Analysis of New \(/.ge-Salary Freezing Regulations

By Milton A. Smith Staff Member, Low Informotion Service National Lumber Manufacturers Association

Freezing of wages and salaries has given lumbermen some new problems. Inquiries received by the National Lumber Manufacturers Association indicate that lumbermen want to know, for example, whether they can raise wages to attract new workers or to keep present men on the job; they want to know whether they can continue customary bonus payments; and they want to know where to go for official information and formal rulings on proposed raises.

Finding the answer to these questions is complicated by the fact that the various orders, regulations, and interpretations which have put the wage stabilization program into effect have been issued by different agencies and at different times. However, there are many provisions of these regulations that have no application to lumber industry employers. The NLMA Law fnformation Service has prepared the following practical explanation of certain fundamentals and a few examples of their application which will help operators clear up some of their problems.

Jurisdiction over wage and salary adjustments has been divided between the National War Labor Board and the Commissioner of Internal Revenue. The Board has jurisdiction over adjustments in all wages, and over salaries less than $5,000 a year in the case of employees represented by a duly recognized or certified labor organization, or who are not employed in an executive, administrative or professional capacity. All other salaries are subject to the jurisdiction of the Commissioner of Internal Revenue.

The definition of "executive, administrative, or professional" employee is the same in regulations of both agencies. This definition was taken from the regulations issued under the Wage and Hour Law and is familiar to most lunrbermen.

Wages are defined as compensation computed on an hourly or daily basis, or a piece-work basis. Salary is com- pensation computed on a weekly, monthly, or annual basis.

Thus, in lumber and logging operations generally the majority of employees-both production and office workers-are subject to the rulings of the War Labor Board insofar as pay raises are concerned. Executives and supervisory employees who are not union members are subject to salary orders of the Commissioner of Internal Revenue.

Certain adjustments can be made without prior official approval. In the case of wages or salaries subject to the jurisdiction of the War Labor Board no prior approval is necessary for increases in pay rates of individual employees, if incident to the terms of an established wage or salary agreement or rate schedule, and made as a result of:

(a) Individual promotions or reclassifications.

(b) Individual merit increases within established rate ranges.

(c) Operation of an established plan of wage or salary increases based upon length of service.

(d) Increased productivity under piece-work or incen. tive plans.

(e) Operation of an apprentice or trainee system.

The Board does not say what it regards as an "established" \r/age or salary rate agreement. But the regulations of the Commissioner of Internal Revenue are a little more technical on this point. Those regulations provide that no prior approval is necessary for increases in salaries coming under the Commissioner's jurisdiction which are made under similar circumstances, and in accordance with the terms of a salary agreement or salary rate schedule in effect on October 3, 1942, or approved thereafter.

According to the Commissioner's regulations the terms "salary agreement" or "salary rate schedulb" may include a salary rate policy in effect on October 3 even though not evidenced by written contracts or written schedules. For example, a salary policy may be determined from previous payroll records. The burden of proof, however, rests on the employer, and he may, in advance of making an increase under one of these provisions, reduce his salary policy to writing and have it approved.

In considering making individual pay raises without prior approval, an employer should be certain that he can justify the increase by showing an established pay raise plan. Many plants with satisfactory pay policies and which have what they have considered a practical system of salary review may find that their plan is not susceptible of reduction to a set formula, or will naturally hesitate to take a chance without formdl approval.

Regulations of the two agencies regarding bonuses dift'er in some minor technical points, but in general a bonus customarily paid in the past may be continued, provided (1) if a fixed amount, the total paid during the current year to an employee may not be more than he received during the previous bonus year, or (2) il the bonus is figured on a percentage basis the rate and method of computation are not changed. A greateq amount may be paid when it reresults from use of the same rate and method. of computation.

Theie is a virtual prohibition against reductions in compensation, except in the case of salaries over $5,C00.

When an employer Eas a pay problern coming under the jurisdiction of the War Laboi Board he should consult a field office of the Wage and Hour Division of the Department of Labor. These offices are serving as agents for the Board. A formal written opinion will be given as to whether or not a proposed increase requires prior approval. If it is decided that approval is required, an application must be filed, which u'ill be sent to one of the regional offices of the Board for a ruling. Should an employer be dissatisfied with a ruling he may appeal to the regional director of the Board, whose decision will be final.

In the case of increases coming under the Commissioner of Internal Revenue, inquiry should be made to the nearest field office of the Sal4ry Stabilization Unit of the Bureau of Internal Revenue. A number of these offices have already been set up in principal cities, and they will make rulings on behalf of the Commissioner. Appeal from a decision of a field office may be taken to the Commissioner.

The War Labor Board has adopted a general policy statement and issued a series of orders, which, together with its decisions in some recent cases give a pretty good idea of its attitude on some common problems.

As a fundamental principle, the Board says that it will act rrpon the presumption that the wage-and-salary rates prevailing on September 15, L942, are proper rates. It \,\'ill grant increases over that level only when necessary to "correct maladjustments or inequalities, to eliminate substandards of living, to correct gross inequities, or to aid in the effective prosecution of the war."

No "maladjustment" is considered to exist where a group of employees has received increases amounting to 15 per cent in their average straight-time rates over the level prevailing on January l,1941. Increases will be gtanted to correct "inequalities" and "gross injustices" only when they represent manifest injustices which arise from unusual and unreasonable differences in wage and salary rates. Differences in rates arising out of established differentials are not considered to constitute inequalities or g.ross injustices which will in themselves justify changes.

For the time being, at least, the Board will not attempt to measure substandards of living by any fixed wage rate. Until sufficient experience has accumulated upon which it may base a general policy, it will consider cases involving living standards upon their individual merits. In a recent case the Board overruled a referee's recommendation for a wage increase to correct what he had found to be .,substandard" rates.. As grounds for its refusal to approve the recommended raise, the Board pointed out that the average rates of employees involved had risen 15 per cent since January l,1941.

One of the most pressing problems of many manufacturers today is the need to increase wages in order to hold their employees or to attract new workers. This, the Board considers is a problem of manpower rather than wages. In the absence of a recommendation from the War Manpower Commission or other Government agencies concerned, the Board will not grant an increase solely for the purpose of helping an employer solve the problem of keeping workers from leaving for higher-paid jobs in other plants. Of course, if there is some other basis for a requested increase in such a case, as where the employees have not had their pay raised over the January l, 1941, levels, the increase may be approved.

In a number of industries essential to the war effort, (Continued on Page 22)

FHA Accepts 17,343 Mortgages for Insur- Analysis !(/age-Salary Frcezing Regulations ance in So. Cal. District During 1942

Continuing its vital service of making practical homefinancing available to both present and prospective home owners, the Federal Housing Administration, during the twelve months of 1942, accepted more than 70 million dollars worth of home mortgages for insurance, which involved over 17,000 home properties in the Southern California District, the annual report of Wilson G. Bingham, Southern California District Director. FHA reveals.

While the prosecution of the War caused a drastic curtailment of new home construction in all but designated defense areas ,the Southern California District Office of the FHA recorded a total of 17,343 mortgages accepted for insurance, of which over 14,000 represented new home construction which was designed primarily to house war workers, the report further discloses.

"It is gratifying to note that the additional 3,32O transactions, involved mortgages on existing home properties completed prior to application to FHA'for insurance. This volume was equal to the business transacted for each of two preceding years in this category," Mr. Bingham stated. "The basis of such activity is to either refinance an existing mortgage on the more liberal terms of the FHA system, or to make funds available for the purchase of existing home properties which can qualify or can be prepared to qualify under the location and construction standards of the FHA.

"Loans are available, in the 'existing, construction group for as high as BO/o of the FHA appraised value of the home property, with terms as long as twenty years for repayment, and at a low-interest rate.

"In addition, FHA is authorized to insure loans for essential repairs which are particularly important in order to preserve the existing supply of housing during the period of necessary wartime curbs on new construction," he said. "Repairs and maintenance necessary to keep a property in good rvorking condition and which do not change structural design can be undertaken without priority permission. Such loans are available up to $2,- 5@ with repayment permitted over periods as long as three years," Mr. Bingham concluded.

(Continued from Page 2l) the Board has authorized its regional directors to approve requests for general wage increases in cases where the employees of a plant have not received raises amounting to 15 per cent over their January 1, 1941, rates. Logging, sawmills, and planing mills are included in the list of industries in which this procedure may be applied.

Other interesting principles included in the Board's regulations are (1) the hiring of a worker at a wage rate in excess of the rate previously established in the plant for employees of similar skill and productive ability is a ..wage increase," and (2) adjustments to equalize rates paid women workers with rates paid men may be made without prior approval provided that certain reports are made to the Board.

Penalties for making unauthorized p.y increases are severe. In determining business expenses for income tax purposes, the entire compensation paid a person who has leceived an unauthorized raise may be disallowed. Willful violators are subject to fine and imprisonment in addition.

The National Lumber Manufacturers Association has prepared for the Lumber and Timber Products War Committee a chart presenting the fundamental principles of these wage and salary regulations in a form useful for reference. Copies may be had from the Association headquarters in Washington. In addition, the Association will be glad to furnish lumbermen copies of any of these regulations or lists showing location of the field offices where applications for approval of pay increases may be filed.

Ray Hill Now Captain In The Army

Ray Hill, Lawrence-Philips Lumber Co., Los Angeles, has been commissioned a Captain in the Army Transport Service and reported for duty at Camp Mason, San Francisco, on January 11.

LIMITATION ORDER 1-150-a-SOFTWOOD PLYWOOD

Sales shipments and deliveries of softwood plywood, either wholesale or retail, prohibited after December 20, except on AA-5 or higher rated orders (Limitation Order L150-a), issued December 19.

Speces

!(/estern Pine Prices Revised

Revision of the price regulation governing Western pine lumber, with extension of dollars and cents maximum prices to secondary species not previously under specific regulation as well as to all Western pine imported from Canada and Mexico, has been announced.by OPA. The prices for the secondary species, which apply only to shipments which originate at the mill, are set at the level prevailing in October, 1941.

The new regulation will not affect retail prices, which, as a rule, remain subject to the general maximum price regulation.

The geographical coverage of the secondary species differs somewhat from the primary species area, being defined to include Idaho, Montana, those portions of Washington and Oregon east of the crest of the Cascade Mountains and all of California excepting the counties of Del Norte, Humboldt, Mendocino a,nd Sc'noma. Prices for secondary species in those portions of the Western pine area not included in the geographical coverage of the secondary species will remain governed by the general maximum price regulation.

Brotherly Love

To get an idea how little well oiled words and phrases mean, read the following extract from a speech made in l9D to a great convention of Rotarians : "The evil tendency today in all ranks of society is that individuals are seeking for selfish aims, and neglecting to give service to others. 'Blessed is he who also gives' ii an eternal truth; the highest and most noble thing to give among men, is love. If the spirit of brotherhood, or love of our fellow man is spread among the people living on the borders of the Pacific Ocean, there will be peace and happiness among them; and if it is extended to the nations of the world, it will not be difficult to establish the world-wide eternal peace and happiness so much desired."

You'll never guess who said it, and where. It was the Prime Minister of Japan and the place was Tokyo.' The speaker's name was Baron Tanaka. And even at that time, so we are told, the Japs were getting ready for what happened at Pearl Harbor, and since.

New Calendar by Moor e Dry Kiln Co.

After an absence of ten years, the Moore Dry Kiln Co., North Portland, Oregon, and Jacksonville, Florida, have brought back "Uncle 'Neas," the famous negro character created by the late J. P. Alley, on a 1943 calendar mailed to their friends and customers.

The back of the calendar contains a message from Charles J. Williams, president of Moore Dry Kiln Co., and the story of their 1943.calendar.

Uncle'Neas is a darkey lumberman, and his trials in handling priority regulations and red tape will find a warm spot in every lumberman's heart. Uncle 'Neas is forced to close the mill when his son, Sam, is drafted, so he takes a job in the local express office to do his part for the War effort.

While handling express packages, he accidentally drops a box, from which emerges a big, brown diamond-back rattlesnake. IJncle 'Neas scrambles for the highest perch he can find, but soon regains his optimistic outlook by observing, "Dis is de 'rong station-You belongs in Tokyo !"

If you'have not received your copy of this 1943 calendar, write Moore Dry Kiln Company and they will gladly send you one.

Book on Forests for School Use

Trees for Tomorrow, second educational book on the forests to be published by the American Forest Products Industries, Inc., is ready for free distribution to schools.

Like its predecessor, America's Forests, the new book is geared to the seventh, eighth, and ninth grades. Whereas the first book discussed the past and present of America's most abundant natural resource, Trees for Tomorrow emphasizes the measures being taken by the forest industries to perpetuate the forest harvest on a sustained yield basis. It is liberally illustrated and printed in well-spaced, legible type.

Trees for Tomorrow will be supplied to all teachers and schools requesting it in sufficient quantity for all members of their classes. It is intended to be used in direct class room work, to be collected after study, and re-used the following year.

\fPB Estimates 1943 Lumber Demand at 31 Billion Feet-Ninc Bill:on Under 1942

Lumber consumption for 1943 is estimated at approximately 31,100,000,000 board feet as compared with 4O,200,000,000 feet for all purposes in1942, according to a bulletin of the Lumber and Lumber Products Division of WPB, addressed to members of the Softwood Loggers and Lumber Manufacturers Advisory Committee, and producers and distributors of softwood lumber.

Military and essential civilian requirements for construction lumber are estimated at 13.0 billion feet for 1943 as compared with 22.4 billion f.eet lor 1942.

Estimates of lumber for boxing and crating show a marked rise from 8.8 billion feet in 1942 to 11.5 billion in 1943.

Requirements for special war items, such as aircraft lumber, ship-decking, pontoon lumber, ship and boat timber and structural timbers are expected to increase substantially. fncreased production of these items is essential to the war program.

The lumber production goal for 1943 is 32 billion board feet. Attainment of this goal, however, depends upon maintenance of present levels of ,manpower, tractors, trucks, and flow of repair parts to the industry.

Production of lumber is expected to decline temporarily during the winter months because of early, unseasonable weather conditions, which coupled with shortages of labor will reduce log production. Log inventories are already too low for normal sustained opgration throughout the winter.

The Softwood Loggers and Lumber Manufacturers Advisory Committee, at its last meeting in Washington, November 19, reported that retail lumber dealers' stocks are depleted and recommended that Limitation Order L-41 be liberalized.

Committee members asked the War Production Board to ease restrictions on the movement of all lumber not required for war and essential civilian needs. They emphasized the fact that maximum production of lumber for war cannot be obtained unless outlets for non'war lumber are permitted.

Recommendations of the Industry Advisory Committee for revision of General Conservation Order M-208 were invited by the government presiding officer.

The next meeting of the Industry Advisory Committee will probably be held in Washington in January.

Navy Dedicate3 U.S.C. Buildings

In honor of three of America's war heroes, the Navy on lanuary 7 dedicated buildings on the University of Southern California campus where Naval cadets will receive preflight training.

Owens Hall, formerly the Sigma Chi fraternity house, honors the memory of Lieut. James C. Owens, Jr., Southern California graduate, who as excutive officer of famed Torpedo Squadron 8, went to a hero's death in the Battle of Midway. Among those present at the dedication ceremonies conducted by Lieutenant ((j.g.) J. A. McDevitt were: His widow, Mrs. Helen Owens, and his parents, James C. (Charlie) Owens, well known Southern California lumberman, and Mrs. Owens.

Newkirk Hall, formerly Aneas Hall, honors Capt. John Newkirk, former Navy pilot who became an American Volunteer Group hero in China, where he was killed. Heirderson Hall, a former apartment house, honors Major Loftus P. Henderson, who died flying against the Japanese in the Solomons.

Revised Wood Bibliosraphy Published

The National Lumber Manufacturers Association has just published a revised and up-to-date edition of Lumber Literature, its bibliography of books, folders, and other printed matter concerning wood published by the federated associations. which comprise its membership, and by co-operating organizations.

As practically all the commercially important American species of wood are available through the member mills of the federated associations, this catalog includes most of the literature available on wood and its use.

The new edition lists in 53 classifications nearly 300 pieces of literature, 131 of which are illustrated.

Copies of Lumber Literature may be obtained free from the Washington headquarters of the National Lumber Manufacturers Association or from the office of any of the federated associations.

Eddie Dwyer California Visitor

E. C. (Eddie) Dwyer, Southeast Portland Lumber Co., Portland, was in San Francisco recently on a combined business and pleasure trip. He was accompanied by Mrs. Dwyer. They also visited Los Angeles.