Mr. ULLMAN. No questions. Mr. RIVERS. No questions. Mr. O'BRIEN. Thank you, gentlemen, very much. That concludes the hearing for today and we will adjourn until 9:30 tomorrow morning. (Whereupon, at 5:30 p.m., the committee adjourned, to reconvene at 9:30 a.m., Friday, Dec. 4, 1959.) PUERTO RICO-1959 FRIDAY, DECEMBER 4, 1959 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON TERRITORIAL San Juan, P.R. The subcommittee met, pursuant to adjournment, at 9:30 a.m., in the Capitol Building, Hon. Leo W. O'Brien, chairman of the subcommittee presiding. Mr. O'BRIEN. The hearing will come to order. I might note at the outset we have been joined today by a distinguished member of the committee, the gentlewoman from Idaho, Mrs. Pfost, who is one of the very able members of this committee. We will hear as our first witness, the secretary of labor, the Honorable Fernando Sierra Berdecia. STATEMENT OF HON. FERNANDO SIERRA BERDECIA, SECRETARY OF LABOR, COMMONWEALTH OF PUERTO RICO Mr. SIERRA BERDECIA. Mr. Chairman, I am Fernando Sierra Berdecia, secretary of labor of the Commonwealth of Puerto Rico. It is a great pleasure to me to have the opportunity to appear before this committee and to speak about our progress and our problems. The progress we have made in recent years is considerable. The problems which we still face are similarly considerable. Less than two decades ago, economists, public officials, social scientists, were looking at Puerto Rico, with its problems of underdevelopment, overpopulation, and lack of natural resources. Many of them said the problems were insoluble. We listened, thought perhaps they were right-and decided to try to solve them anyway. The results of our efforts of the efforts of the people of Puerto Rico-are now well known. The nearly 600 new factories which have been established under Operation Bootstrap, the doubling of real incomes in the past 19 years, the dramatic rise in life expectancy from 46 years in 1940 to 68 years in 1955, the drop in the death rate, the great improvements in education, the rapidity with which workers have been trained for industrial jobs, and so on. I merely mention these in passing, since I know that others appearing before the committee will present these subjects in detail. The matters with which I am especially concerned, as secretary of labor, are the welfare of workers and their families, their working conditions, their opportunities for gainful employment, wages, and productivity. Our department of labor consists of 14 divisions at 129 the bureau level, dealing with, among others, such areas of activity as labor standards, statistics, accident prevention, labor-union accounting, conciliation and arbitration, apprenticeship, and accident and unemployment compensation. Also part of the department of labor but whose decisions are not subject to revision by the secretary of labor, are three quasi-independent agencies: the industrial commission and the State insurance fund, both of which are concerned with various aspects of labor accident cases, and the minimum wage board. It is the responsibility of our department to administer and develop the government's labor program in all of these fields. We work actively to inform employers and workers of the labor laws and regulations, attempting to reduce violations to a minimum and to utilize preventive action in order to promote and maintain good labor-management relations. When disputes arise, we provide our full resources for mediation and arbitration. We have modern labor legislation on our books in such fields as wages and hours, safety and hygienic standards, and unemployment and accident compensation. Most important, we actively seek to enforce this legislation by orientation, persuasion, and, as necessary, by judicial action. For example, during the fiscal year which ended last June 30, our bureau of labor standards resolved 6,595 wage claims by workers, resulting in the payment to the workers of $374,119 which they were owed. And, to mention one other example of the results of our work, 93 percent of Puerto Rico's labor disputes were settled peacefully during the year, without strikes or walkouts, through the efforts of our bureau of conciliation and arbitration. Since time would not permit me to go into all of the many aspects of our programs today, I should like to try to present a brief overall picture of the situation in Puerto Rico with respect to employment, unemployment, and migration, and the changes which have occurred during recent years. Fundamental changes have been taking place in the labor force, both in agriculture and in the nonagricultural industries. The overall picture since 1950 has been: a decrease in the size of the labor force; decreasing employment; changing patterns of employment reflecting the increasing importance of manufacturing, which surpassed agriculture as a source of income 3 years ago; increasing full employment, with a corresponding diminution in underemployment; a shift in employment from less productive to more productive industries; and considerable increases in wages. Perhaps I should pause here to say that the concepts used in our labor force survey follow very closely those established by the U.S. Bureau of the Census. The labor force consists of persons 14 years of age and over who either have a job or who are unemployed and seeking work. During the 8-year period from 1950 through 1958, the size of the labor force declined from 704,000 persons to 639,000, and correspondingly, total employment decreased from 601,000 to 550,000. At the same time, unemployment decreased from 103,000 to 89,000, a drop of 14,000. Nevertheless, unemployment constituted 13.9 percent of the labor force in 1958 and will continue to remain a serious problem for some time to come. Between 1950 and 1958, wage and salaried employment, exclusive of home needlework, rose from 357,000 to 394,000, reflecting the rapid increase in more productive and better paying jobs. The significant advances in the quality of jobs available and the increases in wages and family incomes have made it possible for a number of persons to withdraw from the labor force in order to study, to become housewives, and so on. The improvements in income and in the educational programs vigorously supported by the government have enabled young persons to remain in school longer and to achieve the greater education needed for the new technical and industrial jobs which have been created. The movement of workers to the U.S. mainland in response to job opportunities there has also been an important factor in reducing the size of the labor force. An examination of the changes taking place in each industry show what is happening. With respect to agriculture, decreases in employment have been occurring in sugar, tobacco, and other types of farming, except coffee. These have occurred as technological advances have increased productivity per worker and as workers have left agriculture to seek better paying jobs in other industries, with the exception of tobacco in which both production and employment have declined. With respect to nonagriculture, decreases have been occurring in home needlework, domestic services, and sugar mills. The home needlework industry-in which weekly earnings average about $4, reflecting the part-time nature of the work-has come close to disappearing; employment dropped from 55,000 to 10,000 between 1950 and 1958. This has occurred partly as a result of competition from low-wage areas in the Far East and Europe, against which there is no effective tariff protection. Domestic services have decreased by nearly half, from 32,000 to 19,000-reflecting the low wages paid for such work and the movement of workers to better paying jobs. The fall in sugar mill employment, which has been due to technological advances and the closing of some small mills, has been much smaller, from 10,000 workers to 7,000. The principal increases, on the other hand, have occurred in the following categories: factory employment; construction; transportation, communication, and public utilities; service industries, excluding domestic service; and in government services. Smaller increases have occurred in wholesale and retail trade and on coffee farms. What we see in this changing industrial distribution are considerable increases in the more modern, more productive, better paying industries, accompanied by considerable decreases in the older, more traditional, and generally less productive and poorer paying industries. Notable progress has also been made in providing our workers with full-time employment. In July 1950, only 52 percent of the persons employed were working 35 hours or more per week. By July 1959 the proportion had risen to 66 percent. One question which must be asked of any developing economy is whether the working people are participating fully in that development. The answer in the case of Puerto Rico is a resounding "Yes." In 1941, the average annual income of wage earners' families was $360. By 1953, the latest data available, this figure had increased to $1,180. Even after allowing for the rise in the cost of living during this period, the increases amounted to a gain of 83 percent in real income. In other words, the average working family in 1953 was able to purchase over 14 times as many goods and services as in 1941. Moreover, significant reductions occurred in the number of families at the lowest end of the income scale. In 1941, 81 percent of the wage earners' families had incomes of less than $500 a year; by 1953 such families amounted to only 7 percent. While the real average income of wage earners' families was rising by 83 percent during the 12-year period from 1941 through 1953, the real average income of all families rose by only 80 percent during the 16-year period from 1940 through 1956, for which data are available. This means that the income of working class families grew at a greater rate than did family income for the economy as a whole. In addition, labor's share of Puerto Rico's total national income is high-64.4 percent. Out of 36 countries in various parts of the world for which figures are available, there are only 2 in which labor's share of national income is higher-in the United States, where it is 67.6 percent, and in the United Kingdom, where it is 68.9 percent. As I have indicated, one of the basic factors in the rising incomes of wage earners' families has been the shift to more productive jobs and increasing productivity in a number of traditional industries as well. Another factor has been the minimum wage policies pursued jointly by the Commonwealth and Federal Governments, with the Puerto Rico Minimum Wage Board, which was established in 1941, acting under act No. 96 of June 26, 1956, passed by the Puerto Rican Legislature, and with the U.S. Department of Labor acting under the Federal Fair Labor Standards Act. The Federal Government is concerned, of course, with those industries engaged in interstate commerce, and the Commonwealth government is concerned with both local and interstate industries. Under the two programs, minimum wages in each industry in Puerto Rico are reviewed at least once every 2 years by industrial committees, for the purpose of setting new minimum wage rates which will be at the highest level economically feasible without substantially curtailing employment and which will not give any industry in Puerto Rico a competitive advantage over an industry in the continental United States. In addition, it is the policy of the Puerto Rico Minimum Wage Board to provide for a review once every year, rather than once every 2 years, of every industry engaged in interstate commerce in which the current minimum is less than 70 cents an hour. These industries are reviewed biennially under the Federal law and in alternate years by the Puerto Rico Minimum Wage Board. The increases which have occurred in minimum wage rates are reflected in the significant increases in earnings of wage and salaried workers during the past few years. Between April 1953 and April 1959, average hourly earnings of factory production workers rose from 54 cents an hour to 87 cents. This constitutes an increase of |