STATEMENT OF HON. PETER H. DOMINICK, A U.S. SENATOR FROM THE STATE OF COLORADO

Although most of the witnesses will be addressing themselves to S. 1861, which is essentially the same as the bill reported by the committee last year, I would like to comment briefly on the other bill which is pending before this subcommittee S. 1725. S. 1725, which I introduced for myself and my distinguished colleague from Ohio, Mr. Taft, is similar to the bill we offered last year as a substitute for the committee bill. It does, however, contain several significant changes.

First, it provides for somewhat larger increases in minimum wage rates. Under this bill, the minimum wage for nonagricultural employees would be increased from the present level of $1.60 an hour to $2.30 an hour in five steps stretched out over a 4-year period. The minimum wage would be raised to $1.80 an hour on the effective date of these amendments (60 days after enactment), to $2.00 an hour a year later, to $2.10 an hour 2 years after the effective date, to $2.20 3 years after the effective date, and to $2.30 4 years after the effective date. Assuming these amendments were to go into effect this year, the minimum wage for nonagricultural employees would reach $2.30 an hour sometime in 1977.

Unlike previous increases in minimum wage rates, these increases would apply equally to all nonagricultural employees within coverage of the Fair Labor Standards Act, regardless of when they were first covered. I understand why it is necessary to phase in newly covered businesses at lower rates initially, but I have never been able to understand why it makes sense to perpetuate the gap. I think the increases this bill proposes are moderate enough to avoid undue hardship on those industries first brought within coverage of the Fair Labor Standards Act by the 1966 amendments.

This bill would increase the minimum rate for farmworkers from its present level of $1.30 an hour to $1.90 an hour in three steps. It would be raised to $1.50 on the effective date, to $1.70 a year later, and to $1.90 a year after that.

The minimum rate for employees in Puerto Rico and the Virgin Islands would be increased by 37.5 percent above the most recent rate established by the special industry committees for each industry. The increase would be in three steps of 12.5 percent each, the first taking place on the effective date of these amendments, the second 1 year later, and the third a year after that. The total increase would be roughly comparable to that of employess on the mainland, and the existing industry committee system under which minimum wages are established on an industry by industry basis would be preserved.

I think the wage increases proposed in this bill are reasonable, and are stretched out over long enough periods of time that they could be absorbed without great inflationary impact on the economy. They are based on the recognition that excessive increases have adverse inflationary and unemployment effects, and reflect an effort to minimize those effects.

At a time when unemployment is high, and inflation is soaring, we ought to move very carefully-particularly since those who are most vulnerable to the inflationary and unemployment effects of excessive minimum wage increases are those we are trying to help-low-income workers.

The second difference between this bill and the substitute we sponsored last year is that this bill would extend minimum wage coverage to some 4.9 million Federal, State, and local government employees not now covered by the Fair Labor Standards Act. Coverage would not be extended to military personnel, professional, executive and administrative personnel, employees in noncompetitive positions, or volunteer employees such as those in the Peace Corps and VISTA.

At present, about 3.3 million Federal, State, and local employees are covered for minimum wage purposes. The extension of basic minimum wage coverage to additional Government employees, since it does not include overtime coverage, would have a relatively slight cost impact. The wage levels of all Federal employees to whom coverage would be extended are above the current minimum wage. A 1971 report of the Department of Labor indicated that wage levels for State and local government employees not covered by the act are on the average, substantially higher than those of workers already covered. The bill would provide for no other extensions of coverage, and would not revise existing exemptions. Before any attempt is made to revise the many complex exemptions which have been carved out for various industries, I think Congress needs more facts. Accordingly, the bill would require the Secretary of Labor to do a comprehensive study of the exemptions and submit to Congress within 3 years a report containing recommendations as to whether each exemption should be continued, removed, or modified.

The youth differential provision of this bill is considerably narrower in application than the provision contained in the substitute. First, the differential rate would be 85 percent of the applicable new minimum rates, rather than 80 percent as previously. Second, for youth under 18, the differential rate could be paid only during the first 6 months of employment. Full-time students would be eligible for the youth differential, but only for part-time work-not more than 20 hours per week-except where they are employed at the educational institution they are attending. Students working full-time at offcampus jobs during vacations would not be eligible for the youth differential rate.

The narrowed application of this youth differential provision should meet the objections of those who fear that a differential rate for youth will reduce adult employment opportunities. Few adults seek the kinds of part-time jobs which are held by students. The 6-month limitation would further reduce the already minimal possibility of competition between adult workers and teenagers for low-skilled jobs. This provision would encourage employers to provide inexperienced young workers with job training opportunities necessary in order for them to acquire marketable job skills. I feel strongly that a youth differential provision is essential in order to insure that the minimum wage increases we are considering do not eliminate existing job opportunities for youth, thus worsening their already high unemployment rate-about 15 percent.

STATEMENT OF HON. FRANK CHURCH, A U.S. SENATOR FROM THE STATE OF IDAHO

Mr. Chairman, I appreciate the opportunity to testify today on legislation to amend the Fair Labor Standards Act and other laborrelated proposals.

As chairman of the Senate Committee on Aging, I shall direct my testimony to measures to provide fuller protection for mature workers against discriminatory practices on account of age.

"Age-ism" in employment can be just as cruel and harmful as job bias related to race, religion, or national origin. It demoralizes the individual who is ready, willing, and able to work. But age-ism is also self-defeating for our country. No nation can ever hope to achieve its full potential if some of its most experienced and talented citizens are not allowed to participate.

To my way of thinking, a job should not become off limits simply because a person's hair is "graying" at the temples. Functional capac ity-not chronological age-should determine whether an individual is hired or promoted.

In 1967 the Congress approved the Age Discrimination in Employment Act to protect persons aged 40 to 64 from bias in hiring, job retention, compensation, and other conditions of employment. Before the enactment of this legislation nearly half of all private job openings were barred to persons over 55, and a quarter were closed to those above 45.

Much progress, to be sure, has been made since the Age Discrimination in Employment Act became law. Thousands of new job opportunities have been opened to older workers. Discriminatory employment advertising has been substantially reduced.

But despite these noteworthy advances, the evidence is all too clear that job bias because of age is still a very real and serious problem today. The most recent Department of Labor report made that point crystal clear. It revealed that more than one out of every three establishments investigated in fiscal 1972 was found to be in violation of the act.

In addition, a shocking number of middle-aged and older workerspersons in their forties, fifties, and above-are dropping out of the labor force. Since January 1972 nearly 775,000 persons aged 45 to 64 withdrew from the work force. In sharp contrast, more than 3.4 million jobs were created for younger workers.

The inescapable conclusion is that advancing age is still a formidable—and sometimes insuperable obstacle-for employment of mature workers.

Two major reasons for this problem are (1) gaps in coverage under the Age Discrimination in Employment Act and (2) inadequate funding to enforce the law.

Nearly 37 million persons in the labor force are aged 40 to 64. But only about 18.5 million are covered by the provisions of the age discrimination law.

Employers with less than 25 employees are exempted from the application of the law.

Additionally, there are an estimated 5.5 million Federal, State, and local governmental employees in the 40 to 64 age category who are outside the scope of the act. Many of these workers are covered by the 34 State age discrimination acts now in existence. However, these statutes are frequently more loophole than law. Moreover, the present State acts vary sharply concerning minimum and maximum age limits on coverage, exclusions, types of prohibited practices, and enforcement sanctions.

A few weeks ago, I introduced legislation-the age discrimination in employment amendments of 1973-to close some of these gaps in coverage, while not imposing unnecessary administrative burdens on the small businessman.

Specifically, my bill (S. 1810) would extend the application of the act to include employers with 20 or more employees. This measure alone would provide protection for approximately 1.3 million workers in the 40 to 64 age category.

My proposal would also broaden the application of the act to cover Federal, State, and local government employees. Government-as well as private industry-should, in my judgment, be subject to the provisions of the age discrimination law. As some of the Nation's largest employers, governmental units at the Federal, State, and local levels are admirably equipped to take the lead in making one's year of birth irrelevant for job opportunities.

Finally, my proposal would raise the authorized funding under the Age Discrimination in Employment Act from $3 million to $5 million. With this increased funding level, vitally needed personnel could be hired to enforce the act more effectively.

Mr. Chairman, age discrimination in employment was one of the major concerns of the White House Conference on Aging.

In fact, the delegates at the employment and retirement section said: Our long established goal in employment and retirement policy is to create a climate of free choice between continuing in employment as long as one wishes and is able, or retiring on adequate income with opportunities for meaningful activities.

Enactment of my amendments to the Age Discrimination in Employment Act, I strongly believe, can help to implement some of the major policy goals articulated at the White House Conference on Aging.

Mr. Chairman, I urge that the basic thrust of S. 1810 be incorporated in the legislation reported out by the subcommittee and the Labor and Public Welfare Committee.

The CHAIRMAN. Our first witnesses this morning are representatives of the Chamber of Commerce of the United States, Mr. Robert T. Thompson and Mr. O. F. Wenzler. Mr. Wenzler is labor relations manager for the chamber?

Mr. WENZLER. Yes, sir.

The CHAIRMAN. Mr. Thompson is with Thompson, Ogletree and Deakins, from Atlanta, Ga.

Gentlemen, we are pleased to have you start off our hearings this year. I don't know if we will be pleased all the way through, but we are pleased now.

STATEMENT OF ROBERT T. THOMPSON, OF THOMPSON, OGLETREE & DEAKINS, ACCOMPANIED BY 0. F. WENZLER, LABOR RELATIONS MANAGER, CHAMBER OF COMMERCE OF THE UNITED STATES

Mr. THOMPSON. We appreciate this opportunity to appear before the committee. My name is Robert T. Thompson, and I am a labor attorney with Thompson, Ogletree & Deakins of Atlanta, Ga., and chairman of the labor relations committee of the Chamber of Commerce of the United States.

With me is Otto F. Wenzler, labor relations manager of the national chamber. We are here today to express on behalf of the business community opposition to minimum-wage increases generally, and to the proposals contained in S. 1861 in particular.

At this point, Mr. Chairman, we would ask that our complete statement be included in the hearing record, while we present only a summary of it before the committee today.

The CHAIRMAN. We will include the full statement at the conclusion of your testimony. Thank you.

Mr. THOMPSON. Our position is based on the belief that minimumwage increases cause greater harm than the good they allegedly do. The minimum-wage increases proposed in S. 1861 constitute a clear danger of creating greater unemployment and higher inflation.

For most covered workers, the proposed rates in S. 1861 would result in a 37.5-percent boost in little over 1 year. For those categories of employees first covered in 1966, the same percentage increases would take place, but over a 2-year period.

While minimum-wage increases are currently exempt from the restrictions of the Economic Stabilization Act, the 37.5 percent boost in little more than 1 year is entirely out of line with the President's efforts to hold wage increases within a 5.5 percentage range. The adverse psychological impact of such increases could weaken the economic stabilization program.

The most damaging aspect of minimum-wage increases, however, is the extent to which they contribute to unemployment.

Economists have established a clear link between increases in minimum-wage rates and increases in unemployment. While it may be difficult to establish that past increases in Federal minimums have had much impact on total unemployment, it must be remembered that since 1950, all minimum-wage increases have been enacted during periods of significant economic expansion. Thus the expansion of the economy has tended to submerge the unemployment consequences of the increased minimum rates.

Where does a minimum-wage increase cause or contribute to unemployment?

In the industries which employ the greatest numbers of low-wage workers. Since the original enactment of the Fair Labor Standards Act, various economists have studied the impact of higher minimum rates in specific low-wage industries.

As detailed in our testimony of June 9, 1971, to this subcommittee, these studies have found there is a significant unemployment effect in these low-wage industries as a result of minimum-wage increases. In short, the very people whom supporters of higher minimum-wage rates purport to be helping are the usual victims of the unemployment effects of a minimum-wage increase.

No one can legislate the value of an individual's labor. What can be legislated is the minimum cost of his labor. The difference between value and cost is often the difference between employment and unemployment. Raise the minimum-wage level beyond the level which an employer is willing to pay for a particular individual's services, and the result is loss of employment for that individual.

It must be admitted, of course, that a higher minimum-wage rate will put more money in the hands of some employees. But part of the