Functions concerning the establishment of minimum wages under the Public Contracts Act arise from the fact that this act itself sets no statutory minimum wage rate, but requires that persons employed by covered contractors be paid not less than the minimum wages as found by the Secretary of Labor to be the prevailing minimum for work in the industries producing the contract commodities.

Puerto Rico, the Virgin Islands, and American Samoa

The amendment to the act approved by the President on August 25, 1958, changed the wage order program for Puerto Rico, the Virgin Islands, and American Samoa from an annual to a biennial basis, commencing July 1, 1958.3 The 1958 amendment has the desirable consequence of eliminating the unsettling effects of a too-frequent review, and there has been continued progress toward the achievement of higher minimum wage levels.

In accordance with the provisions of the 1958 amendment and the statutory mandate that minimum wage rates be raised to the $1 level as rapidly as is economically feasible, the Divisions conducted a complete review of all minimum wage rates in Puerto Rico, the Virgin Islands, and American Samoa in the 2year period ending June 30, 1960. In fiscal year 1959, five series of hearings were convened in Puerto Rico in which 18 industry committees were involved. In the following fiscal year an additional three series of hearings were held in Puerto Rico, involving a total of eight industry committees, and one committee each was convened in the Virgin Islands and American Samoa. Composed equally of public, employer, and employee members, the committees recommended minimum wage rates at or below the $1 level for all island industries subject to the law that were not already at that level. The Administrator subsequently issued wage orders putting these recommendations into effect. A total of 85 minimum wage rates were set for the industries or industry classifications in Puerto Rico, 8 for industries in the Virgin Islands, and 4 for industries in American Samoa. Appendix tables G, H, and I show the current and former minimum wage rates for all industries in these areas.

Since the 1955 amendments to the act, which provided for annual review, almost 90 percent of the minimum wage rates in Puerto Rico have been increased in proportions equivalent to or in excess of the 333 percent increase in the statutory minimum effectuated by those amendments; almost 60 percent of the rates have been increased 50 percent or more; and some 12 percent have been increased 100 percent or more. (See appendix table J.) In terms of absolutes, two-thirds of the rates have been increased 25 cents, the amount of the last statutory increase, or more an hour. On the other hand, the wage order increases recommended by the industry committees have been so varied, ranging

'The 1958 amendment to the act also gave the Secretary discretionary authority to order an additional review of particular minimum wage rates in the biennial period and made clear that rates that had reached the statutory objective need not be reviewed.

*In fiscal year 1959, 55 minimum wage rates were increased and 8 were left unchanged; in fiscal year 1960, 20 rates were increased and 2 were left unchanged.

from less than 5 cents an hour to over 50 cents, that the need for a flexible approach to minimum wages for Puerto Rico has been clearly demonstrated. About 3 of every 10 workers covered by the act in Puerto Rico at the end of fiscal year 1957, the first year of annual review, were subject to minimum wage rates of less than 50 cents an hour, and fewer than 2 in 10 were subject to the $1 minimum. At the end of fiscal year 1960, the second year of the first biennial review, only 1 in 10 workers on the island was subject to a minimum wage rate of less than 50 cents an hour, and 4 in 10 were subject to the $1 minimum. (See appendix table K.)

In fiscal year 1960, the median increase in minimum wage rates in Puerto Rico amounted to 6 cents an hour, 1 cent more than in each of the 2 preceding years, although below the 10-cent median increase in fiscal year 1957, which was the first full fiscal year following the enactment of the $1 minimum and the period in which it is to be expected that the largest increases would have occurred. (See appendix table L.) There were a few minor instances, reflecting the marginal or declining nature of some of the industry segments reviewed in 1960, in which no minimum wage increases were recommended. However, the proportion of workers engaged in the activities reviewed for which no increase was recommended in 1960 was markedly lower than in 1958 and 1959 and in fact reached the same low level as in the peak adjustment year of 1957.

Also during the course of the first biennial review, a number of amendments were made to the regulations relating to homeworkers in Puerto Rico and the Virgin Islands. Minimum piece rates applicable to such homeworkers were revised upward to reflect all wage order increases in minimum hourly wage rates. Moreover, effective July 31, 1958, the regulations were amended to require employers in all industries in Puerto Rico other than the needlework industries to adjust homework piece rates in proportion to future changes in the hourly minimum rates on the same day such new wage orders become effective; similar amendments with respect to the needlework industries in Puerto Rico had been effectuated in the previous fiscal year. Finally, the provisions of the regulations relating to official piece rates for homeworkers in the hand-made art linen industry and the hand-made straw goods industry in the Virgin Islands were rescinded, effective January 26, 1960, because at that time there was no employer of homeworkers in the islands engaged in operations covered by the scheduled piece rates.

Learners, Apprentices, and Handicapped Workers

In section 14 of the Fair Labor Standards Act, the Congress recognized that certain workers by reason of inexperience or because of physical or mental disabilities would not be able to compete successfully for employment with experienced, able-bodied workers. This section is designed to meet that situation by authorizing the issuance of certificates, pursuant to regulations, for employment of such workers at rates below the statutory minimum, to the extent necessary to prevent the curtailment of opportunities for employment. Separate regulations have been established for learners, apprentices, certain messengers, and handicapped workers, the categories of workers to whom section 14 applies.

Learners

In addition to the general learner regulations, supplementary learner regulations have been established for seven industries-apparel, hosiery, knitted wear, gloves, shoes, cigars, and independent telephones-with learner rates in these regulations ranging from 80 cents an hour upward. The program of review of the learner standards in these supplemental regulations is a continuing one, as is the review of appropriate terms and conditions for individual plant applications for other industries. Although no regulations, revisions, or amendments became effective during the year, exploratory conferences were held with interested parties to consider clarifying revisions for the apparel industry supplemental regulations. Terms and conditions of employment provided under certificates not covered by supplemental industry learner regulations were also reviewed, with the result that an increasing proportion of such certificates provided for special learner rates of 90 and 95 cents per hour, while none of these certificates carried learner rates of less than 85 cents. In Puerto Rico and the Virgin Islands, learner rates continued to be revised upward in the light of increased minimum rates provided by new wage orders.

A total of 2,042 learner certificates were issued during the year. As of the end of the year, 1,744 certificates were in effect, authorizing the employment of an estimated maximum of 34,956 learners. At the end of the preceding year, 1,834 certificates were in effect, authorizing the employment of an estimated maximum of 35,454 learners.

Some 87 percent of the certificates were issued to plants in industries covered by supplemental regulations, of which the greatest concentration, 1,331, was in the apparel industry. The hosiery industry accounted for an additional 200 certificates, and the knitted wear and glove industries for 136 and 59, respectively. Details on actions taken during the year and certificates in effect as of the end of the year are contained in appendix tables M and N.

Student-Learners, Student-Workers, and Apprentices

Under the student-learner regulations, a total of 782 certificates were issued. Each certificate provides for part-time employment integrated with related school instruction. Certificates are issued on an individual basis, typically to high school students in their senior year, enabling them to gain practical experience by supplementing their studies with work. In addition, 38 student-worker certificates were issued to educational institutions, providing for the training of needy students for employment in school-operated shops in order to assist in defraying school expenses.

The Divisions also authorized the employment of 450 apprentices at special minimum rates, of whom 347 were in Puerto Rico.

Handicapped Workers

A total of 2,467 handicapped worker certificates were in effect in regular commercial industry at the end of the fiscal year. This was a marked decrease compared with the preceding year and continued the downward trend begun 3 years ago. These workers were employed in approximately 950 firms through

out the country. The certificates authorize employment at less than the statutory minimum wage for disabled workers whose employment opportunities are curtailed because of their inability to compete with able-bodied workers.

Age continues to constitute the predominant disability, being the primary handicapping factor in slightly less than half of all the certificates issued. Of the certificates issued this year on the basis of age, approximately 17 percent were to workers 75 years of age and over, the oldest workers being 93 and 94 years old.

Establishments in the men's and boys' apparel industry obtained more certificates than any other industry, accounting for 20 percent of the total. The next four major industry groups, which accounted for an additional 40 percent, were: knitting mills, tobacco manufacturers (principally the hand cigar industry), women's and children's clothing, and miscellaneous apparel.

The number of temporary certificates issued for handicapped on-the-job trainees totaled 109, more than double the number issued in the previous year. These certificates are issued for the Divisions by State vocational rehabilitation agencies and the Veterans' Administration to handicapped persons with im paired earning capacity. The workers are placed for training in industry under the sponsorship of these agencies. The purpose of the temporary certificate, issued for a period not to exceed 90 days, is to expedite training.

A total of 483 sheltered workshops held special minimum wage certificates at the close of the fiscal year, an increase of more than 10 percent over the previous year. As of the time of application for a certificate, these workshops provided employment for 28,361 workers, which is a 20 percent increase over fiscal 1959. The total number of workers provided employment during the course of the year is considerably greater than these figures indicate, since there is a relatively high turnover rate in most workshops. These marked increases over the previous year reflect the continued growing importance of sheltered workshops in the overall picture of rehabilitation and employment of handicapped

persons.

Except for the general type of workshop, serving a variety of disabled persons, the greatest increase in workshops was in those serving the mentally retarded and cerebral palsied. This is in keeping with the trend of the past several years.

During the year, the Divisions surveyed approximately 9 percent of the certificated workshops. These visits served the dual purpose of assisting the workshops in better understanding the provisions of the acts as they relate to sheltered workshops and in determining the state of compliance in these workshops. The Divisions continued close cooperation with various Government and private agencies concerned with rehabilitation and employment of handicapped persons, participating in national and regional meetings, among other activities. The Divisions also took part in the development of a manual on comprehensive services to the homebound, a special project sponsored by the National Associa

"A sheltered workshop is a nonprofit organization which provides employment and other services to persons who are handicapped by age or physical or mental disability and who are unable, either temporarily or permanently, to meet the demands of competitive employment.

tion of Sheltered Workshops and Homebound Programs. The Administrator's Advisory Committee on Sheltered Workshops, composed of representatives from the sheltered workshop field, labor, management, and the public, held meetings which considered a comprehensive guide in layman's language, developed by the Divisions, covering the standards, policies, and procedures that apply to sheltered workshops under both acts. This guide is expected to be published during the next fiscal year. Also considered by the Advisory Committee were workshop standards being developed by the National Institute on Workshop Standards as they may have reference to the Divisions' standards for certificating workshops.

Determinations Under the Public Contracts Act

The Public Contracts Act authorizes the Secretary of Labor to issue prevailing minimum wage determinations applicable to persons employed on Government contracts for the manufacture or furnishing of materials, supplies, articles, or equipment in excess of $10,000. This provision is intended to prevent the Government's vast purchasing power from being used to depress the wage standards already being maintained by firms in the particular industries which perform Government work. The minimum wage rates established under the statute are those which have been found to be actually prevailing, and they merely conform to the standards which the industries themselves have generally adopted.

Under the terms of the act, minimum wage determinations must be made on the record after opportunity for a hearing. The first step in a proceeding is generally the convening of a labor-management panel conference to explore definitional and other relevant problems and to work out plans for obtaining the necessary wage data. Subsequently, all interested parties are afforded opportunity to submit evidence on minimum wages and other pertinent issues at a public hearing conducted pursuant to the Administrative Procedure Act. Parties may also file briefs containing proposed findings of fact and conclusions of law. Upon certification by the hearing examiner, the full record of the proceedings is carefully analyzed and the Secretary of Labor issues a proposed decision based on the facts of record. Opportunity is provided for interested parties to submit exceptions to the Secretary's proposed decision. After reviewing such exceptions, a final decision is issued and the resultant determination becomes effective 30 days after publication in the Federal Register. The determinations are not retroactive but are applicable only to contracts for which bids are solicited or negotiations otherwise commenced on or after the effective date. During the fiscal year, the Secretary of Labor issued two final determinations. A minimum wage of $1.68 an hour, effective January 15, 1960, was established for the evaporated milk industry, with probationary workers permitted at a rate of not less than $1.63 for a period of 160 hours. On June 3, 1960, the first determination to be issued for the tires and related products industry became effective. This determination provided a minimum hourly rate of $1.77, with beginners permitted at $1.67 an hour for a period of not more than 160 hours.