Honorable Harrison A. Williams, Jr., Chairman The National Association of Food Chains, representing some 200 corporate food retailers in America, would like to have this letter considered as part of the record in the Committee's hearings on the minimum wage legislation. We believe that any increase in the minimum wage standard at this time would be highly inflationary, and add to the difficult economic problems our country already faces. However, if the Committee acts on a bill, we would prefer the adoption of S. 1725, sponsored by Senators Dominick and Taft. While most of our members pay an hourly rate much higher than proposed in either of the bills pending in your Committee, we are concerned about the so-called "ripple effect" which would have a serious impact on our industry's already marginal profit position. As you may be aware, supermarket after-tax profits generally average somewhat over one percent of sales, but in today's inflationary era, food chains' profits have dwindled to .86 percent of sales in 1970-71; .82 percent in early 1972; and even lower, to .3 percent by the end of 1972, the latest figure available. This means that in the fall of last year, when a food shopper spent $10 in a food chain supermarket operating at average profitability, the company running the store made three cents on the deal after taxes. Even worse, the fact is that during the same period an estimated 28 percent of the nation's food retailers were operating at a net loss. The industry can hardly afford any increase in any cost which would seriously impact on our already razor thin operations. Honorable Harrison A. Williams, Jr. June 8, 1973 The vast majority of food chain employees who are earning wages below the proposed new minimum are part-timers, and mostly students working their way through high school or college. For this reason, if the Committee brings out a bill, we would favor one along the lines of S. 1725, especially the inclusion of the youth wage differential. We believe that a youth provision such as that in S. 1725 would, in the words of Department of Labor Assistant Secretary Michael H. Moskow, "Boost the employment opportunities for American youth.' We have also noted the recent strong statements by Chairman Arthur Burns and Governor Andrew Brimmer of the Federal Reserve Board in support of youth provisions similar to the ones in S. 1725. Mr. Chairman, NAFC appreciates the opportunity to present this statement to the Committee. Sincerely, lawney M. Cidamy. Clarence G. Adamy President CGA/sm Cc: Honorable Peter Dominick Honorable Robert Taft Members of Committee Statement by WILLIAM A. QUINLAN General Counsel and Washington Representative before the COMMITTEE ON LABOR AND FUBLIC WELFARE (in opposition to the repeal of section 13(a)(4) of the Fair Labor Standards Act provided in section 6(a)(3) of S. 1861) I am William A. Quinlan, General Counsel and Washington Representative of the Associated Retail Bakers of America, the national trade association of retail bakers. Retail bakeries prepare and sell bakery foods across their own counters directly to the consumer. Most of them are very small neighborhood establishments. I have been associated with the baking industry in various capacities since 1933, with the Associated Retail Bakers of America since 1943. My experience with the Fair Labor Standards Act has been close and continuous since before its enactment in 1938. By repealing section 13(a)(4) of the Fair Labor Standards Act, section 6(2)(3) of S. 1861 would put every small neighborhood retail bakery with one or more employees under that Act. Retail establishments with annual sales under $250,000 which make or process any part of the goods they sell would no longer be exempt. In addition to small retail bakeries examples are small retail custom tailor shops, candy shops, ice cream 2 parlors, drug stores and optometrist establishments. (Wage and Hour Division interpretative bulletin on "The Fair Labor Standards Act as Applied to Retailers of Goods or Services," 29 C.F.R. 779.345 et seq.). We do not think that is the wish or intent of many if any Senators, and we earnestly ask for careful consideration of the effect of the bill. Text of Section 13(a)(4) Section 13(a)(4) of the Act exempts from its wage and hour provisions "any employee employed by an establishment which The Legal Need for Section 13(a)(4) Interstate employees (employees engaged in interstate commerce or in the production or handling of goods for interstate commerce) are generally covered regardless of the annual sales of the enterprise which employs them (Act, sections 3(1), 6(a), 7(a)). If section 13(a) (4) is repealed any employees of a retail bakery who are engaged in ordering, receiving, working |