AMENDMENTS TO THE FAIR LABOR STANDARDS ACT OF 1938 THURSDAY, FEBRUARY 3, 1949 HOUSE OF REPRESENTATIVES, COMMITTEE ON EDUCATION AND LABOR, Washington, D. C. The committee met, pursuant to adjournment, at 11:15 a. m., Hon. John Lesinski (chairman) presiding. Mr. LESINSKI. The committee will come to order. The first witness is Alfred Dorman, representing the Georgia Wholesale Grocers' Association. TESTIMONY OF ALFRED DORMAN, PRESIDENT, ACCOMPANIED BY H. E. LONDON, SECRETARY, GEORGIA WHOLESALE GROCERS' ASSOCIATION, MACON, GA. Mr. DORMAN. Mr. Chairman, and gentlemen, if I may, I desire Mr. H. E. London, secretary of the Georgia Wholesale Grocers' Association, to sit in with me on this, as there may be some questions that you would like to ask me that he could possibly answer better. Mr. LESINSKI. What is the name? Mr. DORMAN. H. E. London, L-o-n-d-o-n. Mr. Chairman, we appreciate very much you people allowing us the privilege of appearing before your body. Mr. LESINSKI. You may proceed. Mr. DORMAN. My address is Statesboro, Ga. I am testifying today as an operator of a wholesale grocery concern which consists of four branches operated as partnerships and as president of the Georgia Wholesale Grocers' Association with offices at Macon, Ga. The Georgia Wholesale Grocers' Association is a nonprofit organization consisting of a membership of 106 wholesale grocers who operate in the State of Georgia. In addition to the 106 wholesale grocers who operate in the State of Georgia there is an associate membership of 68 brokers and manufacturers of foods and related items. With the exception of one, all the grocers who are members of the Georgia Wholesale Grocers' Association are service wholesalers. This means that they customarily receive merchandise in relatively large quantities, store it in their warehouses, sell it through the use of outside salesmen and deliver the merchandise on their own trucks. Members vary in size of operations from 1 concern having 5 branches, 26 traveling salesmen and doing $10,000,000 worth of business, to a house having I salesman and doing a volume of $350,000,000 per year Mr. LESINSKI. May I correct you? Is that $350,000,000, or $350,000? AMENDMENTS TO THE FAIR LABOR STANDARDS ACT OF 1938 THURSDAY, FEBRUARY 3, 1949 HOUSE OF REPRESENTATIVES, COMMITTEE ON EDUCATION AND LABOR, Washington, D. C. The committee met, pursuant to adjournment, at 11:15 a. m., Hon. John Lesinski (chairman) presiding. Mr. LESINSKI. The committee will come to order. The first witness is Alfred Dorman, representing the Georgia Wholesale Grocers' Association. TESTIMONY OF ALFRED DORMAN, PRESIDENT, ACCOMPANIED BY H. E. LONDON, SECRETARY, GEORGIA WHOLESALE GROCERS' ASSOCIATION, MACON, GA. Mr. DORMAN. Mr. Chairman, and gentlemen, if I may, I desire Mr. H. E. London, secretary of the Georgia Wholesale Grocers' Association, to sit in with me on this, as there may be some questions that you would like to ask me that he could possibly answer better. Mr. LESINSKI. What is the name? Mr. DORMAN. H. E. London, L-o-n-d-o-n. Mr. Chairman, we appreciate very much you people allowing us the privilege of appearing before your body. Mr. LESINSKI. You may proceed. Mr. DORMAN. My address is Statesboro, Ga. I am testifying today as an operator of a wholesale grocery concern which consists of four branches operated as partnerships and as president of the Georgia Wholesale Grocers' Association with offices at Macon, Ga. The Georgia Wholesale Grocers' Association is a nonprofit organization consisting of a membership of 106 wholesale grocers who operate in the State of Georgia. In addition to the 106 wholesale grocers who operate in the State of Georgia there is an associate membership of 68 brokers and manufacturers of foods and related items. With the exception of one, all the grocers who are members of the Georgia Wholesale Grocers' Association are service wholesalers. This means that they customarily receive merchandise in relatively large quantities, store it in their warehouses, sell it through the use of outside salesmen and deliver the merchandise on their own trucks. Members vary in size of operations from 1 concern having 5 branches, 26 traveling salesmen and doing $10,000,000 worth of business, to a house having I salesman and doing a volume of $350,000,000 per year Mr. LESINSKI. May I correct you? Is that $350,000,000, or $350,000? Mr. DORMAN. Correction. I would like to do $350,000,000 worth of business, but it does not happen like that in the wholesale grocery business. In a State such as Georgia, the wholesale grocer is necessary to the proper distribution of foods, for excepting the larger population centers no other type of business is capable of performing this function. The cost of operating a distributing business, such as that engaged in by the service wholesale grocer, is affected to a large extent by labor costs, and the net profit remaining to the operator after all expenses are paid is relatively low. Studies have shown that there is a little variation in the cost of operation between the wholesale grocers of different sizes or in different locations. In Georgia, the average cost of operation is between 7 and 8 percent of total gross sales. Likewise, there is little difference in the net profit earned by the grocery operators because of variation in size or location. The wholesale grocery industry in Georgia pays its help on an average as high, or higher, than other businesses in the same markets. One wholesale grocery concern which employs approximately 150 people pays its labor between 60 cents per hour and $1.25 per hour. Sixty percent of this labor is employed at a rate of 60 cents per hour and 5 percent is employed at a rate of $1.25. The balance, or 35 percent, receive from 80 to 90 cents per hour. Other wholesale grocers pay their labor about the same rates except in the smaller population centers where the cost of living is lower, and where the minimum wage per hour is lower than 60 cents per hour and the maximum rate of pay is an amount of less than $1.25 per hour. Speaking for my company, and the members of the Georgia association, we oppose an increase in the minimum rate to 75 cents per hour for the following reasons: 1. Such an increase would interfere with the orderly and fair marketing of goods in commerce handled directly by the wholesale grocers because it would so increase the cost of operation that the small profit presently being made by wholesale grocers would be entirely dissipated, thereby forcing ruin upon many of the small local operators. This would shut off an important part of the supply of food and related products from consumers in these areas. 2. Such an increase in minimum wage would lead to labor disputes burdening and obstructing commerce and the free flow of goods in commerce as it relates to the wholesale grocer because it would be impossible to increase the wages of all employees in all categories in the same proportion, and it has been found that there is more disturbance because of the differences between those wages than because of unsatisfactory wages. I would like to point out that the wholesale grocery industry in Georgia has had but one strike in one house in the last 5 years, and this strike occurred in a community where the minimum wages are higher than the average in the State of Georgia. 3. Unlike most producing industries, the wholesale grocer must keep his business open more than 40 hours per week. He must maintain a warehouse crew for at least 10 hours per day in order to serve those customers who come to the warehouse for commodities even though these employees are not occupied at all times. This situation would make it necessary to pay time and one-half for periods when the employee was not working but his attendance was necessary. The only alternative would be to arrange for only 40-hours work for any employee. For example, one wholesale grocer who employs 49 persons and does about two and one-quarter million dollars per year, pays wages ranging from 50 cents per hour to 75 cents per hour. This operator permits an employee to work approximately 60 hours per week which gives him take-home pay from $35 to $40 per week. If the minimum wage is raised to 75 cents per hour, he will be forced to do away with all overtime work so that his employees would receive takehome pay of $30 per week instead. 4. An increase in the minimum wage to 75 cents per hour would necessitate a release of a number of employees now being given a wageearning opportunity. There are many tasks in the wholesale grocery business wherein an employee cannot earn this amount of money. One example is the stamping of cigarettes for which the wholesale grocer is allowed 3 cents per carton. At the present time, many of our members employ elderly persons who are not employable in most industries or school boys between the ages of 16 and 18 who are permitted to earn part pay to assist them in gaining their education. Most wholesale grocers cannot afford to pay 75 cents per hour for this type of labor. Wholesale grocers will be forced to eliminate from their pay rolls all except the most efficient workers. There is no place in industry in these locations for the employment of the submarginal workers who will be released. 5. The raising of the minimum wage to 75 cents per hour will interfere with the orderly promotion of employees because in nearly all instances, the minimum will, of necessity, approach the maximum, thereby creating further dissension among our workers. 6. It has been shown that the wholesale food distributor cannot absorb any important increase in wages and the passing of these wages to the cost of merchandise sold by the wholesale grocer will increase the cost of living, which will have the effect of modifying a pledge of the present administration to reduce the cost of living. 7. Extension of the coverage of the Fair Labor Standards Act to include retail stores owned by wholesale grocers and retail stores doing more than a half million per year will place these stores in an unfavorable operating position with respect to other retail stores selling the same products but not having the same requirements. In conclusion I wish to state, on behalf of the industry which I represent, that the grocery industry pays fair wages and has a favorable record of good labor relations. Wholesale grocers have taken a personal interest in their employees, have provided health and hospitalization insurance, and have given an opportunity for advancement to their workers. Many wholesale grocer salesmen who are today earning salaries ranging from $3,000 to $5,000 per year got their start in this business as warehouse helpers or truck-driver helpers. If it becomes necessary to pay 75 cents per hour for all labor involving the operation of the wholesale grocery house, it will no longer be possible for the grocers to offer these opportunities to aspiring young people. We earnestly urge that this committee consider all classes of people involved in this legislation and refuse to saddle our industry with a minimum-wage level which will not work good to the people of this country but will serve as an ill. |