Supplemental statement for 1937, approved by Bureau of the Budget

STATEMENTS OF MR. RICHARDSON SAUNDERS, ASSISTANT TO THE SECRETARY, AND MR. GERARD D. REILLY, ASSISTANT SOLICITOR

DIVISION OF PUBLIC CONTRACTS

SALARIES AND EXPENSES FOR ADMINISTERING LABOR-REQUIREMENT PROVISIONS OF WALSH-HEALEY ACT IN RE GOVERNMENT PURCHASES

AND CONTRACTS

The CHAIRMAN. You have an estimate in House Document No. 122 of $100,000 for personal services in the District of Columbia and elsewhere, in performing the duties imposed by the

act to provide conditions for the purchase of supplies and the making of contracts by the United States—

And so forth.

Have you had any allotment for this purpose from any other funds?

Mr. SAUNDERS. Yes, sir.

The CHAIRMAN. How much?

Mr. SAUNDERS. We have not had an allotment specifically for carrying out the provisions of the act, but we have a project. They have given us $40,000.

The CHAIRMAN. Allotted from what funds?

Mr. SAUNDERS. From emergency funds.

The CHAIRMAN. How much have you had from Congress? Have you had anything from Congress?

Mr. SAUNDERS. No, sir; Congress has made no appropriation whatever.

The CHAIRMAN. This act was passed after the appropriation bill was enacted.

Mr. SAUNDERS. Yes, sir. It was passed on the last night of Congress.

The CHAIRMAN. Tell us what this act does?

Mr. REILLY. The act requires that in all Government contracts, in any amount exceeding $10,000, there shall be included certain labor standards.

The CHAIRMAN. What are they?

Mr. REILLY. That a certain minimum wage is to be paid, and that employment shall not exceed more than a 40-hour week or 8-hour day. The CHAIRMAN. Do you mean that that provision applies to all materials that the Government buys? Do you mean that those conditions must exist in all those cases?

Mr. REILLY. This applies to all contracts for supplies and materials in excess of $10,000. It applies to approximately $400,000,000 of purchases.

The CHAIRMAN. Is that the reason the Navy could not get some copper they wanted?

Mr. REILLY. It may have been, but it may possibly have been because of the rising price of the articles.

The CHAIRMAN. Is the requirement a 30-hour week?

Mr. REILLY. A 40-hour week.

The CHAIRMAN. What else is required?

Mr. REILLY. There is required a certain minimum wage, which is fixed by the Secretary of Labor in accordance with the prevailing wage rate paid in similar industries.

The CHAIRMAN. In other words, the Secretary of Labor will determine what is the prevailing wage rate in that section, and will pick that as the minimum wage rate.

Mr. REILLY. Yes, sir.

The CHAIRMAN. Áre there any other conditions?

Mr. REILLY. No boy under 16 years of age nor girl under 18 years of age may be employed, and no part of the contract may be performed in a factory which is violating State sanitary and safety laws. The CHAIRMAN. Are there any other conditions?

Mr. REILLY. In addition, the duty of enforcing the act is imposed upon the Secretary. It provides certain penalties for a contractor who violates the act; it provides for investigations, with an appeal to the courts from rulings of the Secretary. It provides for the fixing of special standards or granting certain exceptions.

Mr. LUDLOW. To what percentage of Government contracts will this law be applicable?

Mr. REILLY. It will be applicable to about 3 percent of the number and about 15 percent by industry volume, or in money.

The CHAIRMAN. You want $100,000 for the performance of those duties. That will cover a period of how many months?

Mr. REILLY. For the remainder of the fiscal year, or 5 months. Mr. TABER. You have had $40,000 for 7 months.

Mr. REILLY. The act has been in effect only since September 28. Mr. SAUNDERS. We did not begin to spend the $40,000 until about a month ago. We simply have not been filling the organization for

the enforcement of the act because we have had no money to do it with.

The CHAIRMAN. To about how many contracts will this apply?
Mr. REILLY. Between 4 and 5 thousand.

The CHAIRMAN. It only applies to Government contracts.
Mr. REILLY. Yes, sir; that is all.

AMOUNT REQUIRED FOR BALANCE OF FISCAL YEAR 1937

The CHAIRMAN. Do you have any of this $100,000 set aside under your program, or budgeted for enforcing penalties?

Mr. REILLY. I do not understand the question.

The CHAIRMAN. Have you allocated any part of this $100,000 for the enforcement of penalties?

Mr. REILLY. Yes, sir; we submitted a detailed statement to the Budget Bureau in connection with the annual appropriation bill. This list of five items [indicating] covers the enforcement provisions.

The CHAIRMAN. Is this the way you have budgeted this money? Mr. REILLY. That is the way it appears in our annual appropriation estimates.

The CHAIRMAN. What is your estimate for the annual bill?
Mr. REILLY. $350,000.

Mr. SAUNDERS. I can possibly give you some figures on that: We estimated when we set up this organization that it would take $487,000 for the work after we got started in 1938. That was our estimate. Then we took four-twelfths of that, or $202,920, as the amount necessary for the last 5 months of 1937, beginning with February. The Budget includes $350,000 for 1938. After review it was decided that $100,000 would be sufficient for the remainder of the fiscal year since we could not place the full force immmediately and it would take the remainder of the fiscal year to complete the organization. The allotment of $40,000 may be spent only for such purposes as fall within the provision of the Emergency Relief Act.

Mr. TABER. Why do you need all of this money, or what do you have to do?

Mr. SAUNDERS. Taking first, the question of determining minimum wages, we have got to take up each industry. For instance, let us take the clothing industry, which is the one we want to start on first. You have got to study that industry, not only in one location, but you must study it by districts. You must study the whole industry and establish the minimum wages. It is a highly technical and controversial proposition, and it must be done in an orderly way. The act does not become effective as to the minimum wage until the Secretary of Labor rules. We are under tremendous pressure to set up minimum wages in a number of industries, and if we undertook to cover every industry in a limited time, we would need $1,000,000, but, as a matter of fact, we will take them up in the order of their importance. The amount expended will depend on how much or how little of this work we attempt to do. It is a tremendous undertaking.

The CHAIRMAN. It looks like this law is taking advantage of the fact that the Government is a purchaser of materials in order to enforce a Federal Government regulation of industry.

Mr. SAUNDERS. Absolutely, yes, sir. That, I believe is a true statement of the fact as it relates to concerns selling to the Government. Labor is solidly behind the act and is bringing tremendous pressure on the Secretary to administer it effectively.

The CHAIRMAN. I think labor will not gain anything by that. Of course, it is a big organization, a Nation-wide organization, and an important organization. You might say that it represents the brawn and sinew of the land, but why should they take little piece-meal bites at a thing like this? It will only serve to prejudice people against them when they would not otherwise be prejudiced against labor. Mr. SAUNDERS. Congress, in its wisdom, enacted this law.

The CHAIRMAN. It passed it at the behest of some branch of labor. Mr. REILLY. Excuse me, but I do not think that is quite a fair statement. It was shown that when after the N. R. A. codes were invalidated, there was a particular tendency in the matter of Government contracts, for employers to get off the standards that other firms were observing.

Mr. TABER. Do you mean to say that was in the hearings? Mr. REILLY. That is in the testimony before the House Judiciary Committee.

Mr. TABER. Nobody believes that.

ESTIMATE FOR 1937

The CHAIRMAN. Do you have a break-down of this $100,000. Mr. SAUNDERS. We have a break-down of the larger amount we submitted.

The CHAIRMAN. Where is that?

Mr. SAUNDERS. Here is a break-down for $145,000, but the Director of the Budget with our acquiescence put in the round sum of $100,000. That statement shows the organization we proposed to set up, but it was thought that we would not be able to complete our organization in time to require the full amount of $145,000 this year.

The CHAIRMAN. This does not seem to be much of a break-down. Mr. SAUNDERS. There are some other figures there.

ADMINISTRATIVE PERSONNEL

Mr. LUDLOW. In the program you set up, what would be the administrative personnel that you contemplate?

Mr. REILLY. I think it contemplates the employment of about 82 persons.

Mr. LUDLOW. What classes or types of employees would they be? Mr. REILLY. They would be an administrator, an assistant administrator, and a board to pass on the question of minimum wages. Then there would be a staff or statistical clerks.

Mr. LUDLOW. All together there would be 82 employees.

Mr. REILLY. There would be about 82. There would also be a staff with field or inspection duties, detecting violators and performing other duties pertaining to the minimum wage.

The CHAIRMAN. What would be the range of salaries for this personnel?

Mr. REILLY. The salaries would be determined by the Civil Service. The members of the board would get $5,600. I think the Ad

ministrator's position will be classified at $8,000, and the Assistant Administrator would receive around $6,000. The rest of that staff, I think, with one or two exceptions, would be below $4,000.

The CHAIRMAN. What would be the range in the lower grades?

Mr. SAUNDERS. The Civil Service Commission has made studies of that whole organization.

The CHAIRMAN. Did the Civil Service Commission classify these salaries of $8,000 for the Administrator, an assistant at $6,500, and a chief examiner at $5,600?

Mr. SAUNDERS. They are now classifying them.

The CHAIRMAN. You have a field investigator at $5,600. Are they classified by the Civil Service Commission?

Mr. SAUNDERS. They have made a tentative classification. They have not yet made a final ruling on those positions, but they are now at work on them. Of course, we are building up a new organization, and we do not know exactly how far this thing will go. We have tried to keep it down within reason. The task before us is a tremendous one.

STUDY OF MINIMUM WAGE SCALE, ETC., OF INDUSTRIES MAKING CONTRACT FOR SALES OF SUPPLIES TO UNITED STATES GOVERNMENT The CHAIRMAN. Here is a law that contains a lot of reasonable requirements, covering the 40-hour week, prohibiting child labor, and requiring the observance of sanitary conditions. Those are things that industry generally does not object to very much. Of course, some industries insist on longer hours, but the fact that the Government will not be purchasing from them will not change that condition. I am wondering if we should go to so much expense to look into something that will not yield any more result than this.

Mr. REILLY. In some industries it has produced a change, as, for instance, in the case of the automobile industry. Since the truck companies started to bid on Government work under this act, most of the large concerns have gone on the 40-hour week. That is also true of the petroleum industry.

The CHAIRMAN. They did not go into it because you are spending a lot of money enforcing this act. They went into that because it was the law, and they wanted to be in a position to sell their products. Mr. SAUNDERS. The fact is this, that those people who comply with the law are one group, while there is another group bidding on Government contracts who do not comply. These latter are the people that we must control.

The CHAIRMAN. If they file an affidavit that they have complied with it, and there is no evidence that they have violated it

Mr. SAUNDERS (interposing). You have got to police it, Mr. Chair

man.

The CHAIRMAN. It seems to me that the only real problem you have, and what you need money for, is to determine the minimum wage scale. That is your problem.

Mr. SAUNDERS. We determine minimum wage scales, make inspections, and do many other things.

The CHAIRMAN. You must pass on minimum wage scales, and you need money for that, but I do not think you need much money for these other things, because I believe those firms who sell to the Government will comply with the law.