The CHAIRMAN. Mr. Ramsey.

STATEMENT OF W. V. RAMSEY, MOUNTAIN CITY, TENN., REPRESENTING ASSOCIATED GENERAL MERCHANDISING CHAINS

Mr. RAMSEY. Yes, Mr. Chairman, I am W. V. Ramsey of Mountain City, Tenn. I operate two stores, one in Damascus, Va., and my home store. I have had stores doing less than $250,000 in Spruce Pine, West Jefferson, North Wilkesboro, and Burnsville in North Carolina.

The CHAIRMAN. Where is North Wilkes-Barre? Did you say North Wilkes-Barre?

Mr. RAMSEY. North Wilkesboro. Also I have had stores doing less than $250,000 in Sebrin and Avon Park, Fla.

The CHAIRMAN. You are a national chain man.
Mr. RAMSEY. They are all country stores, sir.

I have come to Washington to take part in this hearing before the Senate Labor Committee to talk about the exemption from FLSA coverage for store units doing less than $250,000 a year.

I understand that Chairman Williams is very much opposed to this exemption.

Perhaps the Senators have heard this referred to as "the chainstore. exemption" and they may not be sure why it exists or whether it should be continued.

Gentlemen, the $250,000 establishment is so important, so vital to those of us who operate small stores in small communities and small neighborhoods and to the housewives who live in small communities. that I am here to explain it. I must convince you that this exemption is just, proper, fair, and should be continued.

A brief review of the background of the small establishment exemption may provide useful perspective. In 1960, then Senator John F. Kennedy was manager of the minimum wage legislation which extended coverage to retail stores. He accepted the $250,000 establishment exemption, the Fulbright amendment, because he and the chairman of the Labor Committee, Senator Lister Hill of Alabama, recognized the economics of small towns and their need for reliable stores. A similar small establishment exemption was contained in the House committee bill and was accepted in the Kitchen-Ayres substitute which prevailed temporarily.

In 1965 Congressman James Roosevelt questioned the exemption. After a review of the economics of small-town retailing Mr. Roosevelt and Mr. Dent, who succeeded to the chairmanship of the Labor Subcommittee, agreed that the exemption was fair, needed, and should be retained.

On the basis of 1960 dollars the exemption has been phased down to what would have been a $171,500 volume store in those days.

Let's get a clear picture of the establishments for which the exemption is vital. Foodstores average over $1 million volume. The concentration of high volume on 5,000 to 8,000 items produces very high sales per employee hour-among the highest in all of retailing. These stores do not need the exemption.

In general merchandise retailing the major chains, Sears, Penney, Kresge, Woolworth, Ward, and Grant, do not and have not used the exemption. This was a policy matter made possible by the predomi

nance of larger stores and the trend even then underway toward larger and larger units with an accompanying closing of small stores.

The large department stores in downtown sections and their multimillion-dollar suburban branches are not "small stores." They are able to achieve such a sufficiently high level of sales per employee hour that they do not need it.

Small stores which carry 25,000 or more popular-priced items, 75 percent of which, even today, are priced below $1, cannot generate the volume of business per employe-hour that is possible in foodstores or in units in which the average sale is $4 or more.

In busy city locations and in major regional shopping centers the relatively heavy flow of customer traffic makes possible a comparatively high level of sales per employee-hour. The exemption is not used by stores so situated.

But in small towns and less busy neighborhoods sales productivity is of necessity low.

As you well know, the accelerating trend is away from small stores on Main Street to larger stores where a higher level of customer traffic can be generated.

There are still retailers like me who know and understand small stores in small communities. We prefer them. We think that the women who live in courthouse towns ought to be able to buy small items close to home without going to a shopping center or a large town some miles away. We think those customers are entitled to reasonable assortments of merchandise competitively priced.

The small store units, which have been kept alive by the $250,000 exemption, employ home people, secondary-wage earners, mostly those wanting only part-time schedules. These employees, like local customers, seem better off with the continued existence of small stores. "Continued existence"--that needs to be understood. I am not here to say that I will go out of business if the exemption is phased out. No, small store retailers will be forced to consolidate. They will have to combine the merchandise and resources of several stores, find larger, busier locations and close the small units which will no longer be economically justified.

Even though I am talking about and for thousands of store units in small town U.S.A., I have to speak personally for a minute. Like others, I started with one store. Then we added until we were operating eight stores in small towns. Those of us who were diligent and gave customers satisfaction grew by opening new stores.

In my small stores I'll take on whatever competition there is on any main street. I have never conceded that anyone had an unfair advantage over me just because he had more stores or a bigger company volume. Small stores must meet larger store competition in quality of merchandise and price. We must give friendlier service. But the potential productivity, the possible sales per employee-hour in small stores cannot match that which is achieved in larger, busier, bigger ticket stores. That is why the $250,000 establishment exemption was put in the law when coverage was extended to retailing. It is why the exemption is so vital today.

I like Tennessee. I like Mountain City. I like doing business in smaller towns. I like that way of life.

Is the trend toward bigness and automation and to the big city suburbs inevitable and irrevocable? I don't know the long-range answer to that. I can only hope not. But, I can assure you that the elimination of the $250,000 establishment exemption from the Fair Labor Standards Act will speed the process.

Thank you.

The CHAIRMAN. Thank you very much.

Mr. RAMSEY. I would also like to submit a list of 390 towns in 19 different States which have small establishments doing less than $250,000.

[The following was subsequently supplied for the record:]

I have an exhibit I would like to submit which shows 390 towns in

19 states in which there are small establishments under $250,000 in

volume which are part of larger, modest sized enterprises. This is It is not a statistically balanced study.

illustrative.