the individual. And certainly there is a great area of variance in both cost of living and conduct of business. I think you have got a different situation, Senator, in Detroit versus the Upper Peninsula in Michigan. We have different kinds of stores in hardware. I can think of many. I could use some beautiful examples of types of stores in those two areas within your own State.

Senator MCNAMARA. I don't find that there is a great deal of difference in the cost of living between Detroit and the Upper Peninsula area. There is a great difference in the operation of retail stores. In one area there are more general stores and in larger cities they are specialized.

Mr. MUELLER. You have a productivity factor there, too.

Senator MCNAMARA. Of course.

Mr. MUELLER. You have a certain amount of traffic flow into a store, let's say, in a suburban area of Detroit which is an entirely different traffic flow then we would have through a store located in a 1,500 or 2,000 population area. So the productivity of the employee in the two stores is quite different.

Senator MCNAMARA. Of course.

Mr. MUELLER. Because of the traffic flow itself.

Senator MCNAMARA. The investment is different; everything about it is different.

Mr. MUELLER. Then how would the wage be standard for both of them?

Senator MCNAMARA. Under this bill there would be a minimum that would take into consideration all these factors; not what is accepted as

Mr. MUELLER. But a minimum in our industry would be quite destructive, particularly if 72 percent of our stores have a workweek in excess of 48 hours. How do we come up with this time and a half for overtime? How do we resolve our service within that community within these kind of work periods? How do we maintain a sales organization during January, February, and March if we can't work that same sales organization during April, May, and June, and the peak periods?

Senator MCNAMARA. Many industries, many businesses have this problem. We have many industries that go more than 48 hours or more a week, and they manage by giving a day off to certain employees to meet this thing. This doesn't seem to me to be an insurmountable problem.

Senator Goldwater, do you have any comments or questions?
Senator GOLDWATER. No; I haven't.

Senator MCNAMARA. Again, thank you very much.

Now we will be glad to hear from the other gentleman, who is Mr. Walker, of Columbia, Miss., who deals with variety stores, as I understand it.

You may proceed in your own manner, sir. Your prepared statement will be printed at this point.

(The prepared statement of Mr. Walker follows:)

STATEMENT OF W. E. WALKER, JR., OF COLUMBIA, MISS.

I am W. E. Walker, Jr., from Columbia, Miss. I am president of W. E. Walker Stores, Inc., a retail business. I appreciate this opportunity to explain what extension of coverage of the Fair Labor Standards Act would mean to

our business, our employees, and our customers. I hope that my testimony will help you see more clearly how the entire field of retailing would be adversely affected.

You gentlemen will hear a good deal of testimony on the fact that the constitutional scope of our Federal Government would be violated if Federal wage and hour provisions were to be extended to any part of retailing. On this point, therefore, I only wish to say that I, too, believe every store, regardless of ownership or other affiliation, is a local store selling to customers located in its own small trading area, and thus should be excluded from these Federal regulations.

Now, let me be specific and try to show you what the legislation to extend coverage and apply a $1.25-an-hour minimum wage to retail stores would do. The W. E. Walker Stores, Inc., operate 24 stores. Our stores range in volume from $41,000 to $189,000 a year. The average is slightly less than $93,000 per store. Our total sales last year were $2,225,000. The population of the towns in which we have stores is between 1,800 and 15,000. Sixteen stores are in towns with under 5,000 people; seven are in towns between 5,000 and 10,000; and only one is in a town with over 10,000 population.

We employ an average of 150 full-time workers-95 of these are womenand we also employ 125 part-time workers.

We produced $4.26 in sales for each hour of work put in by our employees last year.

The merchandise we sold cost us 63 cents of every sales dollar. It cost us 18 cents of every dollar for payroll. All other expenses of running the business amounted to 15 cents per dollar of sales. These expenses included rent, utilities, taxes other than income, insurance, supplies, payroll taxes, advertising, etc. The profit before income taxes amounted to 4 cents. After paying Federal and State income taxes, this was reduced to 2 cents.

If the present $1-an-hour Federal minimum wage were applied to retailing and to my small stores, payroll cost would be increased 22 percent. This increase is exactly 4 percent of annual sales, leaving no profit for the Federal and State Governments and the future growth of the business to share. This figure is based on bringing all those employees below $1 to that figure. It does not include any of the further adjustments which would have to be made for my better, more experienced girls. It does not include any overtime at time and a half, because we could not afford to have any.

Now, let's look at what $1.25 an hour would do. My payroll cost would be increased by 40 percent, or 7 percent of yearly sales. Last year there was only a 4 percent, before-taxes profit. Something would have to give.

I think this is important enough to spend a few minutes talking about the adjustments that would be required and their effect on people, as well as on our business.

I pointed out that last year we sold about $4.26 worth of merchandise at retail for every hour of work by our employees. Now, that isn't a very high figure, but we sell inexpensive merchandise and we must keep our stores open a good many hours. We country people get about our business early in the morning. Some of our stores open at 7 o'clock and others at 8, because that's what our customers want. We close at 5 o'clock except on Saturday nights when, depending on the town, it may be 6, 7, or even 8 o'clock.

In a town of 2,000 people there are lots of times when there isn't a customer in the store and, when our customers do come in, it is not like shopping in a big city. They expect to visit a bit. They want to hear about new merchandise and about their friends, too. Remember that our employees live on nearby farms or in the little towns where they work. They are home folks. I suppose we could get real strict and make everybody work faster and try to get higher production, but most of our girls would quit because that's not the way they like to live.

We employ 95 full-time women. Sixty percent of these are from 18 to 23 years old. They are young, living at home, waiting to get married, or working a bit after marriage to help their husbands. Ten percent of our ladies are from 23 to 40 years old. They are married and working to make things easier at home or working to help get something the family wants or the farm needs. Thirty percent of our women are from 40 to 75 years of age. They are not heads of a household. They are not supporting others. They are helping out. Our older ladies are especially nice. It gives them a good feeling not to have to be a burden to their married children.

What will happen if we have to get high production. You and I know who will be the ones to go if we are forced to lay some off.

It is a good thing for youngsters to be able to work on Saturdays and perhaps an afternoon or so a week. It is good to have part-time jobs so that married women with children in school can work a few hours a day. Does the Federal Government want to tell us that our way of life is wrong and that we have to get by with fewer people?

It disturbs me that some people want the Federal Government to change so many things. I treat my employees in as considerate and fair a way as I can. I take a leading part in church activities and I live by my faith. I believe in the dignity of people. My employees are good citizens. Almost all of them are Sunday-school teachers, members of the women's organizations or of the different boards in their churches. They are not downtrodden or oppressed or exploited. They are the salt of the earth and I don't want to have to let any of them go.

We
We

Another group, a bigger and more important group, would be affected if we had to try to operate our stores on $1 or on a $1.25-an-hour minimum wage. I am talking about our customers. In order to increase our sales per employeehour, we would have to drop some of our lower priced merchandise. couldn't afford to give shelf space to kiddies' panties at 29 cents a pair. would be forced to buy the kind that sell for 39 or 49 cents. They are better quality, but they will be outgrown as quickly as the ones we now sell at 29 cents. Merchandise adjustments like this will have to be made throughout all of our lines. Prices on other merchandise would be increased-not on everything, not on nationally advertised, price-fixed brands that everybody carries, but on hundreds of items among the thousands we sell. The combination of dropping some of our lowest priced merchandise and raising the prices of some other items is the kind of inflationary adjustment that would inevitably result. How does this help the farmers or any of our other customers? How does it help our suppliers whose items we would be forced to drop?

If our company made all of the adjustments I have mentioned-increased our sales per working hour, laid off many of our full-time employees and most of our part-timers and tried to sell higher priced merchandise-we would end up with perhaps half of our store locations that would be busy enough to operate in the black.

Our very small volume stores and those in the smallest towns present special problems. There is no potential for substantially increasing the business in our $41,000 store. Productivity can only be increased by raising volume because it takes a manager and three girls to keep the doors open. A substantial increase in wage cost would make it necessary to turn the lock and close the store. We get by now because the fixtures are fully depreciated and the rent is low. The store has been there a long time. Must the customers in this small town go to another town for their inexpensive merchandise in our lines, and must the landlord seek a new tenant-someone who has no other stores or who is in a different line of retailing-because of a Federal law?

There are other stores, too, where we just could not make the adjustment to $1 an hour no matter what we tried to do. It would be even more difficult at $1.25 an hour. These stores would have to go.

Is this good for the communities which we serve? Is it good for our customers, our suppliers or the employees in the stores which could not possibly make the adjustment? Multiplied to other retailers all over the country, is this good for the economy of the country?

I read in the paper that the biggest department store in the world, located in the busiest section of New York City, had just signed a new union contract. As I remember it, the starting wage was raised to $1.10 an hour with provision that this would go to $1.25 at a later date-June, I think. The average sale in this store is close to $5. Customer traffic is just about the heaviest there is.

Gentlemen, how in the world is W. E. Walker Stores, Inc., with 24 small stores in country towns, going to pay the same minimum wage as this biggest store of them all? We can't possibly raise our 53-cent average sale to anywhere near $5. We don't have enough customers streaming through our stores to make it possible for us to match the number of sales per hour that can be achieved in big cities, and to meet their production of dollar volume per employee hour is completely impossible.

Some advocates of a $1 or a $1.25 minimum wage have pointed out that, for example, a large tube of toothpaste is sold for 69 cents everywhere and that

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the hourly wage rates of the salespeople cover a broad range from $1 or $1.25 an hour or sometimes even more in a big city unionized store to much less than that in some stores. It has been asked why all stores cannot pay the same high wage rate. I am sure that you recognize that in the big-city downtown store the clerk has the opportunity, the potential to sell 10 times as many tubes in an hour as could be sold in any of our stores.

There is one more thing I would like to add. I am no economist, but I don't have to be to know that it costs us a lot less to live in our section of the country, in our small towns, than it does in New York City or Chicago or other big cities. This is true of smaller communities all over the country. All of the women working for us live at home, many on small farms. If they were alone and had to rent a room in a nice, clean house, it would not cost anything like a small apartment or even a room in the city. Most people go home to lunch but, even if they didn't, even if they bought their lunch, prices are much cheaper. Our store in Columbia has a lunch counter and a few tables. It is the best place to eat in town. A full-course meal of good, home-cooked fresh food costs a top of 65 cents. And speaking of food, we all either raise a good deal of it or we are close enough to farmers to get a lot of it very reasonably. We don't have transportation problems like city folks do. I cannot understand why anyone would compare living or living costs in county-seat towns and smaller ones with costs in big cities.

What I have been talking about is my story, but it applies to thousands of retailers, small, medium, and large, who are serving American consumers.

Don't you see how violent and disruptive it would be for the Federal Government to apply New York City big store union wages rates to the rest of the country?

Thank you for giving me this time to tell my story. I join retailers, the service trades, and all other local business in urging that the Fair Labor Standards Act be left alone.

STATEMENT OF W. E. WALKER, JR., COLUMBIA, MISS.

Mr. WALKER. Thank you, Senator. I am not exactly in form here, because I assure you that this is not my line of work. I am here because I am interested in the subject and I am here because I feel I have something that can be of value to you and the committee in determining the future status of this extension of coverage.

I apologize if my choice of words is not quite up to some of the other people you will have up here this morning. I do appreciate the opportunity of being here to try to tell you what extension of this act would mean to our business, our employees, and our customers. I will try to be right to the point and give you an example in our business of what would take place.

We operate 24 stores in Mississippi and Louisiana. Our stores range in volume from $41,000 to $189,000 a year.

The average is slightly less than $93,000 a year per store. Our total sales last year were $214 million.

The towns where these stores are located range in population from 1,800 to 15,000. Sixteen of our stores are in towns of under 4,000 population; seven are in towns from 4 to 10,000 population; and one above 10.

Senator MCNAMARA. The copy I have indicates the stores are in areas of 1,800 to 15,000 population. You use 8,000 in several instances. Do you want the record to show 8,000?

Mr. WALKER. Eight is correct. We have 1 store in a town of 12,000 only, we have 7 stores in towns of 4,000 to 8,000. Yes, sir; what I said is correct.

Senator MCNAMARA. Then we will correct our copy. Thank you. Go ahead.

Mr. WALKER. In our 24 stores we average 150 full-time workers95 of these 150 are women-and in addition we average about 125 parttime workers.

Last year, as best we could determine, we produced $4.26 in sales for each hour of work put in by our employees.

The merchandise we sold for a dollar cost us 65 cents; 18 cents went to payroll. The other expenses were 15 cents, leaving 4 cents for gross profit, resulting 2 cents to net profit.

If we were to include our payroll to $1 an hour Federal minimum wage, our payroll, as best we could determine, would be increased by 22 percent. This increase is exactly 4 percent of our annual sales, which would result in no profit for Federal and State income tax; no profit for return on invested capital; more important to me, no incentive to grow in American business.

This figure is based on only bringing our employees below $1 to $1. It does not consider differentials that would necessarily want to be maintained for older and experienced employees. It does not include any overtime at time and a half, because obviously there could be none.

At $1.25 an hour our payroll costs would be increased by 40 percent, 7 percent of annual sales, or a loss of 3 cents on the dollar.

Obviously, drastic adjustments would have to be made. I am just earnest enough to try to come up with the proper adjustments that could make us survive, but I haven't been able to do it.

Let's look just a moment at the adjustments that we could make. I pointed out that last year we sold $4.26 worth of merchandise at retail for every hour of work by our employees. That is a low figure, comparatively speaking. There are a lot of businesses in this country I am sure would go broke in a hurry if that was their production.

Our business has been built and founded and is known for selling inexpensive merchandise. I am not proud of the fact that our average customer does not enjoy the per capita income that the average American does.

I cannot let it be said, as has been inferred previously, that our average customer is poverty stricken. He is not, I would only welcome anyone to come down and examine the situation firsthand, and I can't conscientiously sit here and not correct that inference.

Our stores are small stores in small towns. I don't know that our country people get up any earlier than city people do, but they seem to get where they are going quicker because they don't have as far to go. Some of our stores open at 7 o'clock in the morning. Most of them open at 8. Most of our stores close at 5 o'clock in the afternoon; on Saturday, 6, 7, or 8 o'clock, depending upon the locality.

In a town of 2,000 or 3,000 people, there are lots of times in our stores when we do not have a customer and, when our customers do come in, they are not in a big hurry to rush in, pick up an item, and rush back out because of parking meters pushing them.

They expect to visit a bit. They expect to chat about what is going on, to look at new merchandise. Basic to understanding this problem would be the fact that the majority of our stores do from 40 to 45 percent of their business on Saturday-that is, of a week's business. Of necessity then, more than 50 percent of our employees on Saturday are part-time, 1-day employees.