The figures in table no. 9 are mill margins, which indicate in the case of cotton a margin larger than has obtained for a long period of time. There are further tables on mill margins that will be found in the subcommittee revised report, which I will be glad to send to you. The last figures on profits with which I am familiar in any detail are those of the Federal Trade Commission for the first half of 1936. These figures indicate that at that time there was a higher margin of profit than had existed before, and there was evidence in mill margins of a higher presumptive rate for the last half of 1936 and the early months of 1937. After a study of those profit margins it would seem that the members of the committee might wish to examine the original reports of the Federal Trade Commission or hear from those in the Federal Trade Commission whose staff is familiar with those reports, in order to get a sound interpretation. That, I think, is what is lacking. Mr. HANKIN. We have four factors, namely, the $18 week, the $15 week, the 40-hour week and the 35-hour week. Could you outline to members of the committee and suggest how your figures would determine which would be the most reasonable combination? Mr. HINRICHS. I would first of all attempt to translate those minimum figures and then Mr. HANKIN. I should like to state that in subsection 9 (g) a temporary minimum wage is prescribed for the statute. The other minimum wages are to be determined by the proposed commission. For the purpose of this temporary minimum wage, I should like very much to know what method the committee might use in determining the most reasonable combination. Mr. HINRICHS. I think in the first instance the several combinations ought to be translated into what they mean in effective hourly rates and then those hourly rates which are set up as minima should be compared with the minima established in the codes. I think you can quite safely disregard the wages which are now being paid at less than code minima rates in terms of the economic consequences of any action which you may take. The percentage change between those two gives some indication as to what in the several industries are likely to be the consequences of any given minima that may be established. Then the question is one of a determination, in part through a consultation with the industry, as to what the consequences would be. I should hope to see that analysis carried not only in terms of general statements but carried in specific terms, such as the relation between the total market and sales with one scale of labor costs and those of another scale of labor costs. What you will find after you shall have done that is something I am not prepared to state. My general figures for the various branches of the industry cited on the differences in weekly earnings might have been given in terms of hourly earnings. That would indicate a different response from different industries. Cotton is averaging 39 cents an hour; wool, I think, is averaging approximately 53 cents an hour. Carpet and rugs are averaging about 59 cents an hour. It is quite likely that different branches of the industry will give different responses as to what would be possible in the different and particular branches of the industry. Mr. ELLENBOGEN. I wonder whether you could furnish a table showing average weekly earnings in industry generally. Mr. HINRICHS. Yes; I shall be glad to furnish that. Such information appears regularly in the Monthly Labor Review. I will be glad to see to it that such a table is furnished you. Mr. ELLENBOGEN. Would it be possible to furnish a table giving the value added in the various industries, including the textile industry? Mr. HINRICHS. I do not understand your question, Mr. Ellenbogen. Mr. ELLENBOGEN. I think it would be interesting to know how much value is added to raw materials by the textile worker and how much value is added to the raw materials by workers in other industries. Mr. KELLER. In other words, a pound of cotton is worth 14 cents, but when it is converted into cloth it is worth more; then, ultimately, when it is ready for sale it is worth still more. Mr. ELLENBOGEN. How much does a textile worker add in value. to the raw product with which he works and how much does the automobile worker add to the raw materials with which he works? That is my idea. Mr. HINRICHS. You want to know what the proportionate wages are as a value added in the several industries for which we have weekly earning figures? Mr. ELLENBOGEN. Whatever way you have it available. I want to know the value added by the workers to the raw materials. I should like to have that cover such industries as textiles, steel, automobiles, and other leading industries. Mr. HINRICHS. We shall be glad to do the best we can toward furnishing that information. Mr. KELLER. A 35-hour workweek at $15 a week would mean 43 cents an hour; a 35-hour workweek at $18 a week would mean 51 cents an hour; a 40-hour workweek at $15 a week would mean 37.5 cents an hour; and a 40-hour workweek at $18 a week would mean 45 cents an hour. This means Mr. CHENEY. Mr. Hinrichs, I have noticed this, and perhaps it is up to us to answer the question: Whenever there is a maximum workweek, it seems to me we always find that the mills actually operate less than that time. If, for instance, a mill is on a 40-hour workweek it actually operates 35, 36, or 37 hours a week. Does that hold true, or do your studies show that the actual weekly hour operation of a mill is always less than the maximum set by the code or by law? Mr. HINRICHS. It cannot be more and it may be less. that insofar as you are setting wages on the concept of what it costs to live, it is very dangerous to provide that this minimum amount can only be earned by working the maximum week. If you want workers to earn $15 or $18 a week in 35 hours, you must remember that many of them are not going to get the full 35 hours allowed. You always miss by a little bit, and therefore the minimum wage should be higher than the cost of living study would indicate as a basic minimum, if that is the principle you are following. Mr. CHENEY. Did not the International Labor Conference agree to try to effect a 40-hour week in all the countries? Mr. HINRICHS. That was a technical conference examining the economic and social problems of the textile industry of the world. It was closely related to the discussion of the 40-hour workweek convention at Geneva this year. The question is whether or not the textile industry of the world can afford a 40-hour week. It is a question whether it can afford as little as 40 hours work a week, considering that in some countries a much longer workweek exists. The conference made no positive recommendations. That 40-hour week in textiles is going to be discussed at the International Labor Conference that meets June 2. Mr. DRISCOLL. But the discussion was centered around the question of a 40-hour workweek, was it not? Mr. HINRICHS. Yes; very largely. Many other things were covered. Mr. KELLER. What effect would the paying of time and a half between midnight and 6 o'clock have? I am, of course, against graveyard shifts as an economic matter and a social matter also. I should like to do away with it entirely insofar as we can. I am rather of the opinion that we can do it or lessen it by limiting the possibilities of earning too much by having graveyard shifts and that will tend to discourage the practice. It has occurred to me that if we require the payment of time and a half for all hours worked between 11 p. m. and 7 a. m. that would still allow the graveyard shift if and when it is justified. It has been said that if we make a rule or a law against that shift it may limit a manufacturer who has necessarily to deal with a temporary condition, such as a shift in styles. If we should allow that practice in a case like that, a manufacturer could afford to work that shift and labor also would be benefited. The operator certainly would not use the graveyard shift unless it paid him to do so. What is your judgment about that? Mr. HINRICHS. I am quite sure that the payment of penalty overtime rates rather than the fixing of flat maxima gives a larger degree of flexibility. There ought to be a sufficient penalty so that the practice would be indulged in only under the most favorable market circumstances. I should say that normally the payment of 50 percent more than the going rate for labor would effectively bar the use of such overtime. One could not produce for stock under those conditions. Mr. KELLER. Do you think that would be an effective means of doing away with the abuses of the graveyard shifts? Mr. HINRICHS. The only reason I hesitate to answer in the affirmative absolutely is that I do not know the exact amount by which the overhead of a mill will be reduced by three rather than two shifts. I do not know the balance between the cut in overhead and the increase of 50 percent in labor costs; but a 50-percent increase in labor costs, if not offset, would be a complete barrier. Mr. KELLER. Have you any information that would enable you to calculate whether the overhead might overbalance the 50-percent increase in cost of labor? Mr. HINRICHS. Those who have been working as accountants in the Federal Trade Commission can give you that information much more authoritatively than I can. I shall be glad to try to get that information for you. Mr. KELLER. I understand your language, and I may not understand theirs, therefore, I wish you would get the information for us. Mr. HINRICHS. I shall be glad to do the best I can. Mr. KELLER. Have you finished? Mr. HINRICHS. Yes. Mr. KELLER. If there is nothing further, Mr. Hinrichs, I want to thank you kindly on behalf of the committee for the interesting statement you have made. I am sure it will be very helpful to all of us. If there is nothing further this evening, let us recess until next Tuesday morning at 10 o'clock. (Thereupon, at 4:30 p. m., Wednesday, May 12, 1937, the subcommittee recessed until Tuesday, May 18, 1937.) |