gets 55 cents or $1.40 an hour. A can of Campbell's soup, in a large store, will sell three for a quarter, and in a small store it will sell for 10 cents, and you mean to tell me that one housewife can afford to pay 10 cents as against another housewife who pays 25 cents for three cans? You mean you are attempting to get all the people in the country on an American standard?

Mr. SMITH. Mr. Chairman, I think you have a very excellent point there, if the question of cost of living were confined entirely to this nationally advertised brand thing, which may cost you a variance of a cent difference between Maine and Florida and California, and some place else, but actually that is only a very small item. You will probably find the truck driver who is getting 55 cents lives in a rural area where his rent may be a fraction of what the man living in the highly industrialized area would be, and that his actual cost of living throughout, of what he puts on his table, may be a much higher standard of eating than we are paying here in Washington, but his cost is just a fraction of that. I have traveled out through, as you have, the industrial areas and the rural areas, and there is a great difference in the actual cost of living when you take what can happen to the wage earner's dollar, if you live in the highly populated areas, and how far you can stretch it.

Mr. LESINSKI. That is true, in some instances, but according to the testimony we had here by the Texas citrus growers, they are only getting a penny for a grapefruit, and it is true you can buy them in Washington for three for a quarter, but if you go to Falls Church, or beyond, you will pay 10 cents for that grapefruit, which is the difference you are talking about between a 55-cent truck driver and a $1.40 truck driver. That spread is so large that someone must protect the low-wage earner if we want to bring up the standards of the country at large.

Mr. SMITH. I think you would find the wage of the truck driver who works in the rural areas adjacent to larger cities would not be much different from that received by the truck driver who works out of a place like Salina, Kans., or some place up in Minnesota, or down through some of the outlying areas of California. Workers in places like those have a much different situation from the man who is working in the industrial and rural areas that are very closely associated, and their living costs are almost identical; that is quite true. We can live in Virginia at a little lower cost than we can live in the District of Columbia. And I think you would find the wage the truck driver would get would be almost identical whether he worked in Virginia or in the District of Columbia.

Mr. LESINSKI. That is not always true, because I know there is a difference in wages of $20 a week in a town 20 miles away from a metropolitan town or a manufacturing town, but those are local conditions. The only thing that I am trying to bring out is that the wife of the 55-cent wage earner, in buying certain types of food, must pay just as much, or more, as the wife of the worker who gets $1.40, because in large towns we have large operators, and they buy in large volume, and naturally sell foodstuffs cheaper than the small-town dealer can afford to sell the same items and yet the wife of that lower paid worker is unable to buy the things that the wife of the higherpaid worker can get.

Mr. SMITH. Mr. Chairman, here is a figure we received from Ohio from the Wholesale Grocers' Association in Ohio, that reflects the rural areas in Ohio as compared to your industrial areas. The truck drivers in Ohio average in the metropolitan area $1.26, whereas in the rural areas $2.

Mr. LESINSKI. That is a small differential; that is entirely different. Mr. SMITH. That is a part of the country where the cost of living would be probably pretty well reflected in those differences. In Ohio the warehousemen in the metropolitan districts gets $1.16, as against 95 cents in the rural areas, but this 95 cents undoubtedly comes from outlying districts, and not anywhere near rural areas.

Mr. LESINSKI. May I call the gentleman's attention to one more question: When he made the statement about the great number of wholesalers falling by the wayside-in prewar days I do not think they got more than 6 or 7 cents for a can of soup, and it went up as high as 16 and 17 cents, and he did not fall by the wayside; he just advanced the price.

Mr. SMITH. Mr. Chairman, may I suggest here, as I pointed out when I ad libbed in the statement-it was not written in there-we said on page 3 that all the information we have indicates that such wholesalers could not absorb such increased wage costs, and I added "in their establishments."

In other words, if the price of the goods which they are distributing goes up, that price which they pay is usually reflected in the price which they must charge, but the added costs of their own operations are the costs which is almost impossible for them to pass on.

Mr. LESINSKI. How is it they are able to pass it on in the larger communities, and they cannot pass it on in the smaller communities! Mr. SMITH. It is a matter of consumer resistance.

Mr. LESINSKI. What is the difference between the rising cost of purchase and the rising cost of labor?

Mr. SMITH. Of course, in your metropolitan areas, I think, you will find that your wages are well above the suggested minimum. The thing that this bill will primarily hit, if it should be approved as written, would be your rural areas, and they would be hit very hard. Mr. LESINSKI. That still does not answer the question. That is all. Mr. Irving?

Mr. IRVING. I do not think I have any questions.

Mr. LESINSKI. Thank you, Mr. Smith.

Mr. SMITH. Thank you, Mr. Chairman.

Mr. LESINSKI. You may proceed, Mr. Prince.

TESTIMONY OF GREGORY S. PRINCE, ASSISTANT GENERAL SOLICITOR, ASSOCIATION OF AMERICAN RAILROADS

Mr. PRINCE. My name is Gregory S. Prince and my office is in the Transportation Building, Washington, D. C. I appear here for the Association of American Railroads, a voluntary organization including within its membership railroad companies operating more than 95 percent of the total class 1 mileage in the United States.

My statement will deal with only two features of the committee print having particular application to the railroads. The most important of these features results from section 13 (c) (2) of the committee print or section 13 (d) (2) of H. R. 2033, which are amend

ments of the present section 13 (b) (2) having to do with the classes. of employees exempted from the maximum-hours provisions of section 7. The effect of such an amendment would be the immediate establishment, upon enactment, of a standard 40-hour week for all railroad employees other than those employed on a "line-of-road" train. Thus there would be brought under the maximum hours provisions of the act approximately 1,000,000 so-called nonoperating railroad employees and a substantial proportion of the 300,000 so-called operating employees. The basic workweek in the railroad industry for all employees today is 48 hours.

We think that this method of establishment of a standard workweek for railroad employees is unnecessary and impracticable and will result in much confusion.

It will be helpful at the outset, I think, to refer briefly to some aspects of the history of the Fair Labor Standards Act of 1938. That act provided in section 7 for the establishment in industry generally of a 40-hour workweek. The effective date of section 7 was 120 days after the enactment of the act. A standard workweek of 44 hours was provided during the first year after the effective date of the section; a standard workweek of 40 hours after the expiration of the second year from the effective date. Thus, there was no effort, with respect to industry generally, to reduce the workweek to 40 hours by one. single stroke and immediately upon enactment of the measure. The workweek was reduced, as I have shown, by steps to 44, to 42, and finally to 40, and even the original section's reduction was not made effective until 4 months after the enactment of the bill.

Furthermore, economic conditions today are entirely different from what they were at the time of the passage of the Fair Labor Standards Act in 1938. Then there was a tremendous surplus of labor and substantially all of the industries then placed on a 40-hour week were actually working their forces less than 40 hours a week. The immediate impact on them was practically negligible and the adjustments in operations which were required were very slight and yet, as pointed out, the 40-hour week was put into effect only gradually.

Moreover, with respect to manufacturing concerns, which were working more than 40 hours a week, they had the alternative of closing down at the end of 40 hours to avoid overtime payments. In the event. of the establishment of a 40-hour week by statute for the railroad industry they would not have that alternative. The railroads are a continuous service industry and they are obliged to continue their operations. Many people are prone to think that the only employees on a railroad who are obliged to work on Saturday and Sunday in the interest of furnishing continuous services are the employees employed on the line-of-road trains. This, however, is far from the fact because in order to operate trains a host of other employees must be performing their tasks. Yardmen must be there to operate the yards; shopcraft employees other than in the back shops must be on the job to service equipment; train dispatchers to direct the movement of trains, car cleaners, ticket sellers, and many others to perform their respective tasks. In order to give continuous service without working anyone over 40 hours, the railroads would have to hire additional men and set up a staggered workweek. In a tight labor market such as we have now, this is not easy of accomplishment because finding the men and giving them the necessary training will take time. Not only must the

railroads obtain the services of additional men, but they would also be obliged to make many modifications of their present methods of operation. They would have to set up new working schedules, new assignments of work, revise innumerable working rules which are geared to the present 48-hour week, and make many other adjust

ments.

More fundamental than the question of the time element is a consideration of the reason which led to the exemption of all railroad employees from the hours provisions of the Fair Labor Standards Act at the time it was originally passed. This exemption or exclusion of railroad employees met the views of both railroad management and railroad labor. When the original bill was under consideration, representatives of both railroad management and labor took the position that the provisions establishing the short workweek should not apply to the railroad industry and that any question of a reduced standard workweek in that industry should be left to collective bargaining under the terms of the Railway Labor Act. For example, at the joint hearing before the Senate Committee on Education and Labor and the House Committee on Labor, on S. 2475 and H. R. 7200, bills forming the basis of the Fair Labor Standards Act of 1938, Mr. Charles M. Hay, speaking on behalf of the railroad labor, had this to say:

These gentlemen, who understand their problems much better than I, have authorized me to come before you and ask that they be exempted from the operations of this act, and they ask this because they rely upon the principle of collective bargaining.

The reasons which prompted both railroad labor and management to take such a position at that time and which led Congress to follow their suggestion apply with equal force today. Both parties recognized that legislation was not a suitable means of dealing with the question of the establishment of a proper workweek in the railroad industry. Their intimate familiarity with the many working rules painstakingly evolved through collective bargaining which were interrelated with the basic workweek made them realize that these rules would need adjustment at such time as there was to be a reduction in the basic workweek. They knew also that this would best be done by the machinery through which such rules had originally been established, namely, through collective bargaining under the Railway Labor Act. This is borne out by the subsequent course of events.

No effort has ever been made by the railway labor organizations so far as we know to bring railroad employees under the maximum hours provisions of the Fair Labor Standards Act. In 1948, when the 1,000,000 nonoperating railroad employees decided to seek a reduction in the workweek from 48 to 40 hours, they resorted not to Congress but to collective bargaining under the Railway Labor Act.

Coupled with this demand for a reduction in the basic workweek from 48 to 40 hours was a demand that there be no accompanying reduction in weekly pay and, in addition, a further increase in hourly rates of pay was demanded. The dispute growing out of this request has been through all the processes of the Railway Labor Act, including, ultimately, submission to an Emergency Board appointed by the President of the United States. As a result of the demand for a reduced workweek, the complexities of the case were such that the parties testified at great length and the hearing before the Emergency

Board resulted in a record of approximately 5,000 pages exclusive of exhibits. The Emergency Board, on December 17, 1948, rendered a report recommending a reduction in the basic workweek from 48 hours to 40 hours with no reduction in pay for substantially all of the 1,000,000 nonoperating railroad employees, effective September 1, 1949. The Board also recommended an increase in hourly rates of pay retroactive to October 1, 1948. The carriers in their showing before the Emergency Board indicated the many working rules which were based upon a basic workweek of 48 hours and how these rules would have to be changed if the basic workweek were reduced to 40 hours. The Board recognized that the working rules were dependent upon the length of the basic workweek, and accordingly coupled its recommendation for the 40-hour week with the following recommendations:

3. With respect to rules changes.

(a) That the parties agree before September 1, 1949, on necessary rules revisions through direct negotiations, as they customarily do when they make their agreements; included among the rules which will need revision to make them conform to the staggered 40-hour workweek recommended are those dealing with the following matters: Amount of weekly and monthly guaranties; sick leave; vacations; relief days, including their extension to crafts which do not now have them, and Saturday afternoon relief; punitive pay for Sunday as such; apprenticeship time.

Subparagraph (b) is not pertinent to our discussion.

(c) That there may be reasons for making changes in rules on distribution of overtime, changing of shifts and starting time.

(d) That the working rules should conform to the revised workweek and, therefore, employees are not to have the option of continuing former rules which they may regard as more favorable but which are inconsistent with this intent.

In order that you may have a better understanding of what is involved in some of these working rules which will need revision, let me explain the operation of one of them. The contracts of employment of certain classes of nonoperating employees contain what is known as a 6-day guarantee rule-in other words, six 8-hour days of work a week or 48 hours. If the railroads went to a standard 40-hour week, such a rule providing for a guarantee of 48 hours of work a week would obviously be inappropriate and inconsistent with a standard 40-hour week. Yet, these working rules being incorporated in collective-bargaining agreements, railroad management cannot simply change them through its own independent action but must bargain with its employees for such changes.

In view of the complexity of the situation and the necessity for working out changes in working rules which are dependent upon the basic workweek, the Board considered it advisable to postpone the effective date of its recommendations with respect to the reduction of the workweek to September 1, 1949, in order that there might be an orderly transition. Negotiations between railroad labor and railroad management for the purpose of reaching an agreement in the light of the Emergency Board's report are now in progress. Amendments of the type proposed in this committee print affecting one phase of an integrated report recommending a settlement of the entire existing dispute would only serve to confuse the situation and to interfere with the orderly settlement of this dispute pursuant to the Railway Labor Act.