Evening star., 1939-01-15
Effect Of Wage-Hour
Law on Industry
Studied by Experts
Sectional Competition
And Employment
Are Major Angles
rs the Associated Press.

Experts who guide the regulatory
hand of the Wage-Hour Admins
tration over the complex mechanism
of American industry are largely
concerned at present by the uncer-
tain effect of the law on industrial
competition and employment.
The Fair Labor Standards Act
has been in operation little less
than three months, and economists
have not had time to fashion
yardstick to measure its impact on
production, consumption, prices,
competition and jobs.
An increase in labor costs is ex-
pected, and the economists want to
know how this will affect compe-
tition between geographical divisions
of an industry; what stimulus it
will provide for mechanization or
changes in the technique of man
agement and sales, and how it will
react on the higher wage brackets,
the availability of jobs and prices
of goods.
Left Issues to Legal Experts.
Congress left the Wage-hour law
agency the job of answering these
questions, stipulating only that en-
ployment and earning power must
not be curtailed and that due con-
sideration be given economic and
competitive conditions.
The lawmakers handed over to
the administrative agency the
framework of an act that appeared
rigid in some places and elastic in
others.
Its rigid features included the
scaling down Of the maximum work
week from A to 40 hours over q
period of three years and the auto
matte lifting of the wage floor from
25 to 40 cents an hour over span
of seven years.
Its most elastic spot was the au-
thority to set up industry commit
tees to apply-where economically
feasible-higher minimum wages
than the basic rates specified in the
act.
Economic feasibility" is regarded
by wage-hour experts as the key to
the whole plan for arriving grad
ually at a universal standard of
40 cents an hour minimum pay for
a 40-hour work week
In using the industry committee
system instead of the code authori-
ties of the N. R. A. days, Congress
provided that the wage conditions
of each industry be surveyed. The
committees were to consider COM
petitive conditions as affected by
transportation. living and produc-
ton costs: wages already established
by collective agreements. and wages
paid for work of similar. charac-
ter by employers who voluntarily
maintain higher standards.
A study of lifting the minimum
wage floor for an industry usually
begins with this question: What
will it do to labor costs?"
Elmer F. Andrews, administrator
Of the act, recently told the Ameri-
can Association for Labor Legisla-
ton it could expect an increase in
labor costs and some dislocation of
employment.
But he laid emphasis on a gradual
and steady application of the cost
raising process 80 as to minimize
the resulting dislocation of employ
ment."
Economists who have studied the
labor cost question say minimum
wage benefits may be limited to the
lowest-paid groups or. on the other
hand. may serve to stimulate cor
responding increases in each of
the higher wage brackets of an
industry.
Operating on the theory that the
manufacturer will do what he can
to protect his profits, wage-hour
economists hope to know soon
whether rising labor costs will
be reflected in higher prices or
whether the producer will try to
shave something off his outlay for
raw materials to maintain balance
between labor costs and total costs.
Labor Saving Devices Possible.
They also have canvassed the pos
sibility that higher labor costs may
induce employers to install labor
saving machinery, or to seek i'm
proved sales and management
methods.
Until the effect of wage increases
and higher labor costs becomes
more clear, employers and econo-
mists also are concerned about the
effect Of higher prices on sales and
on use of a product by the public.
Economists profess to see little
effect on the consumption of goods
for which the demand varies little
from year to year, such as the ne
cessities of life. But in luxury
goods, where the demand is elas-
tic. there may be falling off in
sales if the higher labor cost is
passed on to the buyer in higher
prices.
At this point economists inject