The Omaha guide., 1945-11-24

management. It's common sense
that the worker who has money
for good food, for recreation and
for self-improvement is a more
efficient, better satisfied worker
than one without such advantage
eS.
Let me say that the farmers
stake in the proposed minimum
wage of IS cents is too easily over
looked. There are even those
who say that the effect of this
legislation would be to bid up far
mer's labor costs and thus injure
his economic position.
In my opinion, nothing could
be further from the truth. The
farmers great problem is not the
wages that he pays for his hired
help, but good markets for his
products. The one thing this leg
islation can be depended upon to
do is to expand the farmers mar
kets. The more purchasing pow
er there is in the cities the great
er are the markets for the farm
er. That has always been true.
"At this point, the question is
properly raised as to what effect
the proposed increase in the stat
utory minimum wage would have
on prices. In a preliminary way,
let me say three things:
First, judging by history,
| should say that the long-run eff
fects of this legislation would be
to reduce prices rather than raise
them. This is because higher
wages increase productivity.
Second, I am satisfied that
even the immediate effects in the
direction of raising prices viii
be few in number and small in
magnitude.
Third, rel if the price eff
fects were of somewhat greater
dimensions, I would still support
the proposed revision. / say this
in spite of my fear of the huge
inflationary forces which con-
front us. Prices that depend up
on sweatshop wages are sweat
shop prices. No thoughtful con-
sumner would choose to benefit
through lower prices if those
prices are based on substandard
wages.
In tobacco manufacturing, SO
percent of the workers receive
less than 65 cents an hour, the
highest percentage to be found in
any industry. If all workers be-
low that level were to be raised
to IS cents, the industry's pay
roll would raise by $14 million, or
II percent of the June 1915 total.
The need for adjusting wages
which are now at IS cents or a.
bove to provide a reasonable ov-
erall wage pattern would push
the total amount somewhat high
er. How much of this will III a
competitive situation be absorbed
out of profits? Let me give you
the facts on profits as they have
been running and leave it to you
to judge.
I'm 1914, profits of the tobacco
industry totalled 1854 million
The industry's wage increase to
uover the IS cents minimum, if
it was entirely ABSORBED by prof
its, would reduce this total by
nine percent. The resulting lev
Ell of profits would still stand %
percent above the industry's pre-
war level, and would provide a
return of IL percent on net worth
compared to 16 percent before the
war.
However, if we suppose that
tobacco manufacturers were to
receive a higher price to compen-
safe for the higher wages, what
would this amount to? Only a
little more than half of the to-
bacco wage bill is chargeable a.
gainst cigarettes. But let us
suppose the manufacturers dec
ide to add the entire $14 million
increase in wages plus other re-
sulting adjustments to the prices
they charge for cigarettes alone.
If $14 million is spreal over some
II to Is billion packs of cigaret-
ties, it comes to about ITO of a
cent a pack. I think we would
find that wholesale and retail
margins are wide enough so thai
even in this event consumers
would see no difference in the re-
tail stores.
Il hope this bill will be enact
ed into law and / hope that be-
fore another seven years have
passed, we shall again reconsid-
er what constitutes a decent min
imum wage in the powerful Am
erican economy. For it is a ques
ton that requires continual reex-
animation. Not only the health
Of our people but the satisfactory
operation of the economy itself
S affected.
Each year our sights must be
higher than they were the yea1