certainly does not take a mathematician or even a man with a high school education to be able to analyze very quickly whether that individual is padding his hours. And he can be fired. So I think that that is really a side issue that really has no bearing on this, because I think some of them are keeping records.

Senator KENNEDY. Once again we get into the question of the prevailing wage, particularly in the South. Do you think a $1.25 minimum wage is too high for these workers?

Mr. SCOTT. As far as the pulpwood handlers are concerned, they are working right around and in close proximity to the mill towns. I would say there may be exceptions but probably within a 50-mile radius of the mill towns, so far as delivering wood by truck, in most of these papermills we have the basic labor rate somewhere around $1 to $1.82 an hour and any other industry in that community, theirs are proportionately higher too, maybe not up to the maximum that we have, so there is quite a bit of skill, and certainly a tremendous amount of hard labor in regard to the people who are cutting this wood and delivering it.

Senator KENNEDY. Do you have any comment to make on this, sir? Mr. BIEMILLER. Not on this issue.

Senator KENNEDY. We want to thank you very much, Mr. Scott. I think your testimony will be very helpful because this question of logging is probably one of the most difficult before us and is surrounded with the most powerful interests.

Mr. SCOTT. May I add just one more point in regard to the testimony about the use of so many handicapped individuals?

Senator KENNEDY. There has been some testimony also before this subcommittee including your own which suggests that companies are encouraging the independent logger types of operation in order to take advantage of the so-called 12-man exemption.

Isn't it a fact though that there has been no appreciable change in the proportionate share of pulpwood being produced by companies operating since 1950, the year the exemption became effective?

I have before me some figures. With the agreement of Senator Prouty's staff I will turn these questions over to you and perhaps you could furnish your replies to them to the committee before the end of the week.

(The questions and answers referred to follow :)

REPLY TO QUESTIONS SUBMITTED AT HEARING OF LABOR SUBCOMMITTEE ON JUNE 4, 1959, ON QUESTION OF MINIMUM WAGE LEGISLATION, SUBMITTED BY HARRY SCOTT, VICE PRESIDENT AND REGIONAL DIRECTOR, UNITED PAPERMAKERS AND PAPERWORKERS

Question. Mr. Scott, there has been some testimony before this committee, including your own, which suggests that companies are encouraging the independent logger type of operation in order to take advantage of the so-called 12man exemption.

Answer. With respect to the proportion of pulpwood being produced in company operations since 1950 the only data available are those submitted to the committee by the American Pulpwood Association. Their data which show a very small increase submerge the fact that more and more timberland is being purchased by the large companies, but which is being cut by contract loggers and delivered to the owning company.

Question. I have before me some figures from the U.S. Forest Service which show that the volume of pulpwood produced by company operations has almost doubled since 1950. These figures also show that although companies themselves

produced only 8.8 percent of all the pulpwood in 1950, they are now producing 9.3 percent of all pulpwood. If there is a trend, wouldn't it appear to be a trend away from the independent logger type of operation for the Nation as a whole? Answer. While the data are not available as between independent loggers and contract loggers who are financed by the industrial user of pulpwood guaranteed a market, etc., it is generally believed that the small logger who was formerly an independent is now a small contractor or more commonly a subcontractor. The American Pulpwood Association shows that two-thirds of the mills' receipts come from the regular producers of 1,000 or more cords. Many of these so-called regulars actually subcontract the cutting to smaller producers to escape the minimum wage law.

Question. While there have been some increases in the number of smaller operations in the western and northern areas, haven't these taken place partially as a result of the last of the virgin timber stands being cut?

Answer. There has been an increase in the number of small operations and decrease in large ones over the past 50 years as large bodies of timber have given way to smaller scattered patches of second growth.

Question. Mr. Scott, the Kennedy bill, S. 1046, would bring under the Minimum Wage Act many retail and service enterprises having an annual gross volume of sales of more than $500,000. Isn't it a fact that in order for a pulpwood producer to do a business of $500,000 a year he would need to have an operation in the neighborhood of 125 men?

Answer. I am not certain what gross volume of business in pulpwood is needed to produce $500.000 worth of product nor how many men this would take due to variation in price for different species, etc. However, comparison of a retail business which depends on volume turnover with a production enterprise is hardly comparable. A large part of pulpwood production costs goes for wages whereas a retailer must spend most of his outlay for inventory on his shelves. Question. Isn't it also a fact that under the Kennedy bill small pulpwood producers would be covered even if their gross volume of sales were only $5,000 to $10,000 a year? Whereas retail operations would be covered only if they did a business of half a million dollars a year or better?

A

Answer. It is true that small pulpwood producers would be covered by S. 1046 whereas smaller retailers would not. However, pulpwood producers with 12 men employed are comparatively as large as retailers with several hundred. 12-man logging crew is a large establishment in this business. It is not in retailing.

Question. Are you aware that the principal cosponsor of S. 1046 was responsible for legislation getting the U.S. Forest Service to set aside a portion of all sales of Government-owned timber for small business operation? I know from reading the Federal Register that small business for the purpose of the setasides is defined as a concern that together with its affiliates employs not more than 100 persons. Would you agree with this definition of a small businessand if so, wouldn't it be fair to say that the Kennedy bill goes far beyond expanding coverage to the medium-sized pulpwood producers? It would in fact extend coverage to all producers.

Answer. Yes: I am aware that the Small Business Administration defined a small business in the forest products field as having less than 100 employee, but this was done by the Small Business Administration, not the principal cosponsor of the Kennedy bill. That this is an unrealistic definition is apparent in tables I and III of the Senate Small Business Committee report which shows that 99.6 percent of all logging firms have less than 100 employees and 97.3 percent of all sawmills. But this definition does exclude contractors affiliated with large companies as well as those financed by them. This definition is set up primarily for timber sales where the timber industry giants were out bidding small, locally owned enterprises which depended heavily upon national forest timber for their continued survival.

Mr. SCOTT. Very well. In regard to their argument about the use of the handicapped workers in the logging industry, now I have here, which is not in this document, the injury frequency and severity rates for the logging industry and for the pulp and paper mills for 1957 and also for the third quarter of 1958.

Actually it is interesting to note that the frequency of injury in the logging industry as compared to that of the pulp paper and

paperboard mills is six or seven times greater in the logging industry than in the basic pulp and paper industry, and that the injury severity for the year 1957 is 7.5 times greater than in basic pulp and paper.

So when we look at the dangers and inherent hazards in the field of logging, I think that the one witness previously at another hearing, when he said that by going to the sawmills you will find a handicapped person as a watchman, that is probably about the only situation at which maybe handicapped workers are used in this field.

Senator KENNEDY. I believe it is either the first or second, probably after mining one of the most hazardous in the country.

Mr. SCOTT. It is, sir.

Senator KENNEDY. Thank you, sir.

(The following communications from the American Pulpwood Association, the Forest Farmers Association, the Georgia Forestry Association, and the Louisiana Forestry Association were subsequently received for the record:)

AMERICAN PULPWOOD ASSOCIATION,
New York, N.Y., June 12, 1959.

Hon. JOHN F. KENNEDY,
Chairman, Subcommittee on Labor, Senate Committee on Labor and Public
Welfare, Washington, D.C.

DEAR SENATOR KENNEDY: On June 4, Mr. Harry Scott, vice president and regional director of the United Papermakers & Paperworkers, appeared before you and other members of the Labor Subcommittee of the Senate Labor and Public Welfare Committee and submitted testimony and a statement relating to certain portions of S. 1046 and dealing with testimony presented to the Labor Subcommittee on May 11 by 35 witnesses and representatives of forestry and forest product associations. We are fully aware that Mr. Scott is an able union organizer and executive and an enthusiastic witness in behalf of his organization. However, in his testimony and statement to your subcommittee on June 4, he apparently was so moved with enthusiasm that he not only varied from the facts but also created the impression that he was seeking to discredit the testimony of honest woods producers.

The purpose of my letter is to bring clearly to your attention, and the other members of the subcommittee, a correction of the statements which were made by Mr. Scott.

It is my belief that this purpose may best be served by confining my comments primarily to the four main points of the summary which Mr. Scott presented with his statement.

POINT 1. WHAT ARE THE FACTS ON THE FORESTRY WITNESSES?

I am sure that you will agree that your staff, Mr. Scott, or anyone can look at the record and the statements of the witnesses themselves, as we have; and you will find that the 35 witnesses Scott tried to discredit actually are:

FIGURE 1.-Classification of witnesses of forestry and forest product groups, who appeared May 11, 1959

The estimated years of experience was gained from the record, or from personal impressions of the men as they appeared May 11.

Every single man of this group of 35 had more personal experience and more direct knowledge of operating small forestry and logging operations than Mr. Harry Scott, who is not a wood producer.

A careful review of their testimony and, in fact, their operations will reveal that all the operators and the few dealers are independent businessmen, legally and in every other sense of the word. Most all of them do business with more than one mill or other consumers of forest products. They are just what they said they were, all of them being independent businessmen, except the four paid officers of associations who clearly stated their positions. In short, instead of there being only one "genuine" producer as Mr. Scott would have you believe, there were actually 26 "producers" who own and operate logging equipment and have a direct interest in the legislation concerned.

POINT 2. EMPLOYEE STATUS OF PRODUCERS AND WORKERS

Producers do not "circumvent" the intent of the law when they employ 12 or less forestry or woods workers. That has been and is the traditional-size crew and means of logging small forested acres. A previous witness (Mr. Hartung), speaking in behalf of the same organization (AFL-CIO), admits that the average-size holding of farm and other private ownerships is less than 10C acres. Our own figures establish, and no one can refute the fact, that about 80 percent of all pulpwood comes from these small woodlots and forests. The exemption (sec. 13 (a) (15)) in the current Fair Labor Standards Act covers this situation, and no one is circumventing or violating any intent of the law when they use the small crews which they must, as they always have in the past.

Insofar as Mr. Scott's charge is concerned, that the employees of "bona fide" small loggers are "really employees of the middlemen," he personally should know better. According to page 31 of Senate Report No. 240 of the 86th Congress (on the problems of independent loggers, etc.) some "local producers went to the district representative" (who must be Mr. Harry Scott, or be in his region) with a protest about a new practice in measuring pulpwood. The report then reads: "After several organization meetings, the National Labor Relations Board held a hearing and ruled that pulpwood producers sold a product (not their labor) to the company, and, further, were independent contractors, not employees. The ruling also held that the pulpwood producers were not, therefore, eligible for collective-bargaining rights under the National Labor Relations Act."

It is evident, therefore, that Mr. Scott should, from personal experience, remember that the National Labor Relations Board ruled these "pulpwood producers" were "independent contractors, not employees."

Mr. Scott's insistence that producers are employees of "middlemen" or employees of mills, or "contract holders" or "agents" of mills, does not and cannot change the fact that the record shows the Federal agency (NLRB) concerned stated flatly that they are "independent contractors," and in our industry and in this country we all know that means "independent businessmen" and "independent employers."

POINT 3. "CONTROL" OF PRICES, ETC.

Mr. Scott's claim that papermills "control" the price of wood is a loose, unsupported charge, the rashness of which is apparent when you realize that mills in the pulp and paper industry consume less than one-fifth of all wood in the United States. Their raw material, pulpwood, requires about the shortest period of growth for economic harvest; its market requirements are more flexible and have less rigid specifications as to size and species than most other forest products; it is available in greater supply nationally; and is probably growing in volume faster than any other forest product. Basic economic laws of supply and demand are certain to develop relatively low prices for any renewable raw material for which there are large reserves and surplus growth. To claim that users of pulpwood establish the price of wood overall or even of pulpwood itself is ridiculous.

If Mr. Scott is referring to pulpwood specifically, he is obviously ignoring the statements of witnesses made on May 11, which clearly establish that pulpwood producers-dealers and pulpmills do compete with each other as to price

and are free to sell their pulpwood and other forest products to a variety of pulpmills, sawmills, piling, tie, post, wood preserving, and other wood-manufacturing operations.

Mr. Scott's reference to a "living wage" tends to ignore the fact all the producer witnesses and the statement of another AFL-CIO representative (Mr. Hartung), as well as the Bureau of Labor Statistics report, issued by Secretary Mitchell this spring, all show that woods workers of logging operations are earning better than the minimum wage in the South and in most of the North are earning better than the $1.25 per hour provided by S. 1046. Our objection to elimination of the 12-man forestry and logging exemption is not as Mr. Scott insinuates, related to a minimum or a "living" wage, but is based on the impossibility of producers being responsible for and keeping accurate timecards and records on small crews in the woods.

To say that "substantial holdings of timberland" are used as a threat by papermills is to ignore the testimony of this association and the figures of the U.S. Forest Service, which show that less than 5 percent of the commercial forest land is owned by pulp and paper companies.

Mr. Scott's reference to "economic reprisals" and Luther Harvison is a case of building up a charge on an incident that was not described correctly. A careful review of the affidavits on record of three men (D. W. Daughdrill, C. L. Smith, and Lamar M. Breland) closely associated with the "Harvison" incident, will prove that contrary to what has been claimed, Mr. Harvison did not suffer and is not under any "economic reprisals."

POINT 4. "PROTECTION" OF THE ACT

"Exploitation" of workers is claimed, but not proven by Harry Scott. Lower wages generally in the South and in insignificant portions of other forested regions are admitted and figures cited. These figures are not under the minimum currently required by the Fair Labor Standards Act. It is evident, therefore, that elimination of the 12-man exemption would not raise the wages of woods workers to the minimum, as they are already exceeding that amount. The exemption does not, therefore, deny "protection" of the act in this respect, but it does make it possible for the producers to work as they have in the past on a piecework basis, without the burden and unproductive cost of keeping timecards and time records as accurately as the Wage and Hour Decision has insisted on in the past. Moreover, we know that it is not only impractical to do this-that is our major contention.

If Harry Scott thinks this is a "feudal system," he is unaware or ignoring the fact that the number of pulpwood producers has increased and the volume of wood cut and delivered by them has grown from 10,816,000 cords in 1939, when the Fair Labor Standards Act was passed, to 19,945,000 cords in 1949, when the 12-man forestry and logging exemption became effective, to 35,020,000 cords last year. As this tremendous expansion took place, the methods of logging and the type of equipment improved. The felling of trees and preparation of pulpwood has increased from 50 to 100 percent per man in efficiency by the introduction of the powersaw during the past 10 years. The use of skidding tractors, roadbuilding bulldozers, better public roads, and larger trucks all combined to make it possible to haul larger loads of pulpwood per man-day. Loading and unloading devices in the woods, in concentration or dealer's yards, and in mill yards have also marked these past 10 years.

All this mechanization combined has made it possible for pulpwood producers to pay better wages, to produce more wood, and to become well-established businessmen in their own communities if they are "regular" producers, i.e., produce more than 1,000 cords annually.

The alleged plight of "part-time" producers that produce pulpwood in a minor portion of the year is the plight of underemployed farmers, truckdrivers, and other farm and smalltown laborers in areas of "underemployment." The pulp and paper industries have pumped new and vital cash income into the economic life of these areas, which were in much worse condition before they came in or expanded their operations. Harry Scott and others who present this development as a curse, ignore these constructive aspects. Some of the measures proposed by these critics, namely, Government investigations, and control of prices, would eventually eliminate these "smallest producers," build up some large operations, which might be eligible for union organization. Is that the real motive