Price increases for some products of low wage industries appear to be attributable, at least in part, to the minimum wage increase. However, prices for other products of low wage industries did not increase during the first few months of the $1.00 minimum wage.
Some employers reported improvements in plant efficiency resulting from the necessity for adjusting to higher costs per hour of labor. The reports obtained thus far are few in number, however. The intensive studies of methods of adjustment adopted by individual heavily affected plants will provide a much better idea of the nature and extent of improvement in productivity resulting from the minimum wage.
A few of the employers interviewed reported that the minimum wage increase caused them to be more selective in hiring new workers. The extent to which changes in hiring policy have made it more difficult for particular groups of the labor force, such as older workers and new entrants, to obtain jobs will be determined for many situations through the intensive studies of individual plants.
In the short run, in the industries surveyed, the $1.00 minimum wage apparently resulted in some increases in earnings of workers previously paid the minimum rate or more. More detailed analysis of the data will be required to determine to what extent the increases in earnings above the $1.00 level are related to the minimum wage change. The extent of indirect effects over a longer period will be disclosed in later phases of the study program.
The minimum wage resulted in the short-run, in industries surveved, in a general narrowing of wage differentials, particularly among regions, occupations, and plants of different sizes. Analysis of the data has not been carried to the point of determining the extent to which the narrowing of occupational differentials relates to narrowing of inter-plant differentials and to what extent it results from a narrowing of differentials within plants. Information on the extent to which differentials are reestablished over a longer-run period will be obtained through the resurveys to be made in 1957.
The exemption applicable to logging operations utilizing 12 or fewer logging employees has not resulted in lower wages for exempt employees than for subject workers in integrated mills in the South.
Since the Fair Labor Standards Act became effective, 1938, average hourly earnings of workers in selected low-wage industries generally subject to the Act have increased by a larger percentage than earnings for selected high wage industries or for all manufacturing workers combined. Earnings of workers in selected low-wage industries in which the Act is not generally applicable have lagged behind the other three groups, for the period 1938 to 1956 taken as a whole.
C. Evaluation of Reports of Adverse Effects When the Fair Labor Standards Act first became effective, and subsequently when the rate was increased to 30 cents, there were many reports of adverse effects of the minimum wage on employment. It was not possible to evaluate these reports because no procedure had been established for calling them to the attention of the Wage and Hour and Public Contracts Divisions or for determining if the allegations were actual facts in situations which did come to the attention of the Divisions. As part of the study of the effects of the 75-cent minimum wage, an attempt was made to obtain and evaluate such reports. Improved procedures for getting such reports channeled to the Divisions were developed for use in the study of the effects of the $1.00 minimum, and reports received on adverse effects in specific firms were followed up to determine the facts. This study was confined to reports received during the first few months following the effective date of the new minimum.
The field staff of the Divisions and local officials of State Employment Security offices were asked to watch for and report on situations in which the minimum wage was alleged to have adverse effects on employment, including the closing down of plants. Visits were made to all firms which could be identified, and plant owners or management representatives were interviewed to determine whether employees had been discharged, and if so, the apparent reasons for discharges.