first.

Mr. SMITH. Then is it your considered judgment that there is a considerable amount of charity in a minimum wage law?

Mr. ROTH. I would not say that under conditions we have had, these abnormal conditions that we have been in. It could well be. What will happen is that charity will take another form. If businesses collapse, they will be taken care of by the Government. It will be charity.

Mr. SMITH. You have just stated that everything should be based on productivity. There are a lot of submarginal workers that will be affected by this that cannot produce?

Mr. ROTH. That is right.

Mr. SMITH. Is there not an element of charity in a minimum wage law that tries to compensate on a charity basis rather than entirely upon a productivity basis?

Mr. ROTH. There is to the extent and on occasions when the productivity does not justify the wage scale. But what happens is that you take it out of the employer and he goes broke. So the charity stops. They go on the public relief rolls.

Mr. SMITH. That is all.

Mr. LESINSKI. Mr. Kennedy?

Mr. KENNEDY. As you know, during the thirties, the great theory was that the trouble with our economy was that there was not enough purchasing power in the lower income groups to buy anything more than a minimum amount of food and pay some rent. Now, isn't the theory behind this bill that this builds consumer purchasing power so that if there is any danger of a depression or a drop in prices, this serves as a platform to prevent a tremendous drop in consumer purchasing power.

Mr. ROTH. I do not subscribe to the philosophy that the increase of purchasing power necessarily results in an increase of true wages. That was not our experience. Prices went up faster than wages.

Mr. KENNEDY. Of course, everybody talks about wanting prices to go down. But the fact is that we do not really want prices to go down, because then wages go down and unemployment results. So we are much more concerned about prices going down than we are about their going up, basically. I mean deflation is much morse than inflation, as we understand it. So the point I am trying to make is that if we accept this bill, do you not agree that it multiplies the possibility of consumer purchasing power, and it will prevent us from having a deflationary movement in this country that might be disastrous. Do you agree with that?

Mr. ROTH. If it stopped at the place the Administrator says it was, it would only have an effect of 1 percent, on its face. I do not think it would stop there. But that is all he claims for.

Mr. KENNEDY. You say it would affect more people?

Mr. ROTH. I think it will affect it more. But I do not subscribe to the fact he can raise wages beyond the point where they can be paid and contribute to purchasing power, because what happens? The marginal fellow goes out of business, and there are no wages. You cannot say to a fellow, "You have to stay in business and pay these wages." Whether he is in business is up to whether or not he can make a go of it.

Mr. KENNEDY. Whether he stays in business is up to the purchasing power of the people who buy things from him.

Mr. ROTH. That is not true of the individual fellow who is producing southern pine somewhere in competition with major competitors, and his costs go up to a point to where he cannot compete with another product, whether selling wood against steel and all these things, whether he has a plant that is in competition with other people wo are closer to the market, and all these factors, and whether he can pay any wages at all.

Mr. KENNEDY. I agree that you cannot put this at $1.50, and bring it up higher, and say that that increases the purchasing power in the consumer groups. But we have taken the figure of 75 cents, which

is pretty low, to try to get some stability in our economy. I think that is the idea, and I think it may have some effect.

Mr. ROTH. I will admit, Mr. Kennedy, the extent to which they stay in business and the extent to which they pay increased wages will increase purchasing power. But I do not think increased purchasing power, taken by and of itself, is necessarily a blessing. Mr. LESINSKI. Thank you, Mr. Roth.

Mr. ROTH. Thank you, gentlemen, for listening to me for so long. Mr. LESINSKI. Mr. Howard Carlisle, American Cotton Manufacturers Association.

TESTIMONY OF HOWARD B. CARLISLE, JR., REPRESENTING THE AMERICAN COTTON MANUFACTURERS ASSOCIATION

Mr. CARLISLE. My name is Howard B. Carlisle, Jr. I am director of personnel of the Pacific Mills Cotton-Rayon Division and my home 1s in Spartanburg, S. C. I am appearing here today on behalf of the American Cotton Manufacturers Association. The association represents about 86 percent of the cotton textile industry in the United States. The headquarters of the association are in Charlotte, N. C., and most of the mills included in the association are in the Southern States.

At the outset let me say that I have not had time to thoroughly study the proposed bill. It is, as you gentlemen know, an extremely complex and lengthy document. It was with some difficulty that the association succeeded in getting time for its appearance and we were told that the only time available was today, Monday, January 31.

Consequently, I would respect fully ask that the association be given time to file additional data and statements if a further study of the proposed measure indicates that there are points which we have not covered in this appearance. I am sure that you will agree that this matter is of such vital importance that all industries should give it the most careful attention and present their views in detail to the Congress. Since we cannot make such a presentation on short notice, we make the request that we be allowed to present supplementary

material.

As some of you know, the cotton textile industry is one of the largest employers of labor in the country. At present, the industry is employing about 500,000 persons although employment is somewhat down from the peak period.

As of October 1948, the industry averaged, including overtime an hourly wage rate of $1.12. This might make it appear that the proposed minimum wage rate of 75 cents would not concern the industry. We are, however, vitally concerned and for reasons which I shall try to make plain.

I would like to point out that the proposed minimum is not, in our opinion 75 cents per hour, but is actually $1 per hour. I say this because of the provision in the bill that the Secretary of Labor may, under certain conditions, raise the minimum to $1. It is our experience that such power in the hands of the Secretary would be exercised and exercised speedily. In other words, the minimum would soon be $1, and I think you will agree with me, that minimum wages travel one path-which leads upward.

As I have stated, the average hourly wage rate in the cotton textile industry, including overtime is $1.12, and the straight hourly wage rate is $1.11. But any discussion of wage rates in the textile industry must take into account that the industry is a highly competitive and unstable one. While wage rates are at their peak, some sections of the industry already are in distress. Production in the industry has dropped approximately 20 percent since the first half of 1948. There has been a steady decline in employment since early 1948. For example, there were about 523,000 persons employed by the industry in January 1948. In October 1948, the last month for which figures are available, employment had dropped to 511,000 employees. The average number of hours per employee also had dropped during this period. In January 1948, weekly hours per employee averaged 40.7; in October hours had dropped to 36.9.

There is real distress in parts of the industry. This clearly is revealed by the decline in prices for fabrics and yarns since early

1948.

I shall give you a few examples. In January 1948, print cloth of standard construction sold for 2812 cents per yard. In January 1949. the same print cloth sold for 1512 cents per yard. Combed lawn of standard construction sold for 41 cents per yard in January 1948; it sold for 232 cents in January 1949. Broadcloth of standard construction sold for 38 cents per yard a year ago. Now it is 20 cents. To emphasize what I have said, there is a loss of approximately 45 percent in the items mentioned.

While all price declines in the industry have not been as spectacular as the fabrics referred to, there has been a substantial drop in price within the past year in almost every item made by the cotton textile industry.

While the average is more than $1 per hour, I make the prediction that unless conditions materially improve wage rates within the industry must decline or there will be a steady increase in unemployment among textile workers.

I also would make the prediction that many mills today, both large and small, would have to choose between substantial losses and closing down if the minimum today were $1 an hour. And it is entirely possible that a minimum of 75 cents per hour might within the next few months result in widespread unemployment through inability to pay that wage and operate at a profit.

Recognition of industry's poor position today recently found expression in a decision by an impartial arbiter in the New England area that CIO cotton-mill workers were not due a proposed wage increase.

The textile industry is just emerging from a series of profitable years. I do not have to tell you the reasons for these profits. They are due to wartime conditions. The textile industry had a fairly good year in 1940. Already there were signs of war. The succeeding years have been-for the textile industry-extraordinarily good.

However, textile workers have shared in this prosperity of the industry. In 1939 the average hourly wage rate in the cotton textile industry was 38.4 cents per hour. This rate has risen steadily until, as I have previously mentioned, it is $1.11 per hour, straight time, today.