8. What is the ultimate maximum hourly wage paid such operators under your wage scale? (a) At exchanges having less than 500 stations, 40 cents. (b) At exchanges having from 500 to 999 stations, 9. If the 500-station exchange exemption is repealed and a 65-cent minimum hourly wage for operators must be paid, how much additional revenue will you require from subscribers in order to have the same margin between operating revenues and expenses as at present? (a) At exchanges having less than 500 stations, $2,592 yearly. (b) At exchanges having from 500 to 999 stations, (c) How much would be required if the minimum wage were made 75 cents? (1) At exchanges having less than 500 stations, $3,456. (2) At exchanges having from 500 to 999 stations, 10. Express frank opinion as to probable subscriber reaction to rate increases necessary to produce the additional revenue referred to in question No. 9: They would raise hell. This would mean an increase of $1 per month per subscriber. Present rate is $2 for residential phones. 11. What is the prevailing hourly wage in your town for skills comparable to those required of telephone operators, such as those of clerks in stores, offices, etc.? (Indicate types of occupations.) General stores, 25 cents an hour. TYGART VALLEY TELEPHONE Co., Please return this immediately to: United States Independent Telephone Association, 411-17 Munsey Building, Washington 4, D. C. WEST VIRGINIA LAUNDERERS AND DRY CLEANERS ASSOCIATION, Hon. HARLEY O. STAGGERS, House Office Building, Washington, D. O. SIR: We wish to call to your attention a matter of vital importance to the laundry and dry cleaning industry. The Wage and Hour Division has generally exempted laundries and dry cleaners because of intrastate activities. However, because of border cities many cases have arisen when trucks pick-up and deliver laundry and dry cleaning in adjoining States. In order to eliminate doubt and confusion we would suggest that the following be inserted in the law: Laundries and dry cleaners be specifically exempted from the application of the wage-and-hour law-or Laundries and dry cleaners be subjected to the law only if 25 percent or more of their gross income is derived from interstate business. We are sure you can appreciate the soundness of this request. This will eliminate departmental rulings which are subject to change without notice and which can place a heavy financial burden upon an uninformed businessman. May we have your cooperation in writing the above specifically into the law? WEST VIRGINIA LAUNDERERS AND DRY CLEANERS ASSOCIATION, Hon. HARLEY O. STAGGERS, DUNCAN TELEPHONE CO., Thomas, W. Va., January 25, 1949. House of Representatives, Washington, D. C. DEAR MR. STAGGERS: I have been following with interest the progress of our Eighty-first Congress and what our various representatives propose to do. Particular attention is given to the Lesinski and Thomas bills which shall be brought before the House and Senate within the next few days. Chairman Lesinski (Michigan) of the House Labor Committee has introduced one of the most radical and harmful bills relating to wage-hour matters ever presented. The bill would eliminate the exemption written into the law in 1939 applying to "any switchboard operator employed in a public telephone exchange which has less than 500 stations." In its place the bill would merely exempt "any switchboard operator employed in a public telephone exchange having only one operator on duty at a time." The Lesinski bill would increase the minimum wage from 40 cents to 75 cents an hour and provide for the use of industry committee set-ups to push the minimum to $1 as rapidly as economically feasible. It would make the statute of limitations for bringing suits for back wages 4 years instead of 2 years. It would make the Administrator of Wages and Hours subject to direction and control of the Secretary of Labor. It would produce a number of other significant changes in the existing law. In the Senate bill S. 248 introduced by Senator Thomas (Utah) is another bill that would bury our exemption altogether and would likewise revise the Wage-Hour Act in various other respects including the prescription of a 75cent minimum. It is vitally necessary in the interest of survival of the small independent telephone company that the Wage Hour Act as it now stands should not be repealed. We, the Duncan Telephone Co., of Thomas, Tucker County, W. Va., serve the towns of Thomas, Davis, and Parsons. These towns range in population from 2,300 to 3,000. We employ six operators in Parsons, four in Davis, and four in Thomas. Our wage of $60 a month is based on the prevailing hourly and monthly wage for skills comparable to those required of telephone operators in these towns. At the present time we have 566 subscribers. We are now in the midst of rebuilding our entire plant in Parsons which will enable us to take care of many more subscribers. To do this we had to put up every cent we could beg, borrow, and steal, then place a first-mortgage loan against our company for the balance. If the Lesinski bill is passed our operating revenue will have to be increased $2,160 monthly. This revenue can come from but one source, the subscriber. Our rates would have to be increased in such proportion that it's doubtful if the public service commission could or would grant such an increase, for such an increase would make our rates higher than the Bell Telephone Co.'s. And the Bell, God knows, as large as it is, is having considerable trouble trying to get its recent petition for rate increase granted. We would either have to convert our Thomas and Davis exchanges to dial, which we are financially unable to do, curtail our service and not extend our system to take care of the farmer and miner in the coal camp. The sum of it all is, we'd just about have to go out of business. Anything you might do in this matter will be greatly appreciated. Very truly yours, GERALD H. PARKS, President. Mr. LESINSKI. The next witnesses appearing are from the Department of the Army. STATEMENT OF BRIG. GEN. PAUL F. YOUNT, ASSISTANT CHIEF OF TRANSPORTATION OF THE ARMY, REPRESENTING THE NATIONAL MILITARY ESTABLISHMENT General YOUNT. I represent Mr. Forrestal. My name is Brig. Gen. Paul F. Yount, Assistant Chief of Transportation of the Army, and I am representing the National Military Establishment. The prepared remarks I have to present to the committee have the clearance of the Bureau of the Budget. If you are ready, Mr. Chairman, shall I read the remarks here? Mr. LESINSKI. You may proceed. General YOUNT. Thank you. My remarks are directed to proposed legislation, such as H. R. 858, to amend the provisions of the Fair Labor Standards Act relating to the computation of overtime compensation which would nullify the effect of the decision of the United States Supreme Court in Bay Ridge Operating Company versus Aaron. The National Military Establishment is interested in this proposed legislation principally because of its effect on stevedoring and related services procured from contractors who follow the wage practices set out in collective-bargaining agreements with the longshoremen's unions. The extent of the interest of the Military Establishment in the stevedoring industry is shown by the following figures: During the period July 1, 1942, to January 31, 1945, the Army Transportation Corps made payments aggregating approximately $266,126,728 to stevedoring contractors in connection with the loading and discharging of military supplies in the zone of the interior (continental United States exclusive of Alaska). The following payments have been made to stevedoring contractors since that date for handling military supplies: Feb. 1, 1945, to June 30, 1945. July 1, 1946, to June 30, 1947. July 1, 1947, to June 30, 1948- Total___ $41,946, 630 42, 784, 567 14. 786, 205 10, 431, 566 6, 017, 520 115, 986, 488 In addition, the Army Transportation Corps has handled the ocean shipment of supplies for occupied areas, foreign-aid cargoes, and shipments for other Government agencies the stevedoring costs on which have aggregated approximately $53,105,581 since VE-day. The figures do not include stevedoring costs incurred in the Territories and pos sessions of the United States where the Fair Labor Standards Act is also applicable nor stevedoring in foreign countries. Neither do the figures include the stevedoring costs in certain Air Force material contracted for directly by the Air Force. The Navy Department has also procured a large amount of stevedoring services by contract. The enactment of the proposed legislation is a matter involving issues of national labor, economic, and industrial policy. For that reason the National Military Establishment limits its comments to the effect of the decision of the Supreme Court in the Bay Ridge case, and, consequently, the anticipated effect of the enactment of or failure to enact the proposed legislation, upon the activities of the National Military Establishment and upon the stevedoring industry as an instrument in our national-defense system. I do not feel qualified to comment upon the desirability of enacting the proposed legislation from the standpoint of the impact on national labor, economic, and industrial matters. It seems appropriate, however, that Congress be advised of the fiscal and administrative effects which the proposed legislation will have upon the activities of the Military Establishment. Litigation of the kind of which the Bay Ridge Operating Company v. Aaron (334 U. S. 446) is representative began in 1944, testing the question of whether the overtime practices of the longshore industry complied with the Fair Labor Standards Acts of 1938. Most of the longshore work going on at that time was being performed under contracts with the War Department, the Navy Department, and the War Shipping Administration. Government stevedoring contractors threatened to cancel their contracts, which they would have been legally authorized to do under the terms of their contracts, unless they were protected by the Government against the risk of liability in the event of an adverse court decision. The matter was the subject of considerable discussion between the interested Government agencies who concluded that they did not desire their contractors to start paying "overtime-on-overtime" unless and until there was an authoritative court decision requiring such payment. Accordingly, the three principal Government agencies involved, the War and Navy Departments and the War Shipping Administration, amended their stevedoring contracts effective as of February 1, 1945, by the addition of a clause providing that the contractor would be reimbursed for any overtime he was required to pay in excess of one and one-half times the straighttime rate in applicable collective-bargaining agreements, together with normal liquidated damages under the Fair Labor Standards Act, employees' attorney fees, court costs, and related taxes and insurance. Shortly thereafter the same clause was included in contracts covering other water-front services. All contracts for stevedoring and related services made by the Transportation Corps since February 1, 1945, have contained the article providing for reimbursement for possible liability for so-called double overtime. At the same time that the War and Navy Departments and the War Shipping Administration included the double overtime reimbursement clause in their contracts, the three agencies decided to request the Department of Justice to take over the defense of these suits until the basic issues had been adjudicated finally by the Federal courts, and to cooperate fully with the contractors against whom such suits were filed. The question of reimbursing stevedoring contractors for liability for double overtime applicable to work performed prior to February 1, 1945, it was agreed would be given further consideration after the legal liability of the contractors was determined finally by a court of last resort, such further consideration to be based upon the facts and circumstances as they existed at that time. Accordingly, the principal liability of the Department of the Army will have accrued since February 1, 1945, and with respect to that portion of the liability, as indicated above, there is little or no question of the reimbursement responsibility of the Department. The reimbursement responsibility of the Department with respect to any liability accruing before February 1, 1945, has not yet been determined although inquiries have been made from contractors in that respect. Without a contract-by-contract, case-by-case analysis which, within any reasonable limitations of time, would be very difficult, if not impossible, the Transportation Corps is unable to estimate the extent of its reimbursement liabilities in this matter. The application of the "good faith" defenses under the Portal-to-Portal Act may finally result in a substantial reduction in the amount of the potential liability. After considerable investigation, however, it has been decided that no intelligent estimate can be made as to the amount of the Transportation Corps potential liability. It certainly would be substantial. The National Federation of American Shipping has estimated that the longshore industry is subject to a large potential liability where the liability is not reimbursable under Government contracts or otherwise and has estimated this liability as exceeding the liability under Government contracts. If such is in fact the case such a large liability probably would result in bankrupting a large portion of the stevedoring industry which would have an adverse effect upon national defense. The existence of a financially sound stevedoring industry is considered essential to national defense. In addition to overcoming the fiscal effects indicated above, enactment of the subject bill would have certain very desirable administra tive benefits. For example, if the stevedoring industry continues the practice of paying "as such" overtime and complies with the Bay Ridge decision, this means the overtime rates in the stevedoring industry to vary from individual to individual for the same classifications of work and from week to week for the same individual. An employer might have as many different regulate rates and overtime rates as he had employees and these rates could vary from week to week. A stevedoring operator could not tell until the end of the week what was the regular rate and the statutory overtime rate for each of his employees. This means that neither the employer nor the employee would know what the employee's wage rate was after the employee had reached 40 hours' work for the week. In stevedoring, wages plus pay-roll taxes and insurance represent the principal cost and there is a very close relationship between the wage rates paid by the stevedoring operator and the prices charged by him for stevedoring services. A stevedoringo perator cannot quote prices without knowing his wage rates. Aside from the heavy administrative burden of keeping pay-roll records on rates fluctuating from individual to individual and by individuals from week to week, the stevedoring operator who rendered services to several different customers during the same week would find it next to impossible to determine wage rates applicable to the work performed for his different customers during the same week. The application of the Supreme Court decision to the present wage structure for the stevedoring industry will place a serious administrative burden on the Transportation Corps in contracting for stevedoring services due to the difficulty in time check and auditing to determine the correctness of the contractor's charges for stevedoring services. The administrative burden on the contractor necessarily would involve an increase in his overhead expenses which would be reflected in higher prices for stevedoring services. This situation, it is felt, inevitably will involve the stevedoring industry in troublesome labor relations resulting from changes in the wage practices or in expensive and burdensome administrative procedure in computing and paying overtime. Since the decision of the Supreme Court in the Bay Ridge case, difficulty has been experienced in negotiating longshore wage agreements on both coasts. On the Pacific coast an 80-day injunction was followed by a coast-wide longshore strike lasting for approximately 212 months. On the Atlantic coast and Gulf coast a coast-wide longshore strike of short duration followed an 80-day injunction. New longshore wage agreements have not as yet been signed on either the Pacific or the Atlantic coasts and I am informed that this is due in a large part to the difficulty in working out rules relating to the computation of overtime which will conform to the Fair Labor Standards Act as interpreted by the Supreme Court in the Bay Ridge case. The unsettled labor conditions in the stevedoring industry arising out of the Bay Ridge decision have subjected the Transportation Corps to serious difficulties in the transportation overseas of supplies required for troop support as well as for foreign aid shipments. These difficulties are not yet over. When new longshore wage agreements are executed it may be necessary to go through the burdensome process of making retroactive adjustments on stevedoring contracts. |