TYPES OF ESTABLISHMENTS

The power-laundry industry is composed of three basic types of establishments-family laundries, institutional laundries, and commercial wholesale and linen supply establishments. Family laundries, selling their services primarily to the individual consumer at retail, constitute by far the dominant group. Less than 7 percent of the establishments, in 1939, did linen supply work either exclusively or predominantly.

Although characteristically an industry composed of small units, it has shown a tendency toward larger establishments and expanded services. The "average" family laundry receives from its customers about $100,000 a year. Such an average, however, obscures the marked contrasts between the small and large units. In 1939, just a little over half the establishments accounted for over 90 percent of the industry's dollar volume and provided employment for almost 90 percent of the industry's employees. Together, therefore, with many small plants (almost half of the total), generally employing 1 to 3 persons, are the relatively few large establishments doing a substantial share of the business. In 1939, only 314 establishments, less than 5 percent of the total, each with annual receipts of a quarter of a million dollars or more, together were responsible for 30 percent of the industry's total receipts. These large laundries, in addition to the regular family-laundry service, generally offer a variety of other services, such as dry cleaning, rug cleaning and storage, fur cleaning and storage, and hat cleaning.

SPECIAL CHARACTERISTICS

Commercial laundry service shares with other service industries the characteristics of time and place limitations. Customers want their laundry processed and returned at a particular time. The industry, unlike manufacturing industries, cannot store inventories for future sale. At the same time, because the processing is of short-lived utility in that the garments soon become soiled and again require laundering, the establishments generally serve localized markets, insulated from competition from other communities. These factors determine the distribution of establishments. Laundries are operating throughout the country, in all large cities, and in hundreds of smaller cities; in short, in almost every community large enough to support at least one establishment.

Several other special characteristics of the industry have particular bearing on an understanding of the industry itself and more specifically on the wage and employment standards practiced in the individual plants. It is, significantly, a woman-employing industry, a fact which has had far-reaching effects on its wage standards. Women, almost 200,000 in number, constitute almost two-thirds of the work force.

More than in other service industries, total pay-roll costs consume a high percentage of receipts. Approximately 52 cents of every revenue dollar is paid out in pay roll. Most of the plant operations require individual handling. Aside from washing and drying, processes in which several garments can be handled in a machine at one time, all

1 This figure, based on 1939 census, includes salaries of paid executives of corporations.

other plant processes require individual handling of the garments, despite the use of power-driven machinery. This means that the wage bill represents the largest single item in the employer's costs.

It is difficult, if not invalid, to compare the pay-roll ratio in the laundry industry with that in manufacturing or trade industries. Pay-roll cost percentages, being expressed in relation to revenue, are obviously affected by the component elements of revenue. Laundries do not produce a physical product, and therefore the return on raw material costs is not, as in manufacturing, reflected in total receipts.2 Unlike the distributive trade industries, laundries do not have to get a return on merchandise costs.

The two major elements in the laundry employer's pay-roll costs are productive labor, which consumed, in 1944, 35 percent of receipts, and routemen's wages and commissions, 11 percent of receipts. Because laundries sell predominantly the processing performed by their labor force, they should be vitally concerned with modern techniques for using that labor force most effectively. Efficient operating methods, increased productivity, and a realistic concern for the welfare of the employees to enable them to yield maximum quality output should be the benchmarks of the cost-conscious employer.

The industry is profitable, having been consistently "in the black" for over a decade. Total return to management during the three war years, 1942-44, averaged over 7 percent of sales; over 2% percent represented net operating profit, and 4% percent was drawn off for executive salaries. Rates of profit, however, varied substantially, not only with the volume of business of the individual plants but also with their locations. The higher the volume of business, the higher was the net profit rate. Laundries having a weekly sales volume of less than $1,000 showed an average loss of 4.42 percent of sales for the three war years, whereas those in the next higher volume classification ($1,000-$2,000 weekly) averaged 0.10 percent profit. This rate of net profit increased consistently in the higher-volume groups, reaching an average net profit rate of 4.24 percent of sales in laundries doing $8,000 and over a week in business. The rate of profit also differed markedly in different areas of the country. Laundries in the Southern and far Western States realized a higher rate of net profit than did those in other areas of the country.

3

The power-laundry industry is not one of widespread union organization. It is estimated that only 30 to 40 percent of the industry's production workers are working under terms set by collective-bargaining agreements. And it is only within the past decade that this organization was accomplished. As recently as 10 years ago union membership was insignificant. Only 600 paid members belonged to the Laundry Workers' International Union (AFL) in 1936, and some laundry drivers were affiliated with the International Brotherhood of Teamsters (AFL). Significant organizational strides were made by the AFL laundry workers union in 1938-40 and by the CIO union, Amalgamated Clothing Workers of America, which entered the

'Laundries do have productive supply costs which, in 1944, consumed less than 10 percent of revenue. Southern-North Carolina, South Carolina, Georgia, Florida, Kentucky, Tennessee, Alabama, Mississippi, Arkansas, Louisiana, Oklahoma, Texas, New Mexico, District of Columbia, Maryland, Virginia, and West Virginia. Far Western-Washington, Oregon, California, Nevada, and Arizona. A few laundries in British Columbia, Canada, are also included in this group.

laundry field in 1937 and achieved almost complete organization of the industry in the New York area by 1941. Total membership in the AFL laundry workers union, however, apparently reached a plateau in the war years, having remained unchanged in the past 4 years from its 50,000 membership figure of 1943. Comparable data are not available for the CIO union.

Much of the union membership appears to be centered in certain large cities, such as San Francisco, Seattle, and Portland on the west coast; New York, Jersey City, and Philadelphia on the east coast; and middle western cities such as Chicago, St. Louis, Kansas City, Detroit, and Milwaukee. Some union contracts are also in force in scattered southern cities, among them, Birmingham, Atlanta, and, more recently New Orleans. The provisions of some of the southern-city contracts, however, still leave much to be desired. Both the CIO and AFL unions currently report activity in the South.

The extent of union organization thus far attained in the industry lags behind that in most manufacturing and many nonmanufacturing industries.

PURPOSE AND SCOPE OF SURVEY

SELECTION OF INDUSTRY

In selecting the power-laundry industry for survey, the Women's Bureau, fulfilling its statutory function "to promote the welfare of wage-earning women," was guided by the anticipated return to the industry of displaced women war workers. Always an employer of large numbers of women, the industry was faced during the war with the wholesale exodus of its regular workers attracted to the higher wages and more desirable plant environment and working conditions in war-manufacturing industries. Cut-backs following the cessation. of hostilities forced women workers in all parts of the country to reestablish themselves in industries offering postwar job openings to them. Seeking to reconstitute their work forces disrupted by the labormarket upheaval incident to the war, laundries must also expand to meet that part of consumer demand not heretofore satisfied because of war shortages and restrictions. Again assuming their peacetime importance to women workers as a whole, power laundries loom especially significant as a reemployment field for women war workers, fresh from the rewarding experience of higher wage and employment standards in war factories.

Historically the industry has been among the lowest paying for women workers. A Women's Bureau survey conducted in the war period among women employed in 10 war-production areas showed that take-home earnings of women working in war plants considerably exceeded those of women working in laundries. Take-home pay in war plants averaged over $35 in half the areas surveyed, but in laundries, with the exception only of west coast laundries, take-home pay averaged $25 or less, and, in one area, as low as $16 a week. These earnings, low enough, were nevertheless higher than in many other localities in the country because they were received during the war period in war-congested areas of tight labor markets. Some women in the South are still being paid 18 and 25 cents an hour,

Like those in other intrastate trade and service industries, women working in laundries usually do not enjoy the benefits of the Federal Fair Labor Standards Act which assures to workers in interstate industries a minimum rate of at least 40 cents an hour and time and one-half the employee's regular rate of pay for hours in excess of 40 per week. Recognizing that many women laundry workers have long been subjected to unconscionably low wages, every State with an active, applicable minimum-wage law of its own has established, either through a specific minimum-wage order or the statute itself, a legal floor to women's wages in laundries. No other industry has such extensive coverage under State minimum-wage programs. Yet low wages still are widespread in many places. Twenty-two States do not have a minimum-wage law. Three States, Kansas, Louisiana, and Oklahoma, have inactive laws. In a fourth State, Maine, the law cannot be applied to laundries because it is limited, by its terms, to the fish-packing industry only.

Even in those 235 States, however, which have established a minimum wage for laundries, the rates fixed are so low in most as no longer to fulfill the legislative purpose of establishing a living wage. Only 75 States fix a rate for the entire State as high as the 40-cent minimum of the Federal Act. And it was only through recent revision (1943-47) of previously established rates that these 7 States achieved higher minima. In 13 other States, the rate set is 30 cents an hour or less for all or part of the State. In Arkansas a minimum wage of $1.25 per day for experienced workers has remained unchanged since its establishment as far back as 1915. The Arkansas rate, like others which have never been adjusted to increased living costs since originally issued, is patently no longer adequate to assure decent living standards.

The last report made on women's peacetime earnings in laundries was in October 1940, when a Women's Bureau study showed that the average earnings of about 25,000 women laundry employees in 11 large industrial States were 36 cents an hour-average earnings which bore the doubtful distinction of being the lowest among 24 selected woman-employing industries (22 manufacturing and 2 service). PURPOSE OF SURVEY

What conditions confront women laundry workers in the postwar period? To obtain factual information on all conditions affecting the employment of women spells out the objective of the survey. To help employers develop good labor standards was the underlying purpose which determined the method used in obtaining the information. By pointing to the striking differences in standards from laundry to laundry within the same city, and by contrasting a relatively highstandard region of the country with one of low standards, this survey will show that progressive managements in the industry itself have proved the practicability of decent wage standards, pointing the way to those all too numerous establishments still clinging to appallingly depressed standards.

On the basis of recent U. S. Supreme Court decisions, the Act was applied, effective Jan. 15, 1947, to laundry and linen supply firms which receive more than 25 percent of their total gross receipts from services provided to commercial and industrial customers for business purposes.

Includes District of Columbia, counted as a State. All information on State minimum-wage rates is as of March 15, 1947.

SCOPE OF SURVEY

In order to fulfill the purpose of the study, two regions of the country showing contrasts were selected for survey-the Middle West and the Southeast. Women's Bureau agents in the fall of 1945 visited 258 laundries in 38 places (cities and towns) in 11 States-3 in the Middle West: Illinois, Indiana, and Missouri; 8 in the Southeast: Alabama, Florida, Georgia, Kentucky, North Carolina, South Carolina, Tennessee, and Virginia.

Southeastern States 6

The southeast region was selected for more intense survey because it has long been the low-wage, low-income section of the country. Per capita income has for many years been consistently lower in the Southeast than in other regions of the country. Although the gap is being narrowed (substantial gains were made in the war years), per capita income payments in the southeastern region in 1945 were only 67 percent of the national average.

Annual wages of all workers covered by unemployment compensation laws averaged only $1,706 in 1944 in the Southeast; the $2,380 average for the rest of the country exceeded the southeastern region by almost 40 percent. In the low-paid service industries the difference was much greater-workers in the Southeast averaged only $1,222 a year, those in the rest of the country, $1,806, or almost 50 percent

more.

Many of the Southeastern States, aside from being low-wage areas, do not provide their workers with adequate legal safeguards through State laws regulating labor standards. Over half the States in the country have minimum-wage laws but only one of the Southeastern States (Kentucky) has such a law. Two of the five States without a maximum-hour law for women are in the Southeast-Alabama and Florida. In three other Southeastern States, the legal maximum is as high as 60 hours a week (Kentucky, Georgia, and Mississippi). Florida has no laws regulating the payment of wages, and those in North Carolina and Alabama are extremely limited in coverage. Mississippi is the only State in the country without a workmen's compensation law of any kind. Among the eight Southeastern States having such laws, only two, Kentucky and Virginia, have the preferred compulsory type. The unemployment compensation laws are usually of more limited coverage in the Southeast than in many other parts of the country. Only 1 of the 217 States in the country which regulate industrial home work is in the Southeast-Tennessee.

Middle Western States

The three Middle Western States selected for survey contrast with the southeastern region. In Illinois, per capita income payments in 1945 exceeded the national average; in Indiana, they were about the same as the national average; in Missouri, 92 percent of the national average. Wage-earner income in these States in 1944, measured by the $2,350 average annual wage of all workers covered by unemployment compensation laws, topped slightly the national average of

This section covers the nine States commonly considered to comprise the southeastern region of the country-Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Virginia. Mississippi, however, was not included in the survey.

Includes District of Columbia, counted as a State.