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Mr. HEALY. The prevailing wage will be determined for the general locality. It will be, as I have stated, by investigation and hearing. There are several other references along the same line, but there is no question that in the minds of the people who passed this bill and sponsored it, they were talking about the local community in which the contract is to be performed.
Now, the Secretary says it is difficult to administer. I say if that is true, rather than ignoring it because under the protection of the Lukens case he can ignore it, you ought to ask for an amendment, to say you can set industry-wide, Nation-wide appliance.
Do you say that is what would be in the minds of those who wrote this legislation?
Secretary Tobin. Senator, at the time they did have the words "cities, towns, or villages," and they eliminated that language and changed it to "locality."
I am not thoroughly familiar with the legislative history of the whole law, but I think that if you will read beyond the words "locality:" the prevailing minimum wages for persons employed on similar work or in the particular or similar industries or group of industries currently operating in the locality in which the materials, supplies, articles or equipment are to be manufactured or furnished under said contract, the materials, supplies, or articles er equipment that are to be manufactured or furnished under said contract can be in any part of the United States.
Senator FULBRIGHT. It says "locality in which." Secretary Tobin. The stipulation has to be in the contract in advance.
Senator FULBRIGHT. What is that?
Secretary TOBIN. The stipulation as to the minimum wages has to be in the contract in advance, before the invitations for bids are extended. They cannot be established at a later date.
Senator FULBRIGHT. Well, that is true of all contracts made after you have made a determination, but until you have måde a determination the contract is perfectly legal.
Secretary Tobin. But then you would have no Walsh-Healey Act and no Minimum Wage Act.
Senator FULBRIGHT. What do you mean, “po Minimum Wage Act”? Do not keep bringing in the Minimum Wage Act, because that has no effect upon it.
Secretary Tobin. You would have no prevailing minimum wage in the industry por any stipulation setting forth the determination unless it was done before the contract was put out. If a determination is not made, in any field in which a determination is not made, wages are not a part of the contract. Therefore, upon the enactment of your amendments, all of the existing determinations would be wiped out so that we would have no prevailing minimum wage in industry, and then we would be confronted with the problem of making the determinations under your amendment in each of the communities in the United States that would have an establishment that could bid.
Senator FULBRIGHT. I do not think that is correct. I hate to differ with you on the interpretation of that. If these amendments are put into effect-if both of them are put into effect--the second one, of course, will limit the number of contracts subject to the act-because I think you have also extended your authority contrary to the exception in the act as to the standard articles purchased in the open market. I believe you said in one of your memorandums that that would affect about 50 percent of the contracts, is that right?
Secretary TOBIN. That is right.
Senator FULBRIGHT. Coming back to this first one, dealing with the concept of locality it certainly is the impression of the sponsors of this legislation, and because Bacon-Davis Act has long been in effect, it gives no particular difficulty in applying those standards.
Secretary TOBIN. Senator, could I explain to you the difference between Davis-Bacon and Walsh-Healey?
In Bacon-Davis you have a given structure to be built in a given community, and the minimum wage can readily be determined for each of the classes of trades that will be used in the building of that structure. But here
Senator FULBRIGHT. How do you determine the minimum wage under your present procedure, if you do not go to these communities and find out what the minimum is? Do you just accept the minimum set by the union?
Secretary TOBIN. Indeed not. It is a very long, drawn-out process, and I think if you talk to any industry man you will find that they will agree that it is a very fair procedure.
Senator FULBRIGHT. Is it now made up of an investigation of local rates?
Secretary TOBIN. It is made up of an investigation of rates.
Senator FULBRIGHT. Do you not go into the locality and find out what they are?
Secretary Tobin. You get practically the wage rates that are paid in every concern that engages in the industry in which a minimum is being determined.
Senator FULBRIGHT. In each locality, is that not right?
Senator FULBRIGHT. In other words, you gather this material. You already have it, and you use it to make your present minimum, do you not?
Secretary TOBIN. Yes.
Senator FULBRIGHT. Then what is the difficulty in applying it on the local rather than the national basis.
Secretary TOBIN. Because the difference comes in this. Deteri minations are made probably a period of 2 years, but under the pro
posal that you have and your comparison to the Davis-Bacon, a determination is made prior to each contract in Davis-Bacon, and you draw the contracts. The comparison of Davis-Bacon. And the moment a contract comes out in a community, determinations are made in practically each project or each contract in the country for construction.
Senator FULBRIGHT. Well, take in the soap industry. In order to set that minimum, you had to investigate and you had to get, if you did it properly, as you say you do, the prevailing minimum in each of the localities.
Now, why is it impossible, administratively impossible, to apply it in Johnstown, for example, rather than lumping them all into one average and require it to be the same all over the United States? I do not see why.
Secretary TOBIN. Here is the difference.
Senator FULBRIGHT. I am not talking about Davis-Bacon.
Secretary TOBIN. You have made the comparison in your justification to the committee, a comparison with Davis-Bacon.
In Davis-Bacon, you would just have one set of prevailing minimum rates for that building construction project. Whereas in Walsh-Healy, a prevailing minimum rate that will be determined for the industry, either for the country as a whole, or for regions of the country, if it falls into that kind of a pattern.
In iron and steel, I think we have five areas. In cement, I think we have two areas. In chemicals, I think it is two areas.
The rest of them make up just one area over the country.
This is the administrative problem I would have under your amendment. I would have to make a determination in each one of the communities in cotton textiles, which will number, as I have said, at least 2,000 communities, in order to anticipate the stipulations that would have to be placed in the contract, because we would not know, in advance, the number of cotton manufacturers in the country who would desire to bid.
Then, we would have to have a determination in each one of the 2,000 communities of the country. If 100 concerns decided to bid, then we would have to submit that material on the 100 communities in which the 100 concerns, the one-hundred-odd concerns were located.
But, all of the material would have to be available.
It is not quite as complex as the textile industry. If contracts are to be let and you have to set a standard, you have to go into these communities to get the material you now have.
I cannot see any difficulty in saying in a particular community, “well that is what we have found there" because you have already found it.
Secretary Tobin. I think a description of how that work is handled, might be in order.
First, it is decided that a determination should be made and leaders of industry and labor are invited to Washington.
The first thing to be determined is the scope of the given industry and the fields that shall be covered, and the expert advice of both industry and management are given.
Then, another conference will be held between the management and , labor for the purpose of getting their advice as to how best to determine what is the prevailing minimum wage throughout the country.
In many cases, industry itself, with the approval of labor, will do the fact finding for us. Sometimes, we find it is better to have the Bureau of Labor Statistics make the determination.
In many instances, there is an agreement on the part of both management and labor as to how the wage information is to be procured.
Then, when the information has been compiled from all manufacturers or dealers in the industry from all over the country, management and labor are invited back again to go over the information.
Then, when all of this information is in, hearings are held in which any individual manufacturer or dealer in the Nation may appear before that hearing examiner.
Incidentally, all of the information that has been compiled up to and prior to the hearing, is mailed out. Sometimes we will use the trade organization.
In cotton textiles, their organizations will mail to their individual members the compilations of wage data that has been compiled. They then are thoroughly familiar with all of the material that will be considered at the hearings, and any trade union, any individual concern in America is given its opportunity to appear before that hearing examiner and rarely after the determinations are made, is the question ever raised that an unsound determination has been made.
Senator FULBRIGHT. How can they raise that question?
Secretary Tobin. By protests to me. And after these determinations are made
Senator FULBRIGHT. After you make your determination, what can they do about it?
Secretary Tobin. They have had opportunity all the way through.
Senator FULBRIGHT. But they would not know what your determination was. You make a determination, and that is the end of it.
They cannot do anything about it, can they?
Secretary Tobin. As a matter of fact, in 99 percent of the cases, they are pretty well able to determine what the just determination would be.
I think if you will talk to management or labor groups, they would agree.
Senator FULBRIGHT. But what can they do about it?
Senator SCHOEPPEL. Mr. Secretary, does that apply to the airplane industry?
Secretary TOBIN. Yes.
Secretary Tobin. We do have requests for reopening, after a period of time has elapsed and the decision is unrealistic in the light of economic changes in the intervening period of time, maybe a year or a year and a half. Then there is a reopening.
Senator SCHOEPPEL. You did have some difficulty with reference to the Wichita plants, did you not?
Secretary Tobin. Specifically in the airplane industry, was there ever a request made?
Senator FULBRIGHT. It is entirely at your discretion.
Secretary Tobin. Yes; you have touched upon the one apparently in which there was a request for a reopening.
Gentlemen, if I could for a moment. I would like to read into the record, the declared national policy of our Government.
I am going to quote from the Taft-Hartley law. I believe that in order to get this hearing in its proper light, it would be important to read into the record, the declared national policy of our Government.
I am going to go beyond the scope of the Walsh-Healey Act, or the Fair Labor Standards Act, and I am dealing with the Labor Management Relations Act:
The inequality of bargaining power between employees who do not possess full freedom of association, or actual liberty of contract, and employers who are organized in the corporate or other forms of ownership association, substantially burdens and effects the flow of commerce and extends to aggregate current business depressions by freezing wage rates and the purchasing power of wage earners in
industry and by preventing the stabilization of competitive wage rates and working conditions within and between industries.
It is my feeling that the Walsh-Healey Act in a minor way, supplements this declaration of national policy.
Now, I would like to read into the record, a portion of a speech that I made to North Carolina University, on last Thursday night, showing the great improvement that has occurred in the economy of the South under the laws that have been written in the course of the last two decades:
The action that the Government has taken has helped to make possible the great expansion in our American economy. It is an expansion that has benefited all sections of this country, but it has been especially beneficial to the South.
Per capita income throughout the United States is now 111 percent higher than it was in 1929, but per capita income in the South is now 179 percent higher. As you can see, it increased substantially more than the national average.
In fact, it increased more than 50 percent above the increase of the national average,
In 1929, the people of the South received 10.51 percent of income payments. In 1951, that proportion had increased to 13.95 percent; an increasing proportion of our national wealth is going to the South.
Between 1929 and 1948, per capita sales in the South almost tripled. In 1929, retail sales in the South were 12 percent of all retail sales in the Nation. In 1948, they were 15 percent of all the sales in the Nation, an increase of 52 percent above the national average.
The CHAIRMAN. The Government is not responsible for that, Mr. Tobin.
Secretary TOBIN. I believe the Government is responsible for it.
The CHAIRMAN. There is some Government assistance, of course. But when it comes down to the increased business in the South, that is due partly to the efforts of private industry.
You take the textile industry, for instance. I was amazed to find out about the Government giving so much more textile business to New England than to the South. That is all right because it was done on low bid. There was a plan around here to give out business without bids, and I got the local record of the textile business and to my amazement, although we in South Carolina are the largest textile producers in the whole Nation, the contracts went up to New England on low bids.
Why channel business into an area that is getting most of the business now? I do not like to compare New England and the South, because there are joint ownerships in both places. I mean people who own mills in the South also own them in New England, but I just wanted to put that in the record. I also want to insert in the record at this point a memorandum showing the value of textile contracts and where they were awarded.
(The memorandum referred to follows:)
CONTRACT AWARD PLACEMENTS BY AREAS In conjunction with the award of contracts for materials and supplies required for the defense effort there have been many complaints that certain areas were not receiving a reasonable share of the awards. These complaints have been based chiefly on such limited information as that contained in the publication of lists of total awards of contracts in various areas. Such figures could be very misleading if used without due consideration for many important factors involved.
Heretofore, a compilation of contract awards giving consideration to such factors as manpower, plant capacity, plant efficiency and production facilities within particular areas has not been generally available. For this reason an attempt has been made to prepare a tabulation which includes as many variables