3. SENATE REPORT NO. 1487, 89TH CONGRESS, SECOND SESSION, To ACCOMPANY H.R. 13712 Mr. YARBOROUGH, from the Committee on Labor and Public Welfare, submitted the following REPORT together with SUPPLEMENTAL, INDIVIDUAL, AND ADDITIONAL VIEWS [To accompany H.R. 13712] The Committee on Labor and Public Welfare, to which was referred the bill (H.R. 13712) to amend the Fair Labor Standards Act of 1938 to extend its protection to additional employees, to raise the minimum wage, and for other purposes, having considered the same, reports favorably thereon with an amendment in the nature of a substitute and recommends that the bill as amended do pass. The amendment strikes out all after the enacting clause and inserts in lieu thereof a new text which appears in the reported bill in italic type. BACKGROUND OF LEGISLATION The Fair Labor Standards Act was enacted in 1938 to meet the economic and social problems of that era. Low wages, long working hours, and high unemployment plagued the Nation, which was then in the midst of an unprecedented depression. The policy of the act, as set forth therein, was to correct and as rapidly as practicable to eliminate labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers. The Fair Labor Standards Act has proven through the years that its basic concept is sound. Despite the warnings of some critics who predicted the act would produce economic disaster, we have seen our economy emerge stronger than ever. Far from being an impediment to progress, the act has served as a foundation upon which has been built a standard of living for our citizens which is second to none. [2] It has enabled countless Americans to enjoy a dignity, security, and a general well-being which would not otherwise have been possible. The "great depression" of the 1930's is now behind us. Gone too, for most Americans, are the substandard wages and sweatshop conditions which were then commonplace. Nevertheless, successful as the act and its past amendments have been in achieving its objectives, large numbers of workers in interstate commerce remain outside the scope of part or all of the act's protections. As noted by Secretary of Labor W. Willard Wirtz in his testimony before the Subcommittee on Labor of the Senate Committee on Labor and Public Welfare: The Fair Labor Standards Act of 1938 was a commitment to improve living standards by eliminating substandard working conditions in employment subject to Federal authority over interstate commerce. That commitment, incomplete when it was made, has become less complete with the passage of time. The law has not been kept in line with the advancing economy; and some of its guarantees mean less, comparatively, than they did 27 years ago (p. 33, pt. I, of hearings). It is evident to the committee that long working hours and wages which barely provide subsistence are still a daily way of life for far too many of our citizens. It is in recognition of this that the committee bill would extend the protection of the act to some 7.2 million workers, many of whom are among the lowest paid workers in the country. At the present time there are over 60 million employed wage and salary workers in the United States. Of this number less than 10 million are public employees-7.2 million State and local employees and 2.3 million Federal employees. There are 47 million workers in private industry of whom 29.6 million are presently covered by the act. Of the 7.2 million newly covered workers, 5.8 million are in private employment and 1.4 million are in public employment. ESTIMATED NUMBER OF PRIVATE NONSUPERVISORY EMPLOYEES COVERED UNDER THE FAIR LABOR STANDARDS ACT OF 1938, BY INDUSTRY There is great need for extending the present coverage of the act to large groups of workers whose earnings today are unjustifiably and disproportionately low. There is a significant correlation between [3] poverty earnings and exclusion from the protective provisions of the act. Among family heads employed in industries generally covered by the act, only 5 to 10 percent had annual incomes under $3,000 in 1964. The figure is 6 to 13 percent in industries where there is partial coverage of the act. But in industries where there is little or no coverage, the proportions jumped to 29 and 47 percent, respectively. It is imperative, if the act is to have real meaning, that the minimum wage provide earnings above the poverty level. It is a shocking fact that demands immediate remedy that 41 percent of all children living in poverty were in families where there is a worker who has a full-time job throughout the year. Full employment, and equal employment opportunity, are now widely endorsed objectives, but to be employed equally to substandard wages is no social achievement at all. Thẹ "minimum standard of living necessary for health, efficiency, and general well-being of workers" must be attained. The Fair Labor Standards Amendments of 1966 are intended to achieve this standard of living with all deliberate speed consistent with the policy of the act and the welfare of the American people. The committee believes that the proposed amendments contained in H.R. 13712 constitute an important contribution to the Nation's war on poverty. Poverty is not restricted to the unemployed alone. Many who are counted among the ranks of the poor are workers who receive less than a living wage. One of the reasons for this is that they are employed in industries outside the protections of the Fair Labor Standards Act. Extending the coverage of the act will do much to relieve the plight of these "working poor." The President of the United States, Lyndon B. Johnson, has urged the Congress to extend the protections of the act to needy workers. In his message to the Congress of May 18, 1965, the President stated: Many American workers whose employment is clearly within the reach of this law have never enjoyed its benefits. Unfortunately, these workers are generally in the lowest wage groups and most in need of wage and hour protection. We must extend minimum wage and overtime protection to them. The bill will carry out this recommendation of the President. In doing so, it will provide millions of American workers with a living wage and a decent standard of living. PURPOSE OF THE LEGISLATION The bill will extend the benefits and protection of the act to an estimated 7.2 million workers and will raise the minimum wage for workers now covered to $1.40 an hour beginning February 1, 1967, and $1.60 an hour beginning February 1, 1968. The increase in the minimum wage to $1.60 beginning February 1, 1968, was carefully worked out in the House committee. It represented a compromise between those who wanted $1.75 per hour minimum at an earlier date and those who opposed such an increase and wanted a later effective date of increase. The overall cost of moving up the effective date of the $1.60 an hour to February 1, 1968, would be minuscule in an economy such as the United States has today with a gross national product of $732 billion, but the $2 billion in adding purchasing power would mean a great deal to the working poor in terms of additional [4] income and purchasing power. The proposed minimum wage for newly covered workers (other than those employed in agriculture) will be $1 an hour beginning February 1, 1967; $1.15 an hour beginning February 1, 1968; $1.30 an hour beginning February 1, 1969; $1.45 an hour beginning February 1, 1970; and $1.60 an hour beginning February 1, 1971. For newly covered agricultural workers the bill provides a minimum wage of $1 an hour beginning February 1, 1967; $1.15 an hour beginning February 1, 1968; and $1.30 an hour beginning February 1, 1969. Thus, the proposed new wage floors will be reached within 2 years for those presently covered by the act and for certain Federal employees and within 5 years for those, other than agricultural workers, who will be newly covered by the act; and within 3 years for newly covered agricultural workers. The bill continues a uniform 40-hour standard workweek for all employees who are presently covered. It also establishes for newly covered employees a standard workweek of 44 hours during the first year, 42 hours during the second year, and 40 hours after the second year. COMMITTEE CONSIDERATION OF LEGISLATION The Subcommittee on Labor began public hearings on the bills amending the Fair Labor Standards Act of 1938, as amended, on July 6, 1965. Hearings continued in 1965 for 9 days until July 16 and were resumed in January 1966 for 3 days. Testimony was received from 125 witnesses including Secretary of Labor W. Willard Wirtz and other witnesses from government, labor, industry, and other interested groups. In addition, several hundred statements, letters, and additional written information were submitted and included in the official hearing record. On July 15, 1966, the subcommittee concluded 14 days of consideration of the House-passed bill, H.R. 13712, in executive session and reported the bill to the full committee. After 8 days of executive consideration, the Committee on Labor and Public Welfare ordered reported to the Senate H.R. 13712 with an amendment in the nature of a substitute. MAJOR PROVISIONS OF THE LEGISLATION COVERAGE PROVISIONS The bill would extend the coverage of the Fair Labor Standards Act to approximately 7.2 million additional workers. This is accomplished without departing from the act's basic coverage concepts: employment in "commerce" or in the "production of goods for commerce." Employees individually engaged in "commerce" or in the "production of goods for commerce," unless specifically exempted, would continue to enjoy the protection of the act. The additional coverage has been secured through two primary approaches. First, certain definitions, most importantly, enterprise engaged in commerce or in the production of goods for commerce, have been redefined. Second, a number of exemptions in the present law have been repealed or modified so as to narrow the act's exclusions. [5] Proposed extension of minimum wage and overtime protection Minimum wage protection will be ex- Laundering and drycleaning. Overtime protection will be extended to employees in the following: Retailing, including auto, truck, and farm implement dealerships (excluding salesmen and mechanics). Construction. Laundering and drycleaning. Taxicab and transit system nonoperating employees. Logging. Agricultural processing. Gasoline service stations. Federal Government. ESTIMATED DISTRIBUTION OF PRIVATE NONSUPERVISORY EMPLOYEES NOT NOW COVERED AND THE NUMBER WHO WOULD BE BROUGHT UNDER MINIMUM WAGE PROTECTION OF THE ACT IN 1967 AND 1969 BY THE BILL1 * Includes 170,000 employees of State and local government institutions of higher education. * Includes 668,000 employees of State and local government agencies. |