A STUDY OF THE MINSMUM WAGE ORDERS OF 1958 AND 1959 EN RELATBONSHIP 70 THE RESORT iNDUSTRY OF PENNSYLVANIA mesh §or 1‘!» flag?“ cf M. .59 MECHEGAH 335% UNWERSETY W'eé'éon S. Garrisoz‘. W69 pp.-.__-.._ MI‘--7 *— .. LIBRARY Michigan State University A STUDY OF THE MINIMUM'HAGE ORDERS OF 1956 AND 1959 IN RELATIONSHIP TO THE RESORT INDUSTRY OF PENNSYLVANIA by WELDON s. GARRISON A THESIS Submitted to the School for Advanced Graduate Studies of Michigan State University of Agriculture and Applied Science in partial fulfillment of the requirements for the degree of MASTER OF ARTS School of Hotel, Restaurant and Institutional Management 1960 Approved by This thesis is primarily concerned with a study of the Minimum‘wage Orders of 1958 and 1959, with special emphasis upon the resort industry of Pennsylvania, and par- ticularly the large segment located in the Pocono Mountains. The objective of the study was to bring to light all the major aspects of the controversy, to present them both _fnam labor's view-point and management's view-point, and finelly, to determine the over-all effect of the Orders on the industry itself. In preparing this work, the writer has drawn upon published literature found in reports of the Department of labor and Industry; newspapers, bulletins, and periodicals published by the Pennsylvania Hotels Association; as well as minutes of meetings of the Pocono Mountains Vacation Bureau. In addition, much information was supplied by the legal counsel representing the Pocono Mountains Vacation Bureau, whose offices are located in Strondsburg, Pennsylvania. Finally, data was obtained through a questionnaire from.Pocono Mbuntains resort Operators. The above sources, together with practical know- ledge of the controversy, have produced the material to be found in this study. The economic findings of the study were somewhat surprising. It had been expected that the increase in wages and decrease in working hours would be reflected in rising labor costs in the resort industry. Such was not the case. ,‘ Operators merely tightened budget controls and applied.more direct supervision. In some cases the labor force was re- duced. It was found that the sociological effects of the Minimmm Wage Orders were more pronounced than the economic effects. Improved working conditions produced.more efficient, contented workers while forced tightening of controls pro- duced.more efficient Operators. Finally, it was determined that the Minimum Wage Orders of 1956 and 1959, in their final form, could become a real asset to both labor and management in Pennsylvania and will undoubtedly provide the basis for similar legislation in other states as well. I. II. III. V. VI. VII . VIII . TABIE OF CONTENTS INTRODUCTIONOOOQOCOOCO0.0...OOOOOOOOOOOOIOOOOIOI STATEMENT OF PROBLEM AND PROCEDURE.............8 STATEFENT OF DATA SOURCESOOOOOOO000.00.00.000010 PROGRESSION OF EVENTS FROM OCTOBER, 1957, TI-IROUGH SEPTEPIBER, 1959.00.00.00...0.0.0.0....11 THE ROIE OF THE PENNSYLVANIA HUTL‘JIS ASSOCIATION...00.00.000.000.00.000.000.00....072 THE ROIE OF THE POCONO MOUNTAINS VACATION BMAUOOQOOO0.000000000000000.00.0.0000000000089 INTRODUCTION To QUESTIONNAIREOO0.00.00.00.000103 SUMRY AND CONCmSIONO0.00.000.00.0000000000118 BIBLIOGRAPHYOOOOOOCOOOOOOOO.QOOOOOOOOOOOOOOOOJ-Zu APPENDHOOOOOOOCOOOOOOOO0.0.0.0.0000000000000125 qrnoobfioeeeneeoeewoqaq twee-eeeeeo‘er-Oveoen-oeeee-eeeoae .O‘DOO‘OD‘OeonOO-I*94‘IDOOOOICJOO.OO~.l Chapter I INTRODUCTION In the extreme northeastern section of Pennsylvania is a mountainous 1,200 square mile region known as the Pocono Mountains. Located chiefly in.Monroe County, this area has a year—round papulation.of 37,500 occupying 17,880 property units. In addition, the area contains 6,354 property units owned by non-residents.1 The average employment in all industries for this area varies from.ll,500 during the off season to 15,500 during the resort season which extends basically from.May l to Hovember 1. 0f the 15,500 workers in the Pocono Moun- tains during the resort season, 6,000 are engaged in the service industries. These include hotels, motels, resorts, camps, and amusement and recreation establishments. Hence, 38.7 per cent of all employment in this area during this period is in the resort industry.2 This figure in itself is imposing. However, it be- comes even more so in considering that, of the total resort industry in the state of Pennsylvania, eighty per cent is concentrated in the Pocono Mountains with its five hundred 3 hotels and inns. It becomes clear, therefore, that any I‘ ’9 ,‘I [C 2. major change in the wage or labor laws in this area drastically effects the economy of Pennsylvania as a whole Commonwealth. To further emphasise the importance Of a study of any changes in these laws, it is first necessary to look at the resort hotel industry itself. IThis industry may be likened to the operation of a ship. If it is to be economically sound and successful, it must be a self-contained and self-sufficient unit Operating with a high degree of efficiency for a short period of time. wages are paid on a monthly or bimonthly basis. Just as the employee on.a ship lives aboard and receives three meals a day and lodging seven days and nights a week, so also does the resort employee. As with a ship, the industry is extremely subject to the elements}L It is very difficult in this type of Operation to have a rainy weekend and find that as a result of the rain there are cancellations that leave the resort Operator with two hundred employees and fifty guests for the whole weekend. The employees cannot be let off for the weekend; they must be fed and housed as usual, even though the gross income from so few guests would be diminished. One single meal.may even.be affected by the weather. Assume that it begins to rain at the resort shortly before meal time and the manager has a full crew Of waitresses and busboys ready to serve three hundred guests. Assume also 3. that many of the guests delay an hour in arriving at the dining hall in the hOpe that the rain will flap. The dining crew, however, must remain in the dining room to serve the guests as they come and soon the Operator is paying overtime due to the delay. Consider also the case of a convention-resort hotel. Host conventions last less than a week and, although the balance of the week's reservations may be light, it is still necessary to feed and house a complete staff of employees for the whole week to accommodate a two-day convention. There is also the problem in the resort industry of valleys of peak loads and light loads occurring suddenly and without warning. a complete staff of employees must be maintained at all times in order for the peak load to be accomodated. In studying the particular problems Of the resort hotels in the Pocono Mountains of Pennsylvania, one must take into consideration the close proximity of these hotels gOOgraphically to the states Of New York and New Jersey. It is necessary for these resorts to remain in a strong competitive position in regards to these out-Of-state areas in order to remain in existence.5 Another problem faced by resorts in the Pocono Moun- tains is the substantial develOpment of summer air travel h. vacations to Florida, Bermuda, etc., on a low-rate package basis. In addition, the develOpment of swimming pools in backyards and the rising pOpularity of cabana clubs which allow the family to enjoy a convenient facility without leaving home for an expensive vacation in a resort hotel, have cut into the resort business in the Pocono Mountains. It has been estimated that the resort industry in Pennsylvania and in adjacent states was Off ten to twenty per cent in ‘ gross business in the year 1958 in larger resort hotel Operations and as much as forty to fifty per cent in.sma11er Operations.6 It is interesting to.note that in the Pocono Mountains the majority of the resort hotel Operations are small and employ less than ten persons.7 One of the most graphic pictures of the problems faced by the Pocono Mountains resort industry is contained, in a letter written to Charles Bensinger, dttorney-at-law, of Stroudsburg, Pennsylvania, who served as legal counsel for the Pocono Mountains Vacation Bureau during the Minimum ‘Uage Hearings of 1958 and 1959.8 The letter was written by R. LeROy Dengler, owner-manager of the Hawthorne Inn and ‘ Cottages, Mt. Pocono, Pennsylvania: ”The impact of the 1930 to 1939 depression on the resorts of the Poconos, the fatalities were tre- mendous. The bankers, who went through the period, could testify to the number of fore- closures....practically all the hotels in the “water Gap and.many up the Delaware Valley all went to the well during that depression which 5. gives some idea of the very close margin.on‘which resort hotels Operate. The margin between profit and loss is very thin. It is really a very hazardous industry. Another thing was the 1955 flood. It not only did hundreds of thousands of dollars damage to some resorts, entailing loans that they will be paying back for the next twenty years, but it also cut in half the business after August 18 which was a terrible blow to not only the resorts in the Poconos but other parts of the state.... From.l9h0, during the war years, until l9h6, cur- tailment of use Of gasoline for pleasure, the use of railroad and airlines for pleasure travel, and the curtailment of food and food rationing gave the resorts another tremendous wallop. What I am trying to bring out is that the resorts of Pennsylvania were a very sick industry, more so even than the anthracite coal industry, first ‘ from.l930 to 1939 and then during the war years. Only since the end of the war up until a year ago has there been any Opportunity for the resorts to regain some Of their great losses....Reports have come to me that some of them had rather a poor June this year, and are not having too good a summer and are having trouble paying their current bills. I would say as an over-all picture that from 1930 to 1957 there have been only eleven fair years out of twenty-seven." August 5, 1958 Mr. Dengler's letter illustrates some Of the many problems the resort industry in the Pocono Mountains has faced in the past and is still facing. The writer is currently in his fifth season as general manager of Shawnee Inn, a resort-convention hotel in the Pocono Mountains. During that period the Inn has been faced with many of these problems; particularly C. 0).. 6. financial problems arising out of the disasterous flood of 1955. The writer will attempt to show the further problems facing the Pennsylvania resort industry as a result of the Minimum Wage Orders of 1958 and 1959. 1. 2. 3. u. 5. b. 7. 8. 7. FOOTNOTES A_Brief on the Industrial Complexion and_the Resort IggustryVOITthe Pocono Mountains Area Of Pennsylvania, prepared by the Pocono Mountains Vacation Bureau, the Pocono Mountains Chamber of Commerce, and the Mt. Pocono Airport Authority (February 13, 1956). Ibid, p. 3. More Vacation Fun.For Everyone in Panns lvania, Vacation and TraveI Development Bureau, Commonwealth of Pennsylvania (1957). Climatological Data for Penns lvania, United States Epartment o? Comoros, weather Bureau (June, July, and August of 1955. 1956, 1957. and 1958). Hearinggof the Restaugant,_Hotel and Motel Minimum we e Board, Department of Labor andTIndustry, Commonwealth 0? Pennsylvania (August 1h and 15, 1958), p. 355. we P0 355e Ibid, p. 355. The Penns lvania Hotel Herald, January 8, 1958, p. l. 8. Chapter II PROBIEM AND PROCEDURE On October 29, 1957, the first organizational meeting of the Wage Board for Restaurants, Hotels, and Motels in Pennsylvania was held with Elizabeth S. Johnson, Director of the Bureau Of Women and Children, Department of Labor and Industry, as Board Secretary. The nine Board members were appointed by the Secretary of Labor and Industry for Pennsylvania, William L. Batt, Jr.1 In reaching agreement on a list of eleven conclusions and recommendations, the Board found that, "women and minors are employed in some restaurants, hotels, and motels within Pennsylvania at unreasonably low wages which are not sufficient to maintain health and efficiency in such numbers to justify the establishnmnt of a Minimum Wage Order and Regulations for women and minors in restaurant, hotel, and motel occupations".2 In this thesis the writer will: 1. Follow the progression of events in the minimum wage controversy from October, 1957 through September, 1959. 2. Detail the action taken by the Pennsylvania Hotels Association and the Pocono Mountains Vacation Bureau. 3. Attempt to analyze and submarize the effect of the Minimum Wage Orders on the resort industry of Pennsylvania. ‘fi 2. FOOTNOTES Recommendations of the Minimum Wa e Board, Department fibor and:ffidustry, Commonwea th O ennsylvania, December 114., 1957' De 1e Ibid, p. 1. 9. 10. Chapter III STATEMENT OF DATA SOURCES Data used in the preparation of this thesis was necessarily current in nature. Much information was supplied by the firm Of Bensinger and Bensinger, Attorneys- at-law, Stroudsburg, Pennsylvania. Charles Bensinger directly represented the Pocono Mountains Vacation Bureau during the Minimum Wage Hearings, and papers and reports supplied from his files were used extensively. In addition, bulletins issued by the Pennsylvania Hotels Association.and bimonthly issues of the Pennsylvania Hotel Herald'were used to assist in the prOper chronology of events. Official testimony, reports and orders of the Depart- ment Of Labor and Industry Of Pennsylvania were obtained for the purpose of reference and to assure accuracy in direct quotation. Finally, data received from resort hotel Operators and managers in the Pocono Mountains was used for the purpose of analysis and summarization. 11. Chapter IV PROGRESSION OF EVENTS FROM OCTOBER, 1957, THROUGH SEPTEMBER, 1959 The Minimum Wage controversy involving the hotel, restaurant, and.motel industries of Pennsylvania had its most recent beginnings on October 29, 1957. At that time, William L. Batt, Jr., Secretary of the Department of Labor and Industry for the Commonwealth of Pennsylvania, convened the Wage Board for Hotels, Restaurants, and Motels.1 On the date of the first organizational meeting, three public hearings were scheduled in the following cities: Allentown ---- November 18, 1957 Philadelphia - November 19, 1957 Pittsburgh --- Nevember 22, 1957 Publicity releases were issued by the Department of Labor and Industry to attract attention to the hearings and interested parties were invited to participate.2 A large number of persons testified before the Board under oath. During the last of these three hearings at Pittsburgh, the Pennsylvania Restaurant Association requested a fourth hearing. This was scheduled for the city Of Harrisburg, Capitol of Pennsylvania, on.December b, 1957.3 That the December hearing attracted the attention of many concerned parties is revealed in the following r‘ 4‘ a. a. so... .1 ~-. .1. —. II 0. 12. excerpt of the first report of the Wage Board: ”As would be expected, the evidence differed considerably in relation to some facts and witnesses disagreed sharply in their Opinions." On December 11;, 1957, the Board reported to Secretary Batt its conclusions and recomendations as based on the testimony, material, and information brought up at the hearings.5 Following is the Board's eleven point conclusion, Recommended Minimum Fair Wage Order, recommended definitions, and regulations for interpretation and enforcement of the 6 Minimum Fair Wage Orders. Conclusions 1. The existing minimum fair wage order for restaurant occupations is obsolete and women and minors are' employed in some restaurants, hotels and motels within Pennsylvania at unreasonably low wages which are not ‘ sufficient to maintain health and efficiency in such numbers to justify the establishment of a minimum wage order and regulations for women and minors in restaurant, hotel and motel occupations by authority of Act 2h8 of the General Assembly approved May 27th, 1937, P. L. 917. 2. The Board can recommend only basic minimum rates to prevent ”the evils of Oppressive, unreasonable and unfair wages” and it has found no justification in the occupations it has studied for varying rates in accordance with localities. 3. Minimum wage orders in many instances have pro- vided rates for part-time workers which are slightly higher than full-time rates. Among the considerations prompting such distinctions is the fact that the part-time worker has the same cost of living as the full-time worker which may {e 13. include the same cost of travel to and from the place of employment. Also, the possibility has existed that employers would hire groups or shifts of part-time workers to avoid labor costs during slack periods of the day. We doubt, however, that any employer in the restaurant, hotel and motel occupations would be motivated to use such a devise at the present time in view Of the bookkeeping burdens and general inconvenience in.which exist for limited service and among the workers there is a substantial number whose convenience is served by part-time employment, which supplements the individual or family income. Unless there is an unreasonably great differential, it cannot be possible to meet the entire cost of living from part-time employment in restaurants, hotels and.motels at a minimum rate. Furthermore, simplicity in the wage order will aid in effective administration and the Board accordingly does not recommend separate part-time rates Of pay. h. ‘Uniforms are usually worn on various jobs in restaurants, hotels and.motels. This custom.is primarily for the benefit of the business and the major expense of uniform purchase and maintenance should be defrayed by the employer. ‘5. Despite public hostility to tipping, the practice is inextricably woven into the fabric of our life. The amount received in such gratuities differs widely according to circumstances and ranges from.trifling to very substantial sums. Since tipping depends upon factors which are not related to the wages paid by the employer, fairness requires a quite substantial distinction.between.minimum.wages in service and non-service jobs. On the other hand, no service employee should receive a total compensation less than the prescribed minimum for non-service employees and the reg- ulations should provide that women and.minors cannot be exploited by a mixture of service and noneservioe duties. O. Historically, restaurants and hotels are private businesses cloaked, however, with a public responsibility, long recognized by the common law. The inn was the ancestor Of both Of these institutions. A century and.more ago the inn provided lodging and food for the traveler and the separation of these two functions was practically unknown. As social conditions changed and with.them.the habits of the individual, some inns emphasized the function of providing meals and thus the modern restaurant gradually emerged. At the same time there still remain hotels which emphasize the service of food and'drink more than the provision of IOdging and there are both hotels and restaurants which emphasize entertainment in conjunction with providing food Q 3 . I. . . . 4 ' s f. . . . . . , l . . i . . . . l . I . ‘ . . I O . . . A ' 1 a ‘ ‘ 111*- and drink or lodging or both. A relatively recent outgrowth Of this business is the motel. The overwhelming majority of motels provide only sleeping rooms, but as competition in the motel business increases, it should be noted that they are rapidly entering into other fields Of service and par--' ticularly into the service of food and drink. The business of restaurants, hotels and motels is related and overlapping, and their employees generally are peeple of similar economic and educational levels engaged in serving the public in the same general way. There appears to be no sound reason based in logic or in any facts which have come to the attention of the Board to establish.separate minimum.fair wage rates for restaurant, hotel and motel occupations. 7. A habit honored by tradition and supported by convenience is that of eating on the premises so far as restaurant and hotel workers are concerned. This usually applies to motels only if dining facilities are attached. In many hotels and in large restaurants the number of employees may be such that substantial overhead expense is incurred in feeding employees over and above the wholesale cost of the food itself. In smaller units, however, the overhead expense of operation is not materially affected by feeding employees and the menu price is not the real cost even after profit is deducted. The Board has recognized these facts, among others, in.making a general allowance to the employer for meals served to employees. The Board believes it is not feasible to require an eating place to serve food to employees of greater variety than is served to its patrons, and abhorring any regulation.which is incoherently unenforceable, it recommends a regulation which it regards as realistic in this respect. 8. It is usually for the convenience of the employer, in whole or in part, that lodging is provided for employees, but this results in an incidental financial advantage to the employee, and a reasonable allowance for the value of such lodging should be recognized, taking into consideration the relative advantages of each party. 9. The gradual shortening of the work week is a well- recognized trend throughout the United States as a whOle and in Pennsylvania in.particular, and such shortening Of the work week is particularly desirable where women and minors are involved. 10. The problems presented in regard to resort hotels have been carefully considered and the general allowance for lodging takes into consideration the practice of resort hotels and other hotels and.motels which.provide lodging. 15. 11. The question of unfair employment practices involving Negroes was raised in the public hearings. To the extent that any such practices exist in the restaurant, hotel and motel occupations, the Board deplores and condemns such practices, whatever their basis, but their correction is not within our jurisdiction. We have referred the testimony on the subject to the Fair Employment Practices Commission. 16. RECOMMENDED MINIMUM FAIR'IAGE ORDER Regular Rates ‘Uithout Meal; With Heals Hon-service employees $1.05 per hour 90 cents per hour Service employees 73 cents per hour 56 cents per hour Learner or Apprentice Bates Hensservice employees 79 cents per hour 66 cents per hour Service employees 55 cents per hour uh cents per heur Overtime The mininum.overtime rate shall be one and one half times the applicable rate for all hours worked in.excess of eight hours in any one day or forty hours in.any one work week. Lodging furnished to an employee as a condition of employment or at the request of the employee may be calcu- lated as a part of the minimum fair wage but shall not be valued at more than $5.00 for each week in computing the applicable minimum fair wage and units of time less than one week shall not be counted. 17. RECOMMENDED DEFINITIONS AND REGULATIONS FOR INTERPRETATION AND ENFORCEMENT OF MINIMUM FAIR WAGE ORDER DEFINITIONS Restaurant, hoteltand motel occu ations - The term "restaurant, hotel and motel occupations“ means any activity connected with or incidental to the provision of lodging or the preparation of or offering of food or beverage for human consumption either on the employer's premises or elsewhere, by such services as catering, banquet, box lunch, or curb service, whether such service is Operated as the principal business of the employer or as a unit of another business to the public, to employees, to members or guests of members, or to paying guests, but does not include domestic service in the home of the employer or services in a religious, community or charitable institution. Employee - ”Employee” means a woman or a minor of either sex. Service employee - ”Service employee" means a woman or minor who direct y serves patrons or guests and who does not engage in housekeeping or maintenance or cleaning of the premises or facilities, and who regularly receives gratuities in an amount at least equal to the difference between the mintmmm wage at the service employee rate and the minimum rate at the non-service employee rate. Hen-service e lo ee - "Non-service employee” means all emponees except i{service employees”. Employment with.Neals - The term “with meals” as used in the recommends fair wage order shall be interpreted to mean.an adequate quantity and reasonable choice of the foods regularly available for patrons, and which are provided without charge to employees at the usual meal times or as nearly as possible thereto. Learner or a rentice - ”Learner or apprentice" means an employee during the first three months of employment with the same employer. 18. REGULATION§ Service Employees Performing Hen-Service Duties Whenever a service employee is required to do any work of a ”non-service nature" in the course of any single hour of employment, such employee shall receive the minimum rate of pay for non-service employment for such hour. A service employee engaged in serving food or drink to patrons may set and clear tables without receiving the non-service rate of pay for time spent in such work. Call-in Pay On any day an employee reports for duty at the request or permission of the employer, such employee shall be paid for at least three hours of work at the minimum applicable rate for the said day. Work Day The work day shall be computed from the time the employee reports for duty in any twenty-four hour period until the time the employee is finally relieved from duty in the same twenty-four hour period, regardless of intervals off duty, except that normal.meal periods of one hour or less need not be included in computing the length of the day, and except that split shifts with intervals not exceeding a total of two hours are allowed for service employees, pro- vided the work spread does not exceed ten hours. The over- time rate begins after the eight hours of work. Unifom where an employee is required to wear clothing of a type required by the employer, such clothing shall be pro- vided and maintained by the employer, or if the employer by failure or choice, does not provide and maintain such cloth- ing, the employee shall be paid an additional sum of 5% an hour or $1.50 for a full work week of forty hours or more, whichever is less. ” Maintenance of Records and Statements to Eglozees Employers subject to this wage order shall maintain and keep available for inspection for a period of at least two years employment and wage records of women and minors in sufficient detail adequately to inform the department in regard to all details related to this minimum fair wage order. Employers shall furnish statements to each woman or .4 I. 19. minor in their employ subject to this minimum fair wage order with each payment of wages which shall clearly list the hours worked, the rates paid, and the total earnings and deductions. On December 20, 1957. Secretary Batt approved the new minimum wage rates and issued from the Publicity Division Of the Department of Labor and Industry a revised list of regulations and definitions on December 22, 1957.7 Following are the additions and corrgctions to the Wage Board's definitions and regulations: Definitions cgges : I l. Egloyee - ”Employee" means a woman twenty-one years of age or over or a minor under twenty-one years of age of either sex in a restaurant, hotel, or motel occupation. Additions : . 1. Emplgzer - ”Employer" includes any person, firm or corporat on or officer or agent of a corporation who hires for compensation persons and directly or indirectly controls hours, wages or working conditions of any employee in a restaurant, hotel or motel occupation. 2. Hours worked - ”Hours worked” includes time of permitted attendance at a place of work, including waiting time, whether or not work is provided, and time spent in traveling as part of the duties of the employee. 3. Lougigg - ”Lodging” means living accommodations which are a equate, decent, and sanitary according to usual and customary standards. Re gulat i one fineness: 1. The "work day” regulation remained the same but 20. with the following deletion: ”The overtime rate begins after the eighth hour of work". Additions : l. Learners - An employer may pay wages to an.employee with less than.E30 hours experience for the same employer at not less than the applicable learner rate with the following provision: (a) The number of employees receiving wages at less than the applicable regular minimum wage rate, does not exceed one for each ten employees or fraction thereof in the estab- lishment. (b) The employer submits to the Department of Labor and Industry at least one time each month the name, address, and age, if under twenty-one, of each employee currently paid wages at a learner rate and the aggregate hours during which he has employed each to date. 2. Method of Co uti Minimum Ha e - The wage paid shall be at least the EEEImum wage rate, Irrespective of the method of payment, whether by time, piece, comission or otherwise. In no case shall gratuities or tips be counted as part of the minimum wage. 3. Time and Method of Pamnt - The employer shall pay all wages no 0 s emp Oyees a least semi-monthly on regular pay days designated in advance by the employer. Not more than three days may elapse between the end of the pay period and the designated pay day. Wages shall be paid in cash or by check convertible into cash on demand at full face value. 14.. Deductions - The minimum wage shall be subject to no deductions whatsoever except as provided by law. 5. Travel Expense - An employee who is required to travel as part c s uties shall be reimbursed for travel time and for actual travel expenses incurred. 6. Handica ed Workers - No woman or minor whose earning capacIEy has been Impaired by physical disability or mental deficiency may be paid less than the minimum fair wage unless a license, specifying a minimum wage comensurate with the employee's productive capacity, has been obtained 21. by the employer from the Department of Labor and Industry. 7. Records and Statements to gpployees - Every employer subject to this wage order shall maintain and keep available for inspection for a period of at least two years accurate information for each employee including: (a) Name and address of employee. (b) Hours worked daily including time of beginning and ending each.work period. (c) Total hours worked and total wages paid each pay period. (d) Employment certificate showing date of birth for each minor under eighteen years of age. (e) Date of birth for each.mele mdnor eighteen and under twenty-one years of age. (f) Designation of each male minor under twenty-one years of age. (g) Designation of each service employee, each employee receiving meals and each employee receiving lodging. (h) Designation Of each learner and the date when MNde Every employer shall furnish a statement to each* woman or minor employee with each payment of wages which shall clearly show the hours worked, the rates paid, any deductions and the total earnings. 7. Postgpg Of Order - Every employer shall keep a copy of this order posted in a conspicuous place where all employees can read it. In this release, Secretary Batt set the date for a public hearing to give employees, employers, and the general public another Opportunity to review the recommendations. This hearing was set for January 1h, 1956, in the main caucus room.of the Capitol Building at Harrisburg, Pennsyl- vania.9 I At the January ll; hearing in Harrisburg, eighteen witnesses appeared, five of whomnwere preponents of the 22. 10 recommendations, and the remainder in.0pposition. Following this hearing, Secretary Batt invited representatives of the Pennsylvania Hotels Association, Pennsylvania Restaurant Association, and.Pennsylvania Motels Association, all of whom had filed detailed objections to the recommendations, to meet with him to review additional information. These meetings took place on January 15 and January 20.11 Following the January lu hearing, Secretary Batt had ten days in which to decide whether to accept or reject the recommendations. It should be noted that wages were not subject to change by the department; merely the revision of terms, definitions and regulations. On January 2h, 1958, the Secretary issued his decision: To accept and approve. The following two orders were handed down from.the Board:12 1. Directory Minimum wage Order Number Two for ”Hotel, Hotel, and Restaurant” Occupations. 2. Directory Minimum wage Order Number Three for Restaurant Occupations. The two orders were to apply to all employees under twenty-one and all female workers. The previous April 15 effective date was changed to May 12 to give employers added time to make adjustments.13 In issuing the directories, major concessions were given the hotel Operators. Principally, these concessions 1‘ 23. were as follows: 1. 2. 3. h. S. b. 7. 8. Service personnel was defined as all employees who regularly received gratuities. The Board had recommended that only food servers be classi- fied as service workers. A one dollar allowance for split shift workers was substituted for the ten hour work spread limitation. The effective date of the Order was changed from April 15 to may 12 to give employers added tine in.making adjustments. The number of learners that could be employed was changed from one in every ten to one in.every three employees. The learner period was increased from a maximum of four hundred eighty hours to six hundred hours, or three months. Two hours of non-service work was allowed before a service employee became entitled to the higher non-service minimum.rate for the entire day worked. ' An.employee could be charged not more than.two 7 dollars weekly for three meals received on non- work days if the employer regularly provided lodging on the premises. An.employee must be paid not more than five days after the end of the pay period, instead of three days as recommended by the Board. Upon issuance of the Orders, the Pennsylvania Hotels Association took action and on February 1h, 1956, by unantmous motion, directed its Counsel to appeal to the Commonwealth 1 Court in behalf of its member hotels. On February 18, Counsel for the Pennsylvania Hotels Association,‘william.S. 16 Livengood, Jr., filed as follows: '3 ,$ 2h. 1. Petition for review and appeal. 2. Supersedeas (to set aside pending outcome of court case). 3. Petition for the Pennsylvania Hotels Association to intervene on behalf of its members. The Commonwealth Court granted the supersedeas and gave the Department of Labor and Industry ten days in.which to file its report. Counsel Livengood was then granted an additional ten days in which to prepare his brief, detailing the hotels' reasons for Opposition to the Order.17 Accordingly, on.March 3, the Commonwealth Court at Harrisburg set March 1h as the date for hearing appeals filed from the Minimum‘Wage Order of Secretary Batt.18 At the request of Counsel for the Pennsylvania Hotels, Restaurant, and Motels Associations, the Commonwealth Court delayed the date for hearing appeals from.the Orders from March 1h to March 28, 1958. Opposition to the delay was made by Attorneys for Secretary Batt but was overruled by the Court. Attorneys for the three associations met on March 28 with.Attorneys for the Department of Labor and Industry before Judges Neely, Sohn, and Richards in an argumentative session. Accordingly, the attorneys for the three associa- tions were given until April h to file rebuttal briefs. In addition, the Court continued the supercedeas setting aside .1 25. the effective date of the Orders until the matter was 20 decided by the Court. The case was finally heard on May 12 in the Dauphin County Courthouse. In a lengthy opinion, Judge William H. Neely set aside the Minimum'flage increases as unconstitutional 21 and.made the following points: 1. That the procedure followed by Secretary Batt violated the ”due process" clause of the Federal and State Constitutions. ” 2. That the‘Wage Board made a "fatal error” in refusing the right to cross-examine witnesses in the series of hearings preceding the increases. 3. That the Board erred in accepting information on wage and working conditions without giving industryrepresentatives the right to challenge. h. That the Board's methods violated the spirit of fair play essential to salary determinations. 5. That the Court was "disturbed” by the manner in which data, surveys, and other information were introduced. On the following day, May 13, 1958, Deputy Attorney General, David C. Harrison, speaking for Secretary Batt, announced that the Department of Labor and Industry would ask the Court to reconsider its case in June. Harrison stated that the complainants "had not sought to protect their rights", that the hearings were ”merely investigative", and did not demand that the strict rules of evidence be followed.22 On June 17, 1958, Secretary Batt issued public notices in newspapers throughout the state in which he invited 26. interested persons to nominate candidates to serve on a new ‘Wage Hearing Board. Nine positions were available to repre- sent employees, employers, and the general public, equally. meinations were due seven days later, on June 24. A token payment of ten dollars daily was to be given each member of 23 the wage Hearing Board. On June 30, in a meeting at Eagles Mere, Pennsylvania, the Board of Directors of the Pennsylvania Hotels Association resolved to demand a separate hotel board for minimum‘wage hearings. Counsel for the Pennsylvania Hotels Association, William S. Livengood, Jr., filed a petition with Secretary Batt asking for the establishment of a separate board for 25 hotels in minimum wage hearings for the following reasons: 1. The hotel industry is considered separate and distinct from.both the motel and restaurant industries by reason of the multiplicity of occupations in'which.women and minors are employed. 2. Hotels furnish food, lodging, and many incidental services to their guests whereas restaurants furnish only food and motels, generally, provide only lodging. 3. There is a wide variation in rates charged by hotels because they fall into three categories: (a) city hotels, (b) small hotels, (c) resort hotels. h. The requirement for a wage board to make its report within sixty days of its organization allows inadequate time to grant the hotel industry to present their case to a wage board taking testimony as to the factors affecting wages in the restaurant and motel industry. 5. It has been the custom in the past for the state ‘1 27. to appoint separate boards for hotels and restaurants and it is the custom.in many neigh- boring, competitive states to have separate wage boards for hotels and for restaurants. This petition of the Pennsylvania Hotels Association was refused by Judge Neely without explanation and on July 15, 1958, Secretary Batt announced the nine members of the new Wage Hearing Board. Six of the nine members of the new Board had served on the original‘Uage Hearing Board. The three new members, all representing industry, were L. Gardner Moore, President and General Manager of the Bedford Springs Hotel, who was recommended by the Pennsylvania Hotels Association; Fred G. Sampson, Executive Vice-President of the Pennsylvania Restaurant Association, and Ben Josgghson, Direc- tor of Tamiment, a Pocono Mountain resort hotel. The first public hearing was announced by Secretary Batt for July 31 in the Senate Caucus Room at the Capitol in Harrisburg. Interested persons were invited to present information at this hearing and subsequent hearings on ‘ August 1, 7, and 8, if deemed necessary. Those wishing to be heard were asked to notify Miss Elizabeth S. Johnson, Director of the‘Homen and Childrenfls Division of the Department of Labor and Industry by July 29. 1958.27 On July 30, one day prior to the first hearing of the new Board, Secretary Batt called the first organisational meeting of the Board. At this meeting the three industry members reported that they could not legally serve if the 4‘ 28. hearings began on July 31, as the act providing for a wage board stated that hearings could only be held fifteen days after the new board was organized.28 The dates for these hearings were rescheduled by 29 Secretary Batt as follows: Stroudsburg, Pennsylvania August 1h, 1958 Erie, Pennsylvania August 20, 1958 Pittsburgh, Pennsylvania August 22, 1958 Philadelphia, Pennsylvania August 26, 1958 Following the organizational meeting of July 30, Counsel Livengood, acting for both the Pennsylvania Hotels Association and the Pennsylvania Motels Association, filed quo warranto (by what authority) proceedings against Secretary Batt in Commonwealth Court at Harrisburg on August 8.30 Under quo warranto proceedings, Secretary Batt was directed to show the following: 1 1. By what authority he appointed a joint board for the hotel, motel, and restaurant industries instead of separate boards as the law provided. 2. By what authority he appointed three union labor leaders as employees' representatives on the hearing board. 3. By what authority he appointed public members to the board reputedly partial in previous labor matters. h. By what authority, the amusement park industry had been included under the jurisdiction of the wage board. 29. The department was granted twenty days in which to reply to the quo warranto proceedings. In the meantime, Secretary Batt proceeded with the series of four public hearings, with the first one scheduled for Stroudsburg, 32 Pennsylvania, on August 124, 1958. 30. THE STROUDSBURG HEARING The Stroudsburg hearing was held on August 1% and 15, 3 1958, at the Courthouse, Stroudsburg, Pennsylvania. In addition to the general public and interested operators of the Pocono Mountains, the following were present at this 3h hearing: Board Members: Honorable Frederic G. Heir, Chairman Mrs. Sadie T. M. Alexander Ben Josephson Gardner Moore Fred G. Sampson Alfonso Catarino August 2. Sommers Lawrence Stoltz Secretary for the Board: Elisabeth.8. Johnson Deputy Attorney General: David C. Harrison Hearing Reporters: Frances Brown Caroline LeBar Verna Musser Jennifer Parlopiano Attorneys for Interested Parties: Charles Bensinger Stroudsburg, Pennsylvania Representing Pocono Mountains resorts Edgar B. Casper Harrisburg, Pennsylvania Representing Pennsylvania Federation of Labor I1 31. Edward.First Harrisburg, Pennsylvania Representing Pennsylvania Restaurant Association Samuel D. Goodis Folz, Bum, Kamsler, Goodis and Greenfield Representing Pennsylvania Hotels Association Sidney Handler Handler and Rosenberg Representing Pennsylvania Federation of Labor Sidney Krawitz Milford, Pennsylvania Representing Pocono Mountains Resorts ‘Hilliam.S. Livengood, Jr., Livengood, Braucher and Stroup Representing Pennsylvania Hotels Association Sterling G. McNees McNees, Wallace and Nurick Representing Pennsylvania Amusement Park Association witnesses: Sterling G. McNees Harrisburg, Pennsylvania 'Elizabeth S. Johnson, Director Bureau of Human and Children Pennsylvania Department of Labor and Industry Mrs. Martha Aprils Easton, Pennsylvania Christie D. Shull, Executive Officer Stroudsburg Security Trust Company Stroudsburg, Pennsylvania Chester Nagel Pennsylvania Department of Labor and Industry Donald Z.‘Uade Metamoras, Pennsylvania Jonas/Anchel, Director First National Bank Milford, Pennsylvania (I x‘ f‘ 32. Harold A. Swanson, Director Vacation Travel Development Bureau Pennsylvania Department of Comoros 8“”). Me Momtt Certified Public Accountant Stroudsburg, Pennsylvania Morton Barrow East Stroudsburg, Pennsylvania Everett Allen Executive Secretary Pennsylvania Hotels Association Harrisburg, Pennsylvania The testimony at the two-day hearing in Stroudsburg filled one hundred forty-four typewritten, single-spaced, 8} by 11:." pages.35 More attention has been given to the Stroudsburg hearing in this paper for the following reasons: 1. Stroudsburg is the business hub of the Pocono Mountains, the county seat of Monroe County, and the largest metr0politsn area in the Pocono Mountains. 6 2. Much of the testimony given at this hearing was based on the resort industry of the Pocono Mountains surrounding the Stroudsburg area.37 3. This area makes up eighty per ceng of the resort industry of Pennsylvania.3 On August 1h, 1958, Chairman of the Wage Hearing Board, Frederic G. weir, Opened the Stroudsburg hearing. The first witness to be called and sworn in was 8 Sterling McNees, Counsel for the Pennsylvania Amusement Park 33. Association. In a fourteen point presentation, McNees moved that the Board ”rule at the Opening of the first hearing in this investigation that none of the occupations in the amusement park industry...be subject to investigation under the present proceeding, or in any of the hearings now fixed by this Board“.39 McNees was not subject to cross-exams ination. Following this testimony, Elizabeth S. Johnson, Director of the Division of Hemen and Children of the Depart- ment of Labor and Industry, was called as a witness. On direct examination, Miss Johnson testified as to her back- ground, both educational and professional, as well as her qualifications for serving as Secretary for the Board.ho On cross-examination, Counsel Livengood brought out the fact that no studies of minimum wages in the neighboring competitive states of Maryland,‘west Virginia, Delaware, and Virginia had been made because these states had no comparable minimum wage laws. In addition, Miss Johnson testified that the United States Federal Government had not yet extended the coverage of minimum wages to the service Ill industries. Much of the balance of the testimony centered around Exhibit 310-C, a report on the living expenses of a single woman living alone in Pennsylvania. The special problem of nonrprofessional workers in 31+. the resort industry was brought up by Counsel for the Pocono u2 Mountains resorts, Sidney Krawitz, in the following exchange: Krawitz: Johnson: Krawitz: Johnson: Krawitz: Johnson: Krawitz: Johnson: Krawitz: "What studies are you going to give the Board to assist them.in relation to resort hotels that will give them an annual budget of a student who lives either at home or at college nine months a year and works season- ally ata resort hotel?" "Again I might point out that the concept in the minimum wage law is that the wage should be sufficient to pay the essential living cost for the help and efficiency of a worker-~nwoman or a minor, and that it isn't intended, in the language of the law as we read it, to imply that a part of that cost should be born through other means-- that the wage should be the same for every- bOdyeee" "All that is very nice, but you didn't answer my question. ‘what studies are you giving this Board in relation to students who are not professional workers, but work on summer vacation in a resort hotel?" ”I would say if the Department had the re- sources, we would like to make such a study, but we have no such resources, and we--' "In other words, you have no studies?" ”I said such a specialized stud y isnit essential to the Board's work. ”...I am trying to find out what the Board is going to have in.front of it with relation to noneprofessional workers or a student who spends perhaps eight to ten weeks work- ing in a hotel. Are such studies available by your Department?" "No.” ”That 18 Elle " .w 35. In the afternoon session on.August 1h, Krawitz cross- examined.Miss Johnson in regards to the New York Minimum Wage Law which recognized the differences between resort hotels and other hotels. Miss Johnson declined to express her opinion of the New YOrk‘Minimum'Wage Law.“3 The third witness at the Stroudsburg Minimum Wage Hearing was Mrs. Martha Aprils, a maid employed at the Huntington Hotel, Easton, Pennsylvania. This witness had been subpoenaed by the Board for testimony at the hearing in regards to the wages she earned as a chambermaid.uh Certain discrepancies in her testimony were brought out by Counsel Livengood. The witness testified that she received $.56 per hour; whereas Livengood showed the figure to be at least $.68 and possibly $.71. The exchanges bee tween the two became quite heated as is evidenced by the following excerpt from recorded testimony}5 Livengood: "She said she got thirty dollars a week wages.a Aprils: 'I didn't say no such word, donit tell me I did because I didn't. I know what I get a week.” Idvengood: ”well, what you said is in there, and that 13 what it will be." Aprils: "Could your wife live on thirty dollars a'weekf' Livengood: "Hell, 1'11 tell you this-~she has." Aprils: "Maybe a good many years ago, but not right now, not right now. I know." 36- Chairman: I'Out of consideration for the reporter, try not to all talk at once." It was conceded by both sides that Mrs. Aprile's testimony proved more harmful to the hearing than helpful. Christie D. Shull, Executive Officer of the Stroudsburg Security Trust Company, was then called by Counsel for the Pocono Mountains resorts, Charles Bensinger, as the next witness. 6 In introducing this witness, Counsel Bensingeerade the following statement}7 "For the benefit of the Board, it is very frequently the position of the resorts that they are an industry separate in some areas and distinct from.the commercial hotel trend, that they constitute an.important part of our area and that their impact is very important, and it has also a very important impact on the state of Pennsylvania. Mr. Shull is being called as a background witness in a connection which will be developed in a brief testimony on the importance of our industry.” Shull first testified as to the flow of bank deposits in the Pocono Mountains' resort business. He presented a chart, Resort Exhibit 1, which showed that deposits rose thirty per cent during a resort season.and that an average of six hundred thousand dollars weekly in deposits amounted from the resort industry. He also testified that July and August were the peak months for the area; January, February, 37. and March, the poorest. Further testimony showed that only ten per cent of loans:made in the area were made to resorts, due to the hazards involved. Counsel Livengood, through his questioning of Shull, brought out the fact that if the resort hotels and motels in the area were adversely affected, other businesses in the community would also be adversely affected. Following Shull's testimony, Chester Nagel, a statis- tician with the Department of Labor and Industry, was called on to testify. Nagel was responsible for the preparation of Exhibit 3-l-A, Survey of Rates of Hemen and Minors in.Res- taurants and Motels, June 29, 1957, and Exhibit 3-lO-B, Supplementary Tables based on the survey report prepared July 19, 1958. On direct examination Nagel testified as to his back- ground and qualifications and also substantiated the validity of the tables. During cross-examination.much of Hegel's testimony regarding the accuracy and completeness of these reports was brought under close scrutiny:50 Krawitz: ”Now then, on page 8 of Exhibit 3-lO~A, a statement was made as follows: ”It is at once apparent that the wage rates in the resorts are much lower than in the regular hotels and restaurants“. Is that right?" Hegel: ”That's right." Irawitz: 'Hben.you made that statement did you take into consideration the fact that the average resort hotel provides lodging for its employees seven nights a week and three Nagel: Krawitz: Nagel: Krawitz: Hegel: In,total, ing his reports. Donald Z. was then called location of Pike the major resort Krawitx: Wade: Krawitz: Haas: Krawitz: 38. meals per day, contrary to the commercial hotel which on some occasions provides one meal a day and no lodging?” "I did not.” ”New, also at the same time you stated: "Many of these resorts which pay less than $. 50 an hour expect their employees will be reimbursed by ti s' . Here you serious about the word ”expect or from your own personal experience do you know that tips constitute one of the large forms of reimbursement to employees?” ”I was informed that tips formed a greater part of their reimbursement.” ”So that the‘word ”expect" is not a correct word there, is it?" ”It's just a lapse of English. Another word I think would have been much better than that word. You could use "depend" on their employees being paid tips, which would mean the same thing.” Nagel spent five hours on the stand defend- Hade, a banker frovaatamoras, Pennsylvania, on to testify. ‘Vade outlined the geographical County, Pennsylvania, in relationghip to 1 areas of New Ybrk and New Jersey: “New, Mr. Wade, are you familiar with the vacation area known as the Pocono Blue Ridge Area?" "Yes" e “What is its geographic location to New York State?" "It is adjacent to New York State." ”And what is its geographic location to New Jersey?" wade: Krawitz: wade: Krawitz: Wade: Krawitz: wade: Krawitz: Wade: Krawits: wade: Krawitz: Hade: Krawitz: Hade: Krawitz: Wade: Krawitz: 39. "It is adjacent." 'Canhyou tell us what county Matamoras is in? "Pike.“ "And what is the principal industry of Pike County, Pennsylvania?" "Vacation.” "Are you familiar with Orange, Sullivan and Ulster Counties in new York? ' ”1330. ”And Sussex County, New Jersey?" "Yes.” ”Geographically, how are these counties situated with relation to Pike County, Pennsylvania?” "They are adjacent." "Can you tell us what the principal industry of Sullivan and Ulster Counties, new Yerk, is?” ”Vacation.” "Do you know approximately how meny resort hotels and resort facilities there are in Sullivan and Ulster Counties, new York?“ "I believe there are approximately 1600, slightly over.” ”would you, from.your experience and know- ledge of Pike County as it relates to Sullivan and Ulster Counties, say that our resort hotels are in direct competition with the sister states of New York and New Jersey in these particular counties?” ”That is true." ”What state would you say is the most serious competitor?” f1 ho. Wade: ”New York State.” Krawitz: "Can.you give us the reason why you say that?" Wade: "The resort hotels are definitely more progressive, they have huge investments in their plants." Krawitz: "And has Pike County kept pace with this particular area of New York?‘I Wade: ”It wasn't possible for them to do that." Chairman: "This area of New York that you refer to is the one that contains the fabulous places such as Grossingers', is that right?" Wade: "Yes, that is in that area." f The witness also showed through.his testimmny the effect of the presence or absence of occupancy taxes, sales taxes, and Sunday liquor sales on the three states.52 Jonas Anchel, a department store operator in Milford, Pennsylvania, located on the fringe of the Pocono Mountains, was then called as a witness. He testified as to the decline in the resort business in Pike County and stressed the competition in adjacent Sullivan County, new York, as being a contributing factor.53 Harold A. Swanson, Director of the Vacation Travel Development Bureau of the Pennsylvania Department of Commerce, was next called to testify. Swanson compared the resort ’ industry of Pennsylvania in relationship to other leading industries of the state:Sh Bensinger: ”Do you have any figures in your Depart- ment comparing the resort industry in hi. Pennsylvania with other Pennsylvania industries so far as dollar volume is concerned?" Swanson: ”The figures we have encompass more than just the resort industry, it includes the tourist industry also. The tourist indus- try in Pennsylvania has been.estimatad roughly at about one billion two hundred million a year gross volume. This, in turn, would place the indust in a rating of fifth or sixth position wi him the Commonwealth“ on a par, for example, with agriculture. Swanson also outlined theSEompetitive factors in the Pennsylvania resort industry as: l. The resort facilities in the adjacent states of' New York and New Jersey. 2. Florida "package" plans. 3. Country clubs. a. Home swimming pools and recreational facilities. He testified that out of approximately eight hundred resort hotels in Pennsylvania, there were not more than eighty in which the vacationer would spend as much as eighty- five per cent of his vacation dollar at the hotel in which he was staying. Of these eighty hotels, approximately sixty so were located in the Pocono Mountains area. Everett Allen, Executive Secretary for the Pennsyl- vania Hotels Association, was then.called and sworn in as a witness. Allen's testimony basically concerned a discussion of the definition of a resort hotel by the Pennsylvania 57 Hotels Association: ’42- Livengood: "Mr. Allen, in determining what consti- tutes a resort hotel as defined by the Pennsylvania Hotels Association, what criteria do you use in determining whether or not an Operation is a resort operation?” Allen: ”we use basically the outline which was mentioned by Mr. Swanson, except that we would like to enlarge upon it just a little. we think of a resort, first of all, in regard to its location; we don't expect to find a resort in Harrisburg. ‘We expect a resort location to attract tourists and vacationers because of the recreation facilities. Now, that may be in relation to water, such as a lake, a river, an ocean, a mountain, or some recreation activity such as golf, skiing or hunting. It is usually but not necess- arily limited to a remote area as compared to an urban community or large city.” Following Allen's testimony, Ben Josephson, member of the Board and Director of Tamiment, a Pocono Mountains resort, read into the minutes of the hearing a general statement of the problems of hotels in general, and Pennsylvania resort hotels in particular. This lengthy statement was followed‘ by a discussion.between counsel for the resorts and counsel for Secretary Batt concerning the legality of accepting this report into the minutes. Chairman Weir accepted the statement.58 Samuel M. Monatt, a certified public accountant of Stroudsburg, Pennsylvania, was next called as a witness. Monatt first testified as to his background, training, and associations with resort hotel clients. He testified at length on Resort Exhibit Number Three, which he had prepared for Counsel Bensinger. In this report Monatt used data re- #3. lating to the comparative Operating costs for the year, 1957, in relation to eighteen resort hotels, seventeen of which were located in Monroe County. At one point, Counsel Handler demanded that Monatt reveal the identities of these eighteen 59 resorts: Chairman: Monatt: Handler: Chairman: Monatt: Handler: Monatt: Handler: Chairman: ”He has asked you to produce this ques- tionnaire?" ”I refuse to produce any with the original name on the basis that it is against the ethics of my profession. I have secured information.from the Vacation Bureau by stating we wouldn't divulge any names, and I cannot, as a certified public accountant, under the laws of New Yerk or Pennsylvania, divulge any individual names.” ”As a former member of the certified public accountant examiners, I would be greatly enlightened if you will tell me where that is a condition of your license." "He just said that the law prevented hint" "I am.a member of the New York State Society of Certified Public Accountants, and the Pennsylvania Society of Certified Public Accountants, and our code of ethics goes far beyond the state c0de of ethics, and in the ethics of my profession I cannot divulge any names because it would give in- formation to competitors which would give undue advantage to other pacple.' ”How many of these eighteen resorts are your clients?" "Every one of them." 'I would like to request the Board to issue subpoenas for the documents.” ”Since I don't even know the names of the .parties, I don't know how I can issue any subpoenaes...” 1m. Chairman.Weir, after hearing lengthy debate and dis- cussion.on this matter between both counsels, allowed Monatt's refusal to stand.60 The final witness at the Stroudsburg hearing was Morton Barrow, a hotel Operator and public accountant. Barrow testified in regards to the running of an American plan resort accommodating one hundred persons. Specific testimony was given in relationship to the number of employees, wages paid, hours worked, time off, recreational facilities, tipping, cost of feeding employees, and use of student labor:61 Bensinger: ”Do you have student or college help?" Barrow: ”The bulk of our employees" are college and high school students." Bensinger: "Do they come back to work for you each year?” Barrow: "They usuall y come back on a two or three year basis. Bensinger: "WOuld you say that they are experienced or inexperienced help? Barrow: "They are inexperienced when they come to us. ‘We train them.as we can." Bensinger: ”How long would you say it is before they be come experienced?“ Barrow: "Well, since they are not working at what they will be doing for their ultimate pro- fession, it is hard to say. They do their job satisfactorily.” Bensinger: ”Directing your attention to the definition of 'learners', (Minimum Wage Order), with Barrow: Chairman: Barrow: 1+5 . which you indicated you are familiar: "A learner means an.employee with less than 600 hours experience in the occu- pation“ ,'would you say that the hotel industry and you as a resort Operator would and could be satisfied with such a definition?" “I an answering this on.my own'basis. On the basis of a tendweek season and figur- ing that we use an employee six hours a day and they come back over a three-year season, we would like to include them as learners in that period.” ”You mean for the entire three years?” "In other words, that would be thirty weeks over a three-year period." "You are speaking only of students or others as well? "The majority of our>employees are students. Our chef has been with us eleven years and of course he is not a student and not a learner.” On cross-examination: Harrison: Barrow: Harrison: Barrow 3 ”WOuldn't a learner's rate for one season be enough to cover learning the job?” "This is not their profession. It is ' part-time summer employment. ‘While they may become proficient it is not their regular employment.” “But a learner is designed to take care of the apprenticeship period, and so far as techniques required are concerned, it shouldn't take more than a year.” 'I'm.not qualified to say what the State should do. All our waitresses are teens agers. While they may be proficient in the dining room.they are still teen-agers; they are still learning. Even though they may be competently qualified in the dining #6. room.as waitresses they are not adults nor do they conduct themeelves as adults.” Harrison: ”Are they less valuable to your Operation?” Barrow: "Well, I'll answer it this way. An adult, person, assuming we could hire one, a professional waitress, we would be a lot happier with that type of person than with students, but it is practically impossible to hire an adult staff for this period of time." Following Barrow's testimony the Stroudsburg hearing adjourned and the Board recessed to meet inZErie, Pennsyl- vania on.August 20, 1958.62 Testimony at the Erie hearing basically concerned the following areas:63 ' 1. Basic salary necessary to maintain a woman living alone in the Erie area. - 2. Decline in hotel occupancy due to improved trans- portation. On.August 21, at the Pittsburgh, Pennsylvania, hearing, Operators of hotels, motels, and restaurants testified as to the predicted effect such Minimum Wage Orders would have on their respective businesses. They forecast a wide spread of bankruptcies in their industries if the proposed $1.05 minimum wage for women and children was put into effect. A large part of the testimony cantered on salaries paid to waitresses who also received gratuities from.the public. Several hotel Operators reported having had difficulty in promoting waitresses to hostess positions due to lack of 1L7. gratuities in the latter position. The issue of tips be- came important due to the Board's efforts to determine the adequacy or inadequacy of the salaries of waitresses.“4 The Philadelphia hearing followed on.August 26, 1958, at City Hall. The testimony at the hearing centered largely on the relationship between the cost of living indexes of l9h3 and 1958 and minimum wage floors in the industry for those two years.65 On September h and 5, the final two hearings of the Minimum‘Waga Board were held at the State Capitol in Harris- burg, Pennsylvania. A number of witnesses at the two-day hearing were resort hotel Operators from the Pocono Mountains area. A key witness on September 5 was Joseph Kane, of Horwath and Horwath, who testified in relation to the financial stress that would face Pennsylvania hotels if the prOposed Minimum Wage Orders went into effect. He also come pared the Pennsylvania hotel occupancy rate of fifty-seven per cent with the national rate of 76.8 per cent.66 Following the five hearings, the Board scheduled an executive sessiOn in Philadelphia on September 22, 1958, to determine its recommendations to Secretary Batt. Another meeting was held by the Board on October 3 to conclude its work on the recommendations}:7 On October 7, 1956, at a press conference held by Secretary Batt in Harrisburg, the recommendations of the lid. Board were made public. it that time the Secregary announced 6 a public hearing for October 27 at Harrisburg. 149. 69 RECOMMENDATIONS OF THE NEW MINIMUM WAGE BOARD General Findings 1. The cost of living in Pennsylvania for women and minors, as found by studies prepared by the Bureau Of Research and Information of the Department of Labor and Industry, Commonwealth of Pennsylvania in conjunction with the Bureau of Labor Statistics and the Women's Bureau, United States Department of Labor, is approximately $2,800.00 for a woman living alone and $2,500.00 for a woman living as part of a family group. 2. This figure is based on a survey of cities in Pennsylvania of varying size. 3. The evidence indicates that the cost Of living is fairly uniform throughout the Commonwealth. h. The cost of living for an.employed woman or minor in Pennsylvania is substantially within the range testified to by witness Bryski and supported by Ex. 3-lO-C. 5. Over-time rates are necessary to help prevent any serious reduction in employment due to increased wage rates. The hours of permissible straight time rates are based on the normal‘work week in the various areas. 6. A learner differential of approximately twenty- five per cent is accepted practice in.many places. 7. The definition of the metrOpolitan Philadelphia area to include everything within a twenty-one mile radius of City Hall in the city of Philadelphia and the metrOpolitan, Pittsburg area as all of Allegheny County is necessary to equalize competitive conditions between hotels, motels, and restaurants in these areas. Hotels 17. Commercial hotels in the Philadelphia and Pitts- burg metrOpolitan areas are paying a minimum wage of one dollar per hour less the meal and gratuity allowances pres- cribed in these recommendations to most of their personnel at this time or will be paying this wage shortly to all of their employees. SO. 18. Because of the wide disparity between the wages paid by a majority of the smaller hotels outside of the Philadelphia and Pittsburgh metrOpolitan areas and the mini- mum necessary for a prOper standard of living, a minimum wage at either extreme would be grossly unfair to employers on one hand and employees on the other. 19. a minimum wage of eighty-five cents per hour for a forty-two hour week for non-food occupations in hotels outside of the Philadelphia and Pittsburgh metrOpolitan areas is a fair minimum wage under the above circumstances. 20. Hotel restaurants are in some instances competi- tors Of non-hotel restaurants, so that a difference in rates would give a competitive advantage. 21. Many hotels pay their service employees receiving two meals a day, forty-five cents per hour. 22. Some commercial hotels outside of the Philadelphia and Pittsburgh metrOpolitan areas pay their non-service food employees at a rate of ninety-five cents per hour less the prescribed.mea1 allowance. 23. Many commercial hotels outside of the Philadelphia and Pittsburgh.metrOpolitan areas are making little profit, if any, and a substantial number are Operating at a loss. 2a.. This condition has been prevalent, with the ex- ception of a few years, since 1929, and is evidenced by the fact that many hotels have never paid any dividends, and some have acquired substantial deficits. . 25. The situation is aggravated at the present time by the expanding network of high-speed highways, together with the growth of motels. Because of the age of most hotels, they are not able to Offer as attractive services as the more modern motels. Also, in this particular year, the re- cession has aggravated this business since plants are either shut down.or Operating at low rates of production. 26. The poor financial condition of those hotels re- quires that.they be given a five cents per hour allowance in the minimam.wage for non-service food employees. A greater allowance is not warranted when the prOper consideration is given the criteria Of Section 5 of the act. 27. Some hotels outside of metrOpolitan Philadelphia and Pittsburgh areas are able to pay at a rate of eighty-five cents per hour or more for maids not receiving meals, or a .1 I. 51. corresponding rate if a meal allowance is used. 28. The poor financial condition of these hotels re- quires that they be given a differential of fifteen cents per hour, (a.mdnimum wage of eighty-five cents per hour), in the pay of chambermaids, laundry workers and all other per- sonnel not engaged in food services together with the pres- cribed meal allowances, if applicable. This is the lowest_ minimum.wage commensurate with the best interests of the ' Commonwealth. 29. A meal allowance of fifteen cents per hour for the first meal and five cents per hour for each additional meal is reasonable for hotels outside the Philadelphia and Pittsburgh metropolitan areas due to higher costs in these establishments. Such a rate also reflects accurately the ' sums prOperly allocable to the present wages of these employees for meals. 30. A lodging differential of five dollars per week in commercial hotels appears fair, due to the fact that be- cause of the low occupancy rate of hotels in this state, the space would not normally be used. 31. Resort hotels face keen competition from resorts in nearly every state. 32. in.employee at a resort hotel is given a finan- cial advantage since transportation, recreation and other miscellaneous expenses are provided him by the resort. This affects both the cost of living of the employees and the reasonable value of the services rendered. 33. Resort hotels bring in substantial revenue to this Commonwe alt h. Conclusion; 1. The minimum.cost of living for women and minors in restaurant, hotel and motel occupations is in excess of one dollar per hour. '2. The reasonable values of services rendered in these occupations is one dollar per hour. 3. The wage rates recommended in this report are those voluntarily maintained by some employers in the indus- tries affected. 52. h. The wage rates and regulations recommended in this report reflect the competitive problems of the affected industries. 5. The wage rates and recommendations are consistent with the criteria of the Act and recognize the problems of the industries. 53- RECOMMENDED MINIMUM FAIR WAGE STANDARDS Basic Hourly Rate: One dollar an hour for restaurant, hotel and motel and miscellaneous lodging occupations with the follow- ing allowances and exceptions. éllowance s : For tips to service employees -- thirty-five cents an hour; For meals furnished by employers -- fifteen cents an hour; except that in hotels outside metrOpolitan Philadelphia and Pittsburgh such allowance may be in- creased to twenty cents an hour if two meals a day are furnished and to twenty-five cents an hour if three meals a day are furnished; For lodging furnished by the employer -- five dollars a week; For non-service employees in restaurants and in food occupations in hotels outside metrOpolitan Philadel- phia and Pittsburgh -- five cents less per hour for time worked; For other non-service employees in hotels outside metrOpolitan Philadelphia and Pittsburgh -- fifteen cents less per hour for time worked. Exception for resort hotels: For employees who work forty-eight hours or less in any week but more than three days or twenty-four hours a week, weekly rates as follows: Thirty-five dollars for non-service employees, thirty dollars for chambermaids, and twenty-five dollars for service (tipped) employees with allowances of five dollars a week for lodging and eight dollars a week for meals received. For employees working less time in any week, the minimum hourly rate shall be one-fortieth of the applicable weekly rate. Sh. Basic Changes in.Administrative Regulations 1. Over-time Hate Every employer shall pay one and one-half times the applicable minbmum hourly wage rate (less allowances) for time worked (a) in excess of forty hours a week in metrOpolitan Philadelphia and Pittsburgh and (b) in excess of forty-two hours a week in the remain- der of the State: Exception: For employment in resort hotels the employer shall pay over-time for hours worked in excess of forty-eight a week or worked on the seventh day of the week at one and one-half times the minimum.rate applicable to the classification of the employee based on a forty-eight hour week. 2. Learners Employers are entitled to an allowance for learners of twenty-five per cent of the applicable rate, (exclusive of lodging and meal allowances), for ex- perienced employees. An.employer may pay wages at the applicable learner rate to no more than one employee to two other persons, or fraction thereof, regardless of age or sex, employed in the establish- mO nt e 3. Minimum.Call-in Pay On any day an employee reports for duty at the request of or with the permission of the employer, such employee shall be paid for at least three hours of work at the applicable rate. d. Diversified Employment In any day in which an employee engages for twenty- five per cent or more of his working time in an occu- pation or class of employment with a higher rate under the same or a different minimum wage order, the employee shall be paid for such entire day at the rate for the occupation or class of employment with the higher rate. Such employee shall be entitled to all benefits of whichever minimum wage order is applicable for the day. 5. 1. 2. he 55. Time and Method of Paynent The employer shall pay all wages due to his employees at least semi-monthly on regular pay days designated in advance by the employer. Not more than seven days may elapse between the end Of the pay period and the designated pay day. Minimum wages shall be paid in cash or by check convertible into cash at full face value. Principal Chnnges in Definitions Hotel occunations means any activity in an establishment commonly known as a hotel engaging primarily in provid- ing lodging and meals to the general public on a fee basis with service available twenty-four hours a day, and in any resort hotel. The term includes work in a laundry Operated for use of the hotel and its guests. Resort hotel is one that (1) provides accommodations of a vocational and recreational nature and meals and lodging to the public or to numbers or guests of members; (2) provides without charge, on a weekly basis, lodging, accommodations, and.meals to the majority of its employees; and (3) meets one of the three following criteria of seasonal Operation: a. Operates for not more than seven.months in any calendar year, or b. being located in a rural community or in a city, borough, town or township of less than fifteen thousand pOpulation, increased its number of employee work days (including adult males) during any consecutive fourdweek period by at least one hundred per cent over the number of employee work days (including adult males) in any other consecutive four-week period within the preceding calendar years, or c. being located in a rural community or in a city, borough, town or township of less than fifteen thou- sand pOpulation, increased its number of guest days during any consecutive fourdweek period at least one hundred per cent over the number of guest days in any other consecutive fourdweek period in the preced- ing calendar year. Enployee means a woman twenty-one years of age or over or a m nor under twenty-one years of age Of either sex I‘lll‘l Pa S. 6. 7. 8. 9. 10. S6. in a restaurant, hotel, motel or miscellaneous lodging occupation, as defined above, except (a) executives aarni a guaranteed salary of at least $60.00 a week and (a? caddies at a resort hotel. Metropolitan Philadelphia and Pittsburgh means (a) all cities, boroughs and townships any part of which falls within a radius of twenty-one air:miles of City Hall, Philadelphia and (b) all of Allegheny County. Service enployee means an employee who directly serves patrons or guests and who regularly receives gratuities in an.emount at least equal to the difference between the minimum‘wage at the service employee rate and the mdnimum.wage at the non-service employee rate, and all whose work is customarily part of a "tip" employee's duties. Non-service e lo ee means all employees except (1) ser- vice employees and (2) chambarmaids in resort hotels. Chambermaid means only an employee in a resort hotel whose duties relate solely to the cleaning and servicing of guest rooms, and who receives gratuities at least equal to the difference between the chambermaid rate and the non-service rate. Learner means an employee with less than six hundred hours cummulative experience in occupations of the same general type as that in which the employee is currently employed. Food occupation.means any work in the dining room depart- ment of a hotel. At the October 27, 1958, public hearing in Harrisburg, Pennsylvania, hotel men and.membars of the Pennsylvania Motels Association presented arguments against the Minimum Wage Board's new recommendations. In addition, at this meeting, Charles Bensinger, counsel representing the Pocono Mountains Vacation Bureau, stated that the Operators could live with 70 the Board's recommendations, "if necessary”. ,0 57. Following this hearing, Secretary Batt had ten days in which to accept the recommendations and order their pro- mulgation or to dissapprove and send them back to the Board for additional testimony. On Nevember 7, 1958, Secretary Batt accepted the recommendations of the Board and issued three basic Minrmum Wage Orders for women and all others under twenty-one years of age. The orders affected seventy-five thousand persons; thirty thousand directly. The effective date of the Orders was set for January 1, 1959. Secretary Batt stated that special considerations were allowed resort hotels because of their seasonal nature, including the fact that most re- sort employees lived on the premises and that the resorts ‘were in keen competition with other resorts outside Pennsyl- 71 "nia e 56. SUMMARY OF MAJORLEEOVISIONS OF STATE MINIMUM WAGE ORDE§§2 No. l - Hotel Occupations No. 2 - Restaurant Occupations NO. 3 - Motel and Miscellaneous Lodging Occupations Minimum Wage Rates: Philadelphia and Remainder Of Pittsburgh Commonwealth Restaurants Hen-service without meals $1.00 $.95 Hen-service with meals .85 .80 Service without meals .65 .65 Service with meals .50 .50 Hotels Non-service in food occupations: without meals 1.00 .95 with meals .85 .70-.80 Nenpservice in other occupations: without meals 1.00 .85 with meals .85 .60-.7o Service employees: without meals .65 .65 with.meals .50 .h0-.50 In hotels outside metrOpolitan Philadelphia, and Pittsburgh, the meal allowance is fifteen cents for one meal, twenty cents for two meals and 25 cents for three meals. Special weekly rates are provided for resort hotels. Motels and Miscellaneous Logging Occupations amp oyaes 1.00 1.00 Overtime: Time and a half the minimum rate. After forty hours in Philadelphia and Pittsburgh areas. After forty-two hours in rest of State. Learners: Twenty-five per cent less than the applicable minimum may be paid to learners with less than six hundred hours experience in the occupation, the ratio not to exceed one learner to two other employees. 59. Following the release of the Minimum Wage Orders, the Board of Directors of the Pennsylvania Hotels Association held a meeting on November 21, 1958. At this meeting, Counsel Livengood advised the Board as follows:72 1. Quo warrento proceedings against Secretary Batt should be drapped if certain modifications were obtained. 2. The one dollar basic minimum wage and forty-two hour work week could not be reduced further. Accordingly, on January 1, 1959, the new Minimum Wage Orders for the Pennsylvania hotel, motel, and restaurant industries, went into effect as recommended by the Minimum Wage Board of 1958. On March 18, 1959, Secretary Batt announced a scheduled hearing would be held on March 31 to draft the following "minor modifications" under the Minimum Wage Orders. This meeting was later cancelled and rescheduled for Apiil 7, 1959, in the Labor and Industry Building in Harrisburg: Modifications Under the prOposed.modifications, the amended regu- lations of this order would read as follows, (underlining indicates matter added, parentheses indicate matter deleted): Definition.g. Employee Employee means a woman.twenty-one years of age or over or a minor under twenty-one years of age of either sex in a hotel occupation, as defined above, except (a)(executives) mana erial employees earning a guaranteed salary of at least sixty dollars a week and (b) caddies at a resort hotel. .‘ 60. Definition 11. Neal gpe word ”meals” as usedgin the classigication of upp- service e loyees, chambermaids and service employees for pppppses o identifyipg the applicable weekly rate in resort hotels;_means three meals a day. Regulation 1. Overtime Bpte Every employer shall pa (one and one-half times the applicable minimum.hourly wage the overtipe hourly rate as (stated above) s ecified in this order under the headipg of Minimum.wage Rates for time worked (a) in excess of forty hours a week in.metr0politan Philadelphia and Pittsburgh and (b) in excess of forty-two hours a week in the remainder of the Commonwealth: Exception - For employment in resort hotels the employer shall pay overtime for each (hours) hour worked in excess of forty-eight a week or worked on the seventh day of the week at one and one-half times one-forty-eighth of the minimum weekl rate applicable to the classification of the amp oyee (based on a forty-eight hour week). Regulation 2. Learpprs Employers are entitled to an allowance for learners of twenty-five per cent of the applicable rate for experienced employees. An.employer:may pay wages at the applicable learner rate to no more than one employee to two other per- sons, or fraction thereof, regardless of age or sex, employed in the establishment; except that the Department of Labgp and Industry;mgy grant a resort hotel operating less than one hundred days a_year betweep June 1 and September 30, a variatign in the number of learners if necessapy to prevent curtailment of students' opportunities for suitable employ- ment. Regulation 3. Minimum Call-in Pay On any day an employee reports for duty at the request of or with the permission of the employer, such employee shall be paid for at least three hours of work at the appli- cable minimum.rate. This provision shall not a l on da s school is in session 0 s u en 3 who regularly aEEend a full- 9 uca iona ns tutiop. 61. Regulation.fl. Additional Rate for Spread of Houpp On any day in.which the spread of hours exceeds ten between beginning and ending of the work day (i.e. time worked, plus time off for meals, plus time off duty) an employee shall be paid one dollar in addition to wages other- wise payable, except that with respect to a hotel dining room.smployee outside metropolitan Philadelphia and Pitts- burgh the employee regardless of spread of hours shall be paid one dOllar in addition to wages otherwise payable on any day when the time worked is broken by more than one interval off duty other than.meal periods of one hour or less. Tpig provip;on shall not apply on days school is in session to students who regularly_attend a full-time educationa ipptitution. In May, Secretary Batt announced a public hearing for May 27, 1959, in Harrisburg for the purpose of determining if the hotel, restaurant, and motel Minimum Wage Orders should be declared mandatory. The Orders became effective on January 1, 1959, but were directory orders only.75 At that time penalties for violations of the Orders were limited only to the publication of names of the viola- tors. Onee the names became published, however, the employers were no longer bound to pay the minimum wage as set up in the Orders. 'Whenever the Orders became mandatory, the Department of Labor and Industry would have legal power to collect un- paid wages due employees. .In addition, mandatory orders would subject violators to fines of fifty to one hundred dollars or ten to thirty days imprisonment.7b At the hearing on May 27, 1959, five witnesses, all 4‘ 62. representing the State, testified as to reported violations of the Orders. Four of the five witnesses were field repre- sentatives; the fifth witness was Miss Elizabeth S. Johnson, Director of the Bureau of Hemen and Children of the Depart- ment of Labor and Industry.77 Visitations early in March, 1959, disclosed that one hundred twenty-nine hotels, two hundred restaurants and thirty-seven.motels were in violation of the Directory Orders. In April, one month after the first inspections, nine hotels, one motel, and twelve restaurants were in violation of the Orders. Only one of the twenty-two not complying with the Orders had been summoned for the hearing or had his name published. Several of the violations had resulted from.hat check concessionaires paying wages below those specified in the Orders.78 Following this hearing, Secretary of Labor and Indus- try,'william.L. Batt, Jr., recessed “indefinitely a meeting to change the Minimum wage Directory Order into a Mandatory Order after hearing five witnesses".79 In June, 1959, word reached the resort operators that inspectors were ready to move into resort areas of the State to inspect payrolls of women and minors. As of July 1, no actual record.w§3 available of such a move in the Pocono Mountains area. On September 9, 1959, Secretary Batt issued a statement 63. declaring the Minimum wage Orders Number One, Two, and Three to be mandatory. This occurred nearly tier; years after the first action had begun in October, 1957. 6h. Summppy of Chapter IV In attempting to set up minimum wage rates applicable to women and minors in Pennsylvania, it was necessary for certain factors to be taken into consideration by the Minimum wage Board. First, the Board had to establish the necessity of these rates; second, it had to formulate a policy on such matters as part-time labor, uniforms, tipping, allowances for food and lodging, and fair employment practices.82 In addition, the Board specifically defined terms used in its report to clarify interpretation of the Minimum'wage Order by the Operators. The recommended regulations were carefully explained in the report, thus enabling the operator to more readily comprehend exactly what was expected under the new Orders. , In approving the new minimum wage rates, Secretary Batt issued a revised list of regulations and definitions on December 22, 1957. This revised list covered many of the finer points of the Order and was more specific in its elaboration of terms and regulations. The ”learner" pro- vision particularly was closely scrutinised.8u Following this, a public hearing was held on Janu- ary 1h, 1958, to allow interested parties to present further information regarding the recommendations. Ten days later, on January 2h, 1958, Secretary Batt approved the recommen- 85 dations and issued the three Directory Orders. 65. This decision was important to the resort industry for several reasons. First, the effective date of the Orders was set as May 12, coinciding with the beginning of the resort season in Pennsylvania. Second, budgets had been formulated and employee contracts signed the previous fall. Predicted gross incomes would have been greatly diminished by the new Orders and little time remained for adjustment. The only answer, therefore, was a "delaying" action on the part of the Pennsylvania Hotels Association, and on February 18 an appeal was filed. Approximately two months later, the case was brought to the Dauphin County Courthouse and on May 12, 1956, the wage increases were declared unconr stitutiona1.86 This marked a major victory for the resort hotels for they were now assured of completing the 1958 season without changes in the minimum wage structure. Following the decision of May 12, four public hearing dates were scheduled to be held in.August. The first and most important from the standpoint of the resort industry, was the Stroudsburg hearing held on August 1h and 15, 1958. For the first time the resort operators were given an oppor- tunity to present their views on the minimum wage issue - as distinguished from previous hearings in which the views of the entire hotel industry were presented. Through testimony of local bankers, resort Operators and an official of the Pennsylvania Hotels Association, the Board was made aware .\ 66. of the economic conditions in the Pocono Mountains and the extreme competition of resort areas in adjacent states. This hearing served particularly to change drastically the "learner” provision - one having a great effect on the resort industry due to the large volume of inexperienced labor used by the resort Operators.87 On October 7, 1958, following the August and September hearings, Secretary Batt released the recommendations of the new Minimum Wage Board. At a public hearing on October 27, Counsel Bensinger stated that the resort industry had accepted the Board's recommendations, and on November 7, 1958, Secretary Batt accepted the new recgmmendations, setting the effective date for January 1, 1959. B At a later hearing on.April 7, 1959, certain.modifi- cations were added to the Minimumflflage Orders. Among these modifications was a relaxation of the "learner” provision, enabling the hiring of student labor by short-season resorts. On September 9, 1959, following several months of investigations involving mdnimmm‘wage violations, Secretary Batt declared the Directory Orders Number One, Two, and Three, to be mandatory, thus bringing to a close two years of con- 69 trovery over the minimum wage issue in Pennsylvania. l. 2. 3. h. 5. 6. 7. 8. 9. 10. 15. 16. 17. 18. 19. 20. 6?. FOOTNOTES Recommendations of the Minimum Wage Board, Department of Labor and Industry, Commonwealth of Pennsylvania, December 1h, 1957. The Daily Record, Stroudsburg, Pennsylvania, October 30, 97' p. e Pennsylvania Hotel Herald, December 11, 1957. p. 8. Ibid’ p. 8. Recommendations of the Minimum Ha e Board, Department of Labor and Industry, Commonwealth of Pennsylvania, December 1h, 1957. Ibid. Publicit Release, Department of Labor and Industry, December 22, 1957. Ibid. Pennsylvania Hotel Herald, December 25, 1957, p. 5. Membershi Bulletin, Pennsylvania Hotels Association, January 57. I957. Ibid. Ibid. Ibid. The Daily Record, Stroudsburg, Pennsylvania, January 27, 195 g p. Pennsylvania Hotel Herald, February 19, 1958, p. 1. ‘gpgg, p. 1. lkége P0 10 Pennsylvania Hotel Heralg, March 5, 1958, p. 1. Pennsylvania Hotel Herald, March 19, 1958, p. 1. Pennsylvania Hotel Repaid, April 2, 1958, p. 1. 1. 2. 3. h. 5. 6. 7. 8. 9. 10. 15. 16. 17. 18. 19. 20. 6?. FOOTNOTES Recommendations of the Minimum‘Wage Board, Department of Labor and Industry, Commonwealth of Pennsylvania, December 1h, 1957. The Daily Record, Stroudsburg, Pennsylvania, October 30, 971?. e Pennsylvania Hotel Herald, December 11, 1957. p. 8. Ibid., p. 8. Recommendations of the Minimum Ha e Board, Department of Labor and Industry, Commonwealth of Pennsylvania, December 1h, 1957. Ibid. Publicit Release, Department of Labor and Industry, December 22, 1957. Ibid. Pennsylvania Hotel Heralg, December 25, 1957. p. 5. Membership Bulletin, Pennsylvania Hotels Association, anuary ' e Ibid. Ibid. Ibid. The Daily Record, Stroudsburg, Pennsylvania, January 27, 195 3 Fe Pennsylvania Hotel Herald, February 19, 1958, p. 1. gpgg, p. 1. I232, p. 1. Pennsylvania Hotel Herald, March 5, 1958, p. 1. Pennsylvania Hotel Herald, March 19, 1958, p. 1. Pennsylvania Hotel Herald, April 2, 1958, p. 1. s. ’ I 4 I s a Q A. . ' 'e a f- ! F I '. O O I 0 e . O. . e 9‘ Of a e. O 21. 22. 23. 25. 26. 27. 28. 29. 30. 31. 32. 33. 3h. 35. 360 37¢ 38. 39. ho. hl. £13. 68. Pennsylvania Hotel Herald, May 1h, 1958, pp. 1 and 8. 121;, p. 1. Pennsylvania Hotel Herald, June 25, 1958, p. 1. Pennsylvania Hotel Herald, July 9, 1958, p. 1. Ibid, pp. 1 and 6. Pennsylvania Hotel Herald, July 23, 1958, p. l. 1233,, pp. 1 and 3. Pennsylvania Hotel prglg,.August 6, 1958, pp. 1 and 8. (Ehigs P0 80 Pennsylvania Hotel Herald, August 20, 1958, p. 1. 9p Cit, August 6, 1958, p. l. 22 Cit, August 20, 1958, p. l. Heari of the Restaurant Hotel and Motel Ha e Board, fiEpartment of Labor and Industry, Commonwealth of Pennsylvania, August In and 15, 1958, p. l. Epig, p. 1. gpgg, p. 1. The Pictures ue Poconos of Penns lvania, Pocono Mountains Vacation Bureau, 1959. Hearipg of the Restaurant Hotel and Motel'Wa e Board, Department of Labor and Industry, Commonwealth of Pennsylvania, August 1k and 15, 1958. Loc Cit. Qp Cit, p. 6. 91.2, p. 50. 321.3. p. 51. Ms Po 580 119.19. p. 102. .0 ,e #5. u6. h7. as. A9. 50. 51. 52. 53. St. 55. 56. S7. 58. 59. 6o. 61. 62. 63. 6h. 65. 66. 67. '53! 0. fi E p. b E p. E E D. Q 8’ p. 9. 0e H 0' p. p. b H U‘ H. p. as H 0' H a. V H as H a. . E p. E p. H 0‘ p. p. Q .53 D.- Q 5' y. p. Q 5‘ [-1. p. 9e 5’ p. 9. 0e E p. D H bi 1 p. 9 5' no 3 Penna lvania Hotel Herald, September 3, 1958, p. 1. Ibid, Ibid, Pennsylvania Hotel Herald, September 17, 1958, p. 7. Membershi Bulletin, Pennsylvania Hotels Association, October 8, 1958. p. 111. Po 123. p. 150. p. 150. p. 151. p. 160. P- 203. pp. 300 and 301. p. 301. p. 30h. Po 307. P. 307. p. 310. p. 350. p. 35h. pp. #56 and h57. p. #57. p. 603. p. 609. De 1e Pe 8e 69. 68. 69. 70. 71. 72. 73. 7h. 75. 76. 77. 78. 79. 80. 31. 82. 83. 8h. 85. 87. 70. Recommendations of the Minimumflfla e Board, Department of fiber and Industry, Commonwealth of Pennsylvania, October 7, 1958. Ibid. Pennsylvgpéa Hotel Herald, October 29, 1958, p. 1. Publicit Release, Department of Labor and Industry, Commonwealth of Pennsylvania, November 8, 1958. Penna lvania Hotel Herald, November 26, 1958, p. 7. Pennsylvania Hotel Herald, December 2h, 1958, p. 1. Po s lvania Hotel Herald, April 1, 1959. p. 8. Pennsylvapia Hotel Herald, May 13, 1959, p. 6. Ibid, p. 6. Pennsylvania Hotel Herald, June 10, 1959, p. 2. gpgg, p. 2. .gpgg, p. 2. ngg, p. 2. Publicit Release, Department of Labor and Industry, Commonwealth of Pennsylvania, September 9, 1959. Recomendations of the Minimum Ha e Board, Department of Labor and Industry, Commonwealth of Pennsylvania, December 1h, 1957- Publicit Release, Department of Labor and Industry, Dacember 22, 1957. Ibid. Membershi Bulletin, Pennsylvania Hotels Association, January 25, 1957. Penns lvania Hotel Herald, May 1h, 1958 pp. 1 and 8. Heari of the Restaurant Hotel and.Motel Nagy Board, Department of Labor and Industry, Commonwealth of Pennsylvania, August 1h and 15, 1958, p. 1. 'l I) ‘0 48 71. 88. Publicit Release, Department of Labor and Industry, Commonwealth of Pennsylvania, Nevember 8, 1958. 89. Publicit Release, Department of Labor and Industry, Commonwealth.o? Pennsylvania, September 9, 1959. 72. CHAPTER V THE ROIE OF THE PENNSYLVANIA HOTELS ASSOCIATION Immediately following the first announcement by Secre- tary of Labor and Industry, William L. Batt, Jr., of the setting up of the Minimum Wage Board in October of 1957. the Pennsylvania Hotels Association took its first stand on the issue. At the October 28 meeting of the Pennsylvania Hotels Association Board of Directors in Harrisburg, action.was taken to withdraw the Association.from.the Minimum Wage Board. The Association went on record as being ”in opposition to the set-up of the Minimum Wage Board investigating wages in the restaurant, hotel, and.motel industries, and, on the_ advice of counsel, has withdrawn Bennett E. Tousley as the hotel industry's representative on the Board”.1 Accordingly, Mr. Tousley attended the organisational meeting of the Board on October 29 as a representative citizen of the State, not as a representative of the Pennsylvania Hotels Association or the hotel industry in general.2 Following this meeting, Counsel for the Pennsylvania Hotels Association, William S. Livengood, Jr., informed Secretary Batt by letter of the Association's position in regards to the withdrawal of Tousley from the Board. Follow- ing is an excerpt from this letter: q I. 73. IYou are further advised that any recommendations or recommendations heretofore made by the Pennsylvania Hotels Association, or any of its officers or agents, of names for membership on the Wage Board, were made under the belief that the Board, when appointed, would give to the hotel industry of Pennsylvania equal representation with hotel employees and the public generally on the Board. This not being the case and the hotel industry not having been.granted equal representation on the Board with hotel employees and the public generally, such recommendation is hereby and herewith revoked and recalled." Following the withdrawal of Tousley from.the Board by the Pennsylvania Hotels Association, the November hearings went ahead as scheduled. In addition, the president of the Pennsylvania Motels Association, Robert Conley, also withdrew as an employer representative on the Board. Although the Pennsylvania Hotels Association.was on the sidelines during the hearings, members of the Association were kept informed of the proceedings through bulletins from the Association's offices in Harrisburg as well as through the trade newspaper of the Pennsylvania hotel and resort in- dustry, the Pennsylvania Hotel Herald. Upon release of the Board's recommendations and accep- tance by Secretary Batt on December 22, 1957, the Pennsyl- vania Hotels Association called a meeting of its officers and directors on January 6, 1958. At that time the course of action of the Association.was mapped out, but was not divulged to its members. On January 1h, 1958, at the final hearing, Counsel 7h. Livengood appeared before Secretary Batt and made what was termed a ”brilliant portraya1”6of the Association's position. Livengood's presentation took over an hour and drew applause fromnwitnesses and spectators, as well as receiving wide press coverage. In building the case for the Pennsylvania 7 Hotels Association, he emphasized three main.points: 1. That the Board, as constituted, was without Juris- diction to establish minimum wages for women and minors in the hotel industry in Pennsylvania. 2. In the event the Board should be determined, or held, to have Jurisdiction over the hotel industry that the procedures followed by it at the hearing were illegal and not in conformity with the act under which the Board was established. 3. In the event the Board should be found to have jurisdiction.over the hotel industry and should be found to be preperly constituted and to have legally proceeded the order and regulations pro- mulgated thereunder were arbitrary, capricious, oppressive, confiscatory and illegal. After the wrap-up hearing and several private confer- ences, Secretary Batt promulgated the new minimum wage rates on January an, 1958.8 Immediately, Pennsylvania Hotels Association's presi- dent, Ed Leach, called a special meeting of the Board of Directors on February 1h to ”consider the Association's course of action on the newly-promulgated minimum wage rates for women and minors in.the hotel, motel, and restaurant industries". At this meeting, Counsel Livengood was instructed to file an appeal from the Minimum Wage Order by a unanimous 75. vote of the Board of Directors. He then informed the Board that he would ask Commonwealth Court for a writ of super- sedeas to set aside the May 12 effective date of Secretary Batt's Order. He also informed the Board that separate appeals would be filed for the Benjamin.Franklin, the Harwick, and the Sheraton Hotels in Philadelphia, (representing the large city hotels), the Hotel Edison in Sunbury, (representing the smaller hotels), and the Crestmont Inn, Eagles Mere, (representing the seasonal resort hotels).10 On February 18, 1958, Counsel Livengood appeared before Commonwealth Court and won the writ of supersedeas. In his brief, Livengood described the wage orders as ”unreasonable, oppressive and confiscatory' in that they established minimum wage rates and employment regulations which were ”high, unreasonable, and unfair”. In addition, he asked the Court to allow the Pennsylvania Hotels Association to intervene in the action because of its interest in the well-being of its. member hotels. The request was granted.11 On this same date, Everett Allen, Executive Secretary of the Pennsylvania Hotels Association, issued a membership bulletin to all member hotels outlining progress to date. Following is an excerpt from the bulletin:12 'PHA member hotels should not make any changes in payroll, hours or work schedules for the time being. We will issue additional bulletins as further infor- mation becomes available. Meanwhile, the matter will be in the lap of the Court.” 76. At the March 3 meeting between Judge Halter R. Sohn, Counsels for the Pennsylvania Hotels, Motels, and Restaurants Associations, and Deputy Attorneys for the Commonwealth, the date of hearing the minimum wage appeal was set for March 1A. Later the counsels for the three Associations requested a delay in the hearings to March 28. Attorneys for the Common- wealth endeavored to Oppose the delay, but were overruled by the Court . 13 At the March 28 hearing, Counsel.Idvengood offered the following points in support of the Pennsylvania Hotels Association's position:ln l. The Minimum Wage Board was not properly constituted since it did not include equal representation for our industry. 2. Hotels are separate and distinct from other indus- tries and are entitled to their own Board. 3. One Board cannot cover multiple industries. A. The public hearings were imprOperly conducted since no cross-examination was permitted. 5. No Job classification rates were established, as provided for in the act. 6. No regional rates were established, as provided for in the act. 7. No cost of living indexes were submitted by the Department, and the two orders were not based on findings of fact or conclusions of law. 8. The Department failed to give preper credit for the furnishing of uniforms and other benefits, as provided for in the act. 77. 9. The two orders are discriminatory since the pro- posed minimum.rate for hotels is higher than that recommended for retail establishments. 10. The preposed rates are confiscatory, arbitrary and capricious. 11.x Preper consideration was not given to different classes of hotels such as resort, residential, small commercial, large commercial, etc. 12. The Supreme Court of Pennsylvania having declared that hotels are not engaged in the restaurant business, any order covering restaurant occupations cannot apply to the hotel industry. The decision of the Court was reserved until May 12. At that time, Judge‘william.H. Neely set aside the Minimum wage Orders as unconstitutional.15 Following this decision, Secretary Batt took action to set up a new wage hearing board. Pennsylvania Hotels Association.members were accordingly advised not to accept an invitation to sit on such a board.16 On June 30, 1958, the Pennsylvania Hotels Association Board of Directors held a meeting at Crestmont Inn, Eagles Mere, Pennsylvania. The principal issue of the meeting was to determine whether to nominate members for a new minimum wage hearing board or ignore a public call for such nominations. By unanimous vote, the Board reaffirmed its previous stand for a separate board to represent hotels in.minimum wage hearings. Pennsylvania Hotels Association's president, Ed Leach, named a committee of six to act with the authority of the Pennsylvania Hotels Association Board of Directors on 78. minimum wage matters. This committee consisted of william.H. Harned, president of the Philadelphia Hotels Association, Charles T. Carey, president of the Pittsburgh Hotels Associa- tion, John M. Crandall of Pocono Manor Inn, representing the resort segment, Charles Duffy III of the Hotel Edison, repre- senting the smaller hotels, and James A. Johnston, president of the Harrisburger Hotel, representing the central section of the state.17 President Leach also announced that Horwath and Her- wath had been engaged to secure data from ten or twelve Pennsylgania hotels to support Counsel Livengood's presenta- tions.1 On July 15, Secretary Batt announced the names serving on the new board and set the date for the first public hear- ing on July 31. To support its case, the Pennsylvania Hotels Association.sent out questionnaires to its members asking for certain information applicable to the wage hearings. Two of the most important questions asked were these:19 1. How would the prOposed Minimum‘Wage Order of May 12, 1958 affect women and minors in your hotel? 2. How would this order affect the over-all Operation of your hotel? These questionnaires were sent out on Friday, July 18, 1958. On July 25, 1958, Counsel Livengood appeared in Common- 79. wealth Court with an.injunction to halt the hearings. Judge William H. Neely, in.refusing the injunction, advised Counsel Livengood that the forthcoming hearing on July 31 might be unlawful because of the provision stating that hearings could only be held fifteen days after formal organization of the Board. Counsel Livengood presented the three industry members with this information which they in turn presented at the organizational meeting of July 30. Accordingly, the hearings were rescheduled by Secretary Batt.20 In connection with this the following paragraph appeared in the Pennsylvania Hots; Heral : ”In.a press release, following the withdrawal of the three industry members, the publicity man for Batt's department put out a newspaper story stating that the hearings for Harrisburg were cancelled after three 'employer members declared a unanimous boycott'." Upon.refusal of the injunction, Counsel Livengood 22 filed the quo warrento proceedings on.August 8, 1958. At the start of the hearings, the following excerpt appeared in the column, Views From.a Mountain To , by E. 3. 23 Sohuck, past president of the Pennsylvania Hotels Association: "This historic and traditional twenty-four hour indus- try is faced with a possible Minimum Wage and Hour Law that up to this point has utterly ignored the basic principals on which the business operates and attempts to saddle it with a standardized wage and hour law, that was originally designed for a pro- duction line." 80. On September 9, 1958, following the final hearing of the wage Board in Harrisburg, the Pennsylvania Hotels Associa- tion sent out the followi release to its membership 2 summarizing the hearings: "Pennsylvania Hotels Association witnesses have painted a uniform picture of the low profits, if any, of the hotel industry. If the prOposed order of the Board could be based on evidence introduced to date, there is no doubt in our minds that the rates would not be harmful to our members. Unfortunately, however, political considerations take precedence and it is doubtful that any rates proposed by the Board will have the least relationship to findings of fact." "The resorts of the Pocono Mountains, though seeking exemption, have said they could live with the New York resort order. Other groups have recommended $1 for non-tip, non-food.employees and $.50 for tip employees who receive one or more meals. The Pennsylvania Hotels Association has not suggested any rate, as yet, but will work with the Board before its executive meeting on September 22. ‘Ue will fight for our members through one of two Options: (a) Delay the effective date through court action; (b) Obtain a more realistic rate, commensurate with the evidence on hand, and one which'would not impose undue hardship upon members. If the latter course is followed, a regional rate (for all hotels outside Philadelphia and Pittsburgh) must be included. Pennsylvania Hotels Association Counsel has made an impressive record, both with witnesses and the Board, and will follow the policy adopted by the Association through its Board of Directors.” In the September 17 issue of the Pennsylvania Hotel Herald, the complete summation.by Pennsylvania Hotels Associa- tionfis Executive Secretary, Everett Allen, before the September 5 hearing was given. Basically he covered the IQ 81. 25 following subjects: 1. 2. 3. u. 5. 6. The hotel building boom.of 1919 - 1929. The depression era of 1930 - 19400 Downward occupancy trends. Increases in.wages. Description of the resort segment of the industry. The role of students and learners in the industry. Following Secretary Batt's acceptance of the Board's recommendations, members of the Pennsylvania Hotels Associa- tion and the Pennsylvania Motels Association appeared at the public hearing of October 27 and presented arguments for a regional rate for all hotels outside Philadelphia and Pitts- burgh. Other than those witnesses who testified, only one 2 Pennsylvania hotel man attended the hearing. On Nbvember 7, 1958, Secretary Batt issued the three basic wage Orders. At a special meeting of the Pennsylvania Hotels Association Board of Directors on Nevember 13, Counsel Livengood was instructed to meet with the Department of Labor and Industry attorneys to seek certain.modifications and 2 clarifications. At a November 21 meeting of the Association Board at Hershey, Pennsylvania, Counsel Livengood reported being unable to contact Deputy Attorney General David Harrison who had handled the Order for the department. He also expressed to 82. the Board his belief that nothing further would be gained by further appeals.28 Prior to the January 1, 1959, promulgation of the new Orders, adjustments in rates in Pennsylvania for lodging and meals were predicted by the Pennsylvania Hotel Herald. It was estimated that the new Order would add "hundreds of thou- sands of dollars to payrolls principally through the imposition of shorter work weeks and overtime pay rates”.29 Meanwhile, by telephone and letter, Pennsylvania Hotel Association.members throughout the state were daily asking Executive Secretary Everett Allen for clarification of var- ious regulations of the new Minimum Wage Order. Following 'were some of the most frequently asked questions and their answers as given in the Pennsylvania Hotel Hegglg, January 21, 1959, issue: 0 Question: Who is an executive? Answer: There is some debate on this. The women's labor law defines executives as those who earn $35 or more per week; the Minimum Wage Order as those who receive $69 or more. Question: Does the Order cover all hotel employees? Answer: No, only women and minors. Question: Are we required to work our employees a minhmwm of forty-two hours? Answer: No. But in the upstate area you have to pay overtime in excess of forty-two. Question: Can our waitresses serve three meals? 83. Answer: Yes, but they are permitted only one interval Off duty. This means they could work from 8:00 a.m. until 2:00 p.m. and from.5:30 until 8:30. If they have two intervals off duty, the $1 penalty applies. Question: Are the waitresses permitted to wash silver and glasses, sweep the floor, etc.? Answer: Yes, but these should require no more than twenty-five per cent of total working time. Question: Can we continue to pay by the month? Answer: Your wages can be based on a monthly stipend, but you must pay cash wages at least semi- monthly. After two months of Operation under the new Minimum Wage Orders, Pennsylvania Hotels Association members were sent minimum wage questionnaires on March 2, 1959, from the Association offices in Harrisburg. These questionnaires were directed tO commercial hotels and a few resort hotels Operat- ing on a year-round basis. Forty-two questionnaires were returned filled out. Following are the results of the questionnaire:31 1. For January, did you employ more, the same, or less total staff than in January, 1958? More - 5 Same - 16 Less - 21 2. was your January payroll up, down, or the same? Up - 26 Down - 9 Same - 7 3. Give percentage change. NO Answer - 15 h. 5. 6. 7. 8. 9. 10. 11. 8h. Do you permit any overtime? Yes - 17 NO - 25 If you employed minors last year, did you keep them? Yes - 16 NO - 12 NO Answer - 1h Are you complying with the Order? Yes - h2 Do you think employees like the Order? Yes - 11 No - 19 No Answer - 12 DO they like the reduction in hours and fewer tips? Yes - h NO - 21 No Answer - 17 Have they expressed a desire to work more hours? Yes - 23 NO - 9 NO Answer - 10 Did you increase prices for: Food Rooms Beverages Yes - 20 Yes - Yes - % NO - 22 No - 2 No -3 DO you think the public is aware that the hotel industry now has minimum wages? Yes - 1h NO - 27 Is service in your hotel Just as good now as in January, 1958? Yes - 35 NO - 7 85. The questionnaire returns indicated that fifty per cent Of the forty-two hotels contacted found it necessary to cut down their total labor force. .Even with this economy measure, approximately sixtyhtwo per cent of these hotels showed a rise in the January payroll. This would indicate that this stOp-gap had failed. The question of overtime would have been more complete had it included a comparison with figures for a comparable period in 1958. Only a supposition.mey be drawn that the Operators cut down on the amount of overtime permitted in order to control labor costs. Of the twenty-eight Operators who employed minors in 1958, twelve did not hire minors in January Of 1959. This could indicate that some Operators replaced minors with adult male workers in order to circumvent the new wage scales. Questions seven, eight, and nine give some indication of the employees' attitudes towards the Order. Approximately fifty per cent wished to work longer hours and expressed dissatisfaction.with the concurrent reduction in gratuities. Forty-seven per cent of the Operators increased food prices and thirty-three per cent increased room rates for January of 1959. These increases may have been made impera- tive due to rising labor costs. In spite of rising labor costs, coupled with rising food prices and room.rates, seventy-four per cent Of the 86. Operators contacted felt that the quality of service in their hotels had not been effected. The results Of the questionnaire were made public in the April 15, 1959, issue of the Pennsylvania Hotel Herald.32 At the May 27, 1959, hearing of Secretary Batt, the Department of Labor agreed to supply the Pennsylvania Hotels) Association with the names of its members not in compliance with the directory order. Also at this meeting, the resort Operators were advised that inspectors would soon be coming into the resort area. Accordingly, a bulletin from the Pennsylvania Hotels Association Offices advised its members that only payroll information concerning women and minors 33 need be given to the inspectors. 87. FOOTNOTES Pennsylvania Hotel Herald, November 13, 1957. p. 8. IRAQ: Po 8- Ibid, p. 8. Pennsylvania Hotel Herald, Nevamber 27, 1958, p. 1. Pennsylvania Hotel Herald, January 8, 1958, p. 1. Pennsylvania Hotel Herglg, January 22, 1958, p. 1. Ibid, p. 1. Pennsylvania Hotel Herald, February 5, 1958, p. l. Ibis, p. 1. Pennsylvania Hotel Herald, February 19, 1958, p. 1. Ibid, p. 1. Membershi Bulletin, Pennsylvania Hotels Association, February 13, 1933. Penns lvania Hotel Herald, March 19, 1958, p. 1. Pennsylvania Hotel Herald, April 2, 1958, p. 6. Pennsylvania Hotel Herald, May 1h, 1958, p. 1. Pennsylvania Hotel Herald, May 28, 1958, p. 1. Pennsylvania Hotel Herald, July 9, 1958, p. 1. 2212: p. 1. Pennsylvania Hotel Herald, July 23, 1958, p. 3. Pennsylvania Hotel Herald, August 6, 1958, p. 8. 2222: P0 80 Pennsylvania Hotel Herald, August 20, 1958, p. 1. 2219. P0 3e r! 2h. 25. 26. 27. 28. 29. 30. 31. 32. 33. 88. Membership Bulletin, Pennsylvania Hotels Association, September 9, 195 . Pennsylvania Hotel Herald, Pennsylvania Hotel Herald, Pennsylvania Hotel Herald, Pemylvania Hotel Herald, Pennsylvania Hotel Herald, Po 1 a Hotel Herald, Peggsylvania Hotel Herald, gegggylvania Hotel Herald, Pennsylvania Hotel Herald, September 17, 1958, p. 8. October 29, 1958, p. 1. November 12, 1958, p. 1. November 26, 1958, p. 1. December 2h, 1958, p. 1. January 21, 1959. p. 8. March A, 1959, p. 1. April 15. 1959. p. 3. June 10, 1959. p. 2. 89. Chapter VI THE ROLE OF THE POCONO MOUNTAINS VACATION BUREAU The first word appearing in the Stroudsburg, Penn- sylvania newspaper, the Daily Record, in regards to the minimum wage controversy of 1958 and 1959, was on October 30, 1957. in a two-inch news item.relegated to the extreme bottom of the first page. The article merely mentioned the setting up of the wage board and the hearing dates.1 Resort Operators in the Pocono Mountains area gradually became aware of the coming problem to be faced by their indus- try and on December 19, 1957. the matter of the new Minimum ‘Wage Order was brought before a meeting of the Board of Governors of the Pocono Mountains VacationBureau.2 The Bureau was founded in l9h9 and as Of July, 1959, had a membership Of one hundred seventy-five resorts in the Pocono Mountains area. At the December 19 meeting, John Crandall, represent- ing the resort hotels on the Pennsylvania Hotels Association's minimum wage committee, presented the details of the prOposed order. At that time Crandall recommended that the Pocono Mountains Vacation Bureau Board of Governors meet on January 23 to determine whether or not the Board should appear at the February hearing.“ However, a special meeting of the Board of Governors 'V 90. was held on January 10, 1958, at Pocono Manor Inn. Crandall again gave the Board a resume of the recomendations of the Minimum Uage Board and advised them Of the public hearing set for January 114 in Harrisburg. Charles Bensinger, Counsel for the Pocono Mountains Vacation Bureau, also appeared and stated that he was interested in getting testimony regarding the new wage recomendations from members of the Bureau and a group of members to testify at the hearing. The "learner" provision came up for a great deal of discussion at the meeting. It was agreed that the regulation definition of a learner, ”someone working in a hotel for the first time, no matter what department he might work in the following season", did not meet;.the qualifications of the Pocono Mountains Vacation Bureau.‘J Regulation two, covering service employees, regulation three, covering call-in pay, and regulation four, covering time lapses between meals, were also discussed at length. It was brought out that the average resort employee worked six and one-half to seven hours during a twelve hour meal spread and was allowed to use the facilities Of the resort, both during time Off and on days off. A larger credit than fifteen cents for meals was also asked by the Bureau members.7 The following volunteered to go to the hearing in Harrisburg on January 1h, 1959: Jack Shinn, Robert Ahnert, Elwood Huffman, LeHoy Guccini, John Crandall, E. C. Jenkins, I‘ 91. and.Eric Schuchard. All Of these men.were either managers or owner-Operators Of resorts in the Pocono Mountains. Following the meeting, Counsels Bensinger and Krawitz asked to meet with those who had volunteered to attend the hearing. The next meeting of the Board of Governors was held on January 18, 1958, in Stroudsburg, Pennsylvania. Counsel Bensinger reported to the Board the results of a private meeting with Secretary Batt on January 15 in which the Secretary advised:9 1. He did not propose to alter the recommendations Of‘the Board. 2. He had no power to change the basic wage recommen- dations but conceded that certain definitions in the prOposed regulations should be changed. Bensinger also advised the Board of Governors that the following recommendations would be made in regards to the basic wage Order:10 1. Try for a reduction from one dollar and five cents to one dollar per hour. 2. Try to raise meal allowances to two dollars per day; room allowances to one dollar per day, seven days a week. 3. Raise tip allowances from thirty-two cents to thirty-five cents per hour. Fa I)! 92. h. Change the basic work week before overtime from forty to forty-four hours. 5. Urge inclusion of maids, bell-hOpe, all employees receiving tips in service employee category. The Board was also advised that representatives of the three Associations would work for the following changes in the prOposed regulations:11 1. Eliminate restrictions as to the number of learners. 2. Eliminate restrictions as to specifically what workers could do when hired for a certain Job. 3. Eliminate restrictions regarding the spread of hours. h. Allow payment of employees five days after wages were earned rather than three days. The next special meeting of the Board of Governors was held on January 31, 1958. Counsel Bensinger again appeared and read the list of concessions obtained from the Minimum wag. Board for resort hotels. John Crandall stated that these concessions would not have been Obtained if members of the Pocono Mountains Vacation Bureau had not protested the original recommendations of the Board.12 At this meeting a motion was carried that the Vacation Bureau support the Pennsylvania Hotels Association in all its negotiations.13 At the next special meeting of the Board of Governors, on March 6, 1958, Counsel Bensinger advised the group of the ,1 93. possibility that the resorts would not be affected by the Minimum‘Hage Order during the 1958 season. The president of the Pocono Mountains Vacation Bureau, LeRoy Guccini, then advised the group that the Bureau had received a bill for legal fees regarding the minimum wage case in the amount of seven thousand dollars. This covered the bill for both lawyers Bensinger and Krawitz acting for member resorts of the Vacation Bureau, the Pike County Resort Association, and such nonpmember resorts as Skyt0p Club. A committee was appointed to discuss the bill with the two law- yers. Bureau member, Paul Azure, a Pocono Mountains resort Operator, stated that he believed the Vacation Bureau could not be responsible for any of the bill before January 10, 1958, as that was the date Counsel Bensinger was hired by the Bureau. Further discussion involving the lawyers' bill was brought out and a motion.was made and carried for the committee to bring back a new bill to the Board for discussion.15 At the April 2 Open.meeting cf the Vacation Bureau, the matter of legal fees was again brought up. It was estimated that there were ten thousand guest accommodations afforded by members of the Bureau and that an assessment Of fifty cents ;per accommodation for each resort would raise the necessary 16 money e The assessment again came up for discussion at the .April 7 meeting of the PoconO.Mountains Vacation Bureau's II 9h. minimum wage committee. Here it was suggested that the ”biz five" of the Pocono Mountains - Pocono Manor, Buck Hill, SkytOp, Split Rock, and Shawnee Inn - accept an assessment 17 of one dollar per guest count. The next Open.meeting of the Vacation Bureau was held on April 17, 1958. At this meeting the follgwing statement 1 was read to the group by Counsel Bensinger: "This is to advise and confirm our previous conver- sations that the Vacation Bureau has not to my knowledge, directed either Mr. Krawitz or.myself, to do any of the work which.we have done subsequent to the last date included on the bill for services 'which.you have in your possession. P.S. I believe you will agree, however, that all of the hotels in the area will benefit from a successful conclusion of this matter." At the May 15, 1958, meeting of the Vacation Bureau, Eric Schuchard, chairman.of the minimum wage committee, made 19 the following report concerning collections for legal fees: Collected Due Eastern region , _. O TOp of the Poconos 1,368.00 316.00 Members-at-large 1,200.00 1,200.00 Nonrmembers 681,00 n.727.5o 1,516.00 It was announced that Counsel Bensinger had been paid ‘ ' 20 $4,650.00 with $1,350.00 still due him. A full membership meeting was called on June 12, 1958. At this meeting, Counsel Bensinger announced that Secretary Batt would probably be appointing another Board by the middle 95. of July. He suggested that the Vacation Bureau attempt the following:21 1. Ask for a separate resort board independent of the Pennsylvania Hotels Association. 2. Or, ask to have a resort man on the present Board. 3. Ask for a deferment until the middle of October. It should be noted that Counsel Bensinger had been continuing on as the Bureau's attorney without any additional expense or payment. On August h, 1958, the laison committee called a general membership meeting. At this large gathering of resort operators, Just prior to the Stroudsburg hearing, the members were thoroughly briefed by John Crandall, representing the resort hotels on the minimum*wage committee Of the Pennsyl- vania Hotels Association, Eric Schuchard, chairman of the Vacation Bureau'szminimum wage committee, and by Counsel Bensinger. Bensinger explained to the group in detail exactly what could be expected in the forth-coming hearing.22 A further discussion of legal fees and assessments was made, and a motion was passed to increase the assessment to seventy-five cents per head count.23 On September 18, 1958, another meeting of the Board of Governors was held. This meeting contained little discussion of activity anathe.minimum wage issue. Officers for 1959 2 were elected. 96. Following dinner, a full membership meeting was held. Schuchard reported that it was believed that the Minimum Wage Board would take action along the lines of other states regarding resort hotels and‘workers.25 At the next Board of Governors' meeting on October 16, 1958, John Crandall gave a resume of the most recent activities regarding the minimum wage hearings and recommendations of the Board. It was felt that resorts, as a group, had achieved as much as they could hOpe for. The Operators still expressed the desire for a forty-four hour work week before payment of overtime.26 At an all-day forumion,December 9, 1958, all members of the Vacation Bureau were invited to attend and submit their questions concerning the minimum‘wage to a pane1.comw posed of Everett Allen, Executive Secretary for the Pennsyl- vania Hotels Association, Ben Josephson, resort member of the Board, and Counsel Bensinger. At this meeting many questions pertaining to the new minimum‘wage regulations in the resort industry were answered.27 On February 214, 1959, at a full membership meeting, the question was raised on the total outstanding bill for legal fees in connection with the minimum wage hearings. Schuchard advised that Counsel Bensinger would settle for five thousand dollars complete End a motion‘was passed to 2 pay the legal account in full. 97. On.March 19, 1959, Counsel Bensinger advised the membership of the forth-comdng March 31 hearing and asked that the Vacation Bureau members let him.kncw their problems before the hearing date.29 It was stated that there was a controversy whether hotels Operating one hundred days or less would be allowed a larger percentage Of allowances than those operating more than one hundred days. Those resort Operators Open less than one hundred days were especially advised to attend the hearing.30 At the April 16, 1959, Board Of Governors' meeting, the Pocono Mountains Vacation Bureau became incorporated.31 Little discussion of theiMinimmm Wage Order took place at the Vacation Bureau meetings of May 1h, 1959, May 26, 1959. and June 25, 1959. NO further activity involving the 32 minimum wage took place following the June meeting. 98. Summary of Chapter VI Although the minimum wage controversy was not taken up by the Pocono Mountains Vacation Bureau until December, 1957. it became rapidly apparent to Pocono Mountain.Operators that this was a matter of grave concern to the resort indus- try. In its original form, the Minimumflwage Order would have greatly reduced profits for the 1958 season and affected ensuing seasons until the resort Operators could adjust their Operations to the new wage scales. In gathering material for his case, Counsel Bensinger contacted.many Operators regarding their outlook for the 1958 season under the prOposed Order. The writer informed Bensinger by letter that the net profit Of his Operation would be reduced by $16,000 under the original wage regulations.33 At the January la hearing in Harrisburg, seven Pocono Mountain Operators presented their views on the new regulations and specifically requested a relaxation Of the ”learner” provision, a larger allowance for tips, meals, and lodging, and a reduction of the one dollar and five cents wage scale to one dollar. In addition, a request was made for a forty-four hour work week before overtime. Certain concessions effecting the resort industry were grants; partially as a result of testimony by the Operators. The classification of service personnel was expanded to include all employees receiving gratuities, f‘ 99. a one dollar allowance for split shift workers was substituted for the ten hour work spread limitation, the effective date of the Order was changed to May 12, and the number of learners was increased and the learner period extended. Following the issuance Of the new Orders on January 2a, 1956, much Of the discussion of the Pocono Mountains VacatiOn Bureau meetings centered on the problem Of legal fees. This issue was finally settled by assessing the member resorts fifty cents per guest count in the smaller resorts and one dollar in the five larger resorts.36 when the new Minimum Wage Board convened for the Stroudsburg hearing, the resort industry had succeeded in having a representative on the Board, Ben Josephson, Director of Tamiment. The witnesses appearing in behalf of the Pocono Mountains resort industry presented a concrete picture of the industry's position in the minimum wage issue. At the October 16, 1958, Board of Governors' meeting of the Pocono Mountains Vacation Bureau, the resort Operators agreed that, as an industry, they had achieved a great deal. However, the request for a forty-four hour work week had been denied. 8 A constructive session.briefing the Pocono Mountains Vacation Bureau members on the new Order was held on.Dec- ember 9, 1958, in Stroudsburg, in order to prepare them for the January 1, 1959, effective date. 9 a short time later the matter of legal fees was settled and the legal account paid in full. as 1. 2. 3.' h. S. 6. 7. 8. 9. 10." 11. 12. 13. 1h. 15. 16. 17. 18. 100. FOOTNOTES The_paily Record, October 30, 1957. p. 1. Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, camber l9, l9 7. Personal Interview with Mrs. Marion Meyers, Secretary and Office Manager Of the Pocono Mountains'Vacation Bureau, July 15, 1959. Minutes of the Pocono Mountains Vacation Bureau, rou s urg, Pennsylvania, ecember , . Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, anuary O, 9 . Ibid. gagg. Ibid. Minutes Of the Pocono Mountains Vacation.Bureau, Stroudsburg, Pennsylvania, anuary . Eggs. Ibid. Minutes of the Pocon. Mountains Vacation Bureau, Stroudsburg, Pennsylvania, January 31, I933. Ibid. Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, March 6, 1958. Ibid. Minutes Of the Pocono Mountains Vacation Bureau, trOu sburg, Pennsylvania, pri , 19 Minutes of the Pocono Mountains Vacation Bureau, trouds urg, Penney van a, pr , . Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, April 17, 19 19. 20. 21. 22. 23. 2h. 25. 26. 27. 28. 29. 30. 31. 32. 33. 31+. 35. 36. Min tee of the Pocono Mountains Vacatio Bureau, Stroudsburg, Pennsylvania, May 15, 1933. Ibid. Minutes of the Pocono Mountains Vacation Bureau, troudsburg, Pennsylv a, une , . Minutes Of the Pocono Mountains Vacation Bureau, §troudsburg, Pennsylvania, August h, 19 B. Ibide Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, September 13, I933. Ibid. Minutes of thePoconO Mountains Vacation Bureau, Stroudsburg, Pennsylvania, October 1 , . Minutes of the Pocono Mountains Vacation Bureau, trouds urg, Pennsylvania, com or 9, . Minutes Of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, February , l9 9. Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania,.March , 9 9. Ibid. Minutes of the Pocono Mountains vacation Bureau, Strou sburg, ennsy va a, pri , . Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, June :3, 1939. letter to Charles Bensin er, January 3, 1958 Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, January 18, 19 . The Dail Record, Stroudsburg, Pennsylvania, January 27, 19g8, p. 1. Minutes of the Pocono Mountaige Vacation Bureau, trou sburg, Pennsylvania, pri 7, l . 101. 37. 38. 39. 102. Minutes of the Pocono Mountains Vacatéon Bm mau, EtroudsBurg, Pennsylvania, September . Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, October 1 , 1 Minutes Of the Pocono Mountains Vacatio Bureau, Stroudsburg, Pennsylvania, December 9, 1933. 103. Chapter VII INTRODUCTION TO QUHSTIONNAIRE In accumulating data to present the three distinct segments of the minimum wage case - the Department of Labor and Industry, the Pennsylvania Hotels Association, and the Pocono Mountains Vacation Bureau - newspapers, periodicals, bulletins, and minutes of meetings were employed. However, in presenting the effects on the resorts themselves, a differ- ent approach.was used - the questionnaire. Through a questionnaire the individual Operator could be contacted and given the Opportunity to express his own views. In addition, a more humanistic picture was gained through this type of sampling; one not found in reports and periodicals. In setting up the questionnaire, several factors were considered. First, the Pocono Mountains region was chosen as the basis of selection for two reasons: (a) proximity, and (b) the fact that the area constitutes eighty per cent of the resort industry of Pennsylvania, and therefore may serve as a representative body. Second, there was a time factor involved in the ques- tionnaire. Although the months of June, July, and August are considered the busy season in the Pocono Mountains, it was felt that the prOper time to contact the Operators was 10h. at the height of the 1959 season. Many Pocono resorts have closed by tradition shortly after Labor Day and Operators frequently leave for vacations Or winter homes shortly there- after. Also, by contacting them during the season, it was felt that they would recall more clearly the problems facing them than at a later date. Thus the questionnaires were sent out on June 30, to be returned by July 15.2 Third, the months of June of 1953 and 1959 were selected for a basis of comparison because many Pocono Mountain resorts do not Open until the last week in May and by using the June factor, one month of full Operation under the Minimum‘Wage Order would have been completed. Fifty resorts were selected for sampling. This figure represents ten.per cent of the Pocono Mountain resort industry and the selection was made on the following basis. 1. Size - Both large and small resorts were contacted. 2. Interest and progressiveness - those resorts most active in the Pocono Mountains Vacation Bureau would be mere inclined to return a completed questionnaire. 3. Type - An effort was made to include all types of resorts - convention, commercial, cottages, honey- moon specialists, etc. 105. Analysis of Questionnaire A forty per cent return had been expected on the ques- tionnaire set out to fifty Pocono Mountains resort Operators. However, ten questionnaires were returned completed, or a return of twenty per cent. Upon discussing this matter with Mrs. Marion Meyers, Secretary and Office Manager for the Pocono Mountains Vacation Bureau in Stroudsburg, it was learned that a twenty per cent return from.Bureau members on any questionnaire sampling was "well above the average". In all, seventeen subjects were covered in the ques- tionnaire: Length of season Type of plan (American or HurOpean) Number of rooms Total guest capacity Number of employees Monthly payroll Overtime Employees' attitudes and Opinions Quality of service Changes in rates Gross income Public reaction Over-all effect of the Minimum Wage Order Further modifications Public awareness Following are the statistical results of the ques- tionnaire survey:6 3 1. Length of season four-month season six-month season year-round Operation no answer l-‘U‘ll-‘w 2. 3. h. 5. Type Of_plan 9 American plan 1 NO answer Number of rooms The range was from.29 to 301. Total capacity 50 to 100 100 to 150 150 to 200 200 to 250 300 to 300 Over MOO No answer HHNNHNH NMmber of employees Only minor increases in a few instances were indicated. Monthly paygoll Dining room.- increased no change no answe 1' increased decreased no answer no change increased decreased no answer no change Beverage - Chambermaids - increased decreased no answer no change Grounds - increased no answer no change Maintenance - an»\n Idbohfln. PWNPHUI latran» unwcr 106. 7. 8. 9. Front Office - Newstand - Gift Shop - Kitchen - Auditing - Other - Overtime J 8 enoraUI IH¢PFH=' Ffiflthl IO\nu> raumhu» huecr increased no answer no change increased decreased no answer no change increased no answer no change increased decreased no answer no change increased decreased no answer no change increased decreased no answer no change 3 - permitted 2 - did not permit 5 - no answer Employees' attitudgg 6 - satisfied 2 - unable to say 2 - no answer Reduction in hours mue: |Ill satisfied dissatisfied unable to say no answer J h 3 3 une 1 - permitted 107. - did not permit - no WW6]? 108. 10. Logger hours 2-yes 5 - no 3 - no answer 11. Quality of service 1 - yes 7 - no 2 - no answer 12. Cpppges in prices room.rates - 5 increased 3 no change 2.no answer ' h increased 3 no change 3 no answer food prices - beverages - 7 no change 3 no answer other - 7 no change 3 no answer 13. Actual gross income, June, 1959 5 - increased 1 - decreased (compared with June, 1953) h - no answer 5 - increased (compared with redicted gross 5 - no answer for June Of 19395. Three percentages were given: 5%. 6%, and 3% increases in gross income over the preceding June. 13. Public reaction 7 - no 3 - no answer 15. Over-all effect This is covered separately in the thesis. 109. 16. Further modifications h-yu 1 - no 5 - no answer 17. Public awareness 3:3" 1 - "apathetic” 2 - no answer Rather than merely compare the questionnaire returns on a statistical basis alone, each one has been reviewed on an individual basis also. If the predicted forty per cent re- turn.had materialized, more direct comparisons between the resorts might have been drawn. The resorts which did return questionnaires have been designated as one through ten. Questions sixtgen and seventeen have been covered separately in the thesis. Resort number one - A year-round, American plan, cottage colony accommodating two hundred and fifty guests. The only major change in the number of employees was in.the laundry. ‘Eight were shown for 1959 and non in 1958, indicating that this resort may have added its own.1aundry facilities. This particular resort permitted overtime in the laundry and dining room.in 1959 and non in June of 1958. However, there was no increase in the dining room.starf. This Operator mentioned that his employees did not like the spread of hours and preferred to work longer hours. In spite of the new 110. Minimum wage Order increases, no payroll increases were necessary here and no increases were made in room, food, or beverage prices. a six per cent increase in the gross income over the preceding June was shown in this resort's questionnaire. Resort number two - An American plan resort Operating on a four-month basis, accomodating one hundred and fifty guests. Complete figures for the number of service, non- service employees, and chambermaids were not given nor were the payroll figures completed. The Operator stated that he felt his employees were agreeable with the new Minimum Wage Order. He showed a general increase in all prices and rates and stated that he thought the public was "apathetic” towards the new Minimum Wage Order in the hotel industry.lo Resort number three - This resort returned the ques- tionnaire without filling in any of the answers. The only information available on this resort was the return address 11 - Of Hountainhone, Pennsylvania. Resort ng‘ger four - A year-round, American plan resort hotel accomodating three to four hundred guests and having one hundred eighty-eight rooms. The balance Of the report was left blank although the following letter was in- cluded:12 “The Minimum Wage Order had no appreciable effect upon our Operation either in regard to the number of employees, wages paid or hours worked. r‘ 111. It is, Of course, possible as we get further inter- pretation Of some Of the ambiguous language in the Order that it may become troublesome, but up to now we at least think we are abiding by the regulations and the few adjustments we were required to make have not materially effected us one way or another. Our payroll is up in June of 1959 because our volume is up and because our outside labor all got a raise of ten cents an hour this spring which had nothing to do with the Minimum Wage Law.” Resort number five - a year-round resort, Operating on the American plan, and accommodating one hundred thirty- six guests. No increase was indicated in the number Of employees although all departments received wage increases. This Operator did not permit overtime work in June Of 1959. and stated that his employees were happy as they were working shorter hours, while receiving larger wages, and the same amount of gratuities. He also indicated a rearrangement of meal hours due to the "spread of hours" provision. This Operator also raised his room.rates and his gross income was 13 up five per cent from.June, 1958. Resort number six - A resort Operating.from May 29 to September 8 on the American.plan and accommodating fifty to one hundred persons. Here again, there was an increase of only one employee in the dining room but wages were increased in every department. The Operator permitted overtime for the waitresses and kitchen staff both in June Of 1958 and 1959. He expressed an unawareness of his employees' feelings towards the new Order. He also stated that the hiring Of one extra ,9 112. person in the dining room had kept service quality up to past standards. This Operator raised his room.and food rates and showed an increase in the rose income over June, 1958. He also added the following: ”I believe that the new Minimum Wage Orders are fair to beth employer and employees.'' Resort number geven - An.American.plan resort Operating four months, and accommodating one hundred and fifty guests. No increases or decreases in the number Of employees were indicated although the dining roomxpayroll figures were nearly doubled in June, 1959, as opposed to June, 1958. NO overtime was permitted by this Operator. Under the question Of employee attitudes he mentioned the fellowing:15 "we have had some trouble with working schedules in the kitchen and chambermaid departments. These have been worked out.” , Under the question concerning quality of service he made the following remarks:16 "There has been.a general increase in efficiency in some departments. Generally the former employees are happier." Resort number eight - A large American plan resort hotel Operating on a year-round basis, accommodating well over four hundred guests. A decrease in the number Of dining room.employees was indicated. Chambermaids were increased by four due to the shorter hours permitted before overtime. The kitchen staff was also increased by four. Payroll in- f. 113. creases were especially noticeable in the dining room.and bell staff. Front Office and grounds also showed increases. NO overtime was shown for this resort and the employees were thought to be satisfied with the present Minimum‘wage Orders. This Operator did not consider that the quality of service had been unpaired in any way. NO changes were:made in the room rates although an increase in the June, 1959 gross income was shown. The Operator stated that the new Minimumeage Order had little effect on his resort and added that he believed the public was aware of the new minimum'wages.17 Egggpt number nip; - Ln American.plan resort hotel Open on a six-month.basis and accommodating two hundred guests. Other than in the auditing department, no increases in personnel were shown.except for one each in golf and maintenance. Pay- roll increases were shown in the dining room, maintenance, auditing, and ”other” departments, with the largest increase being in chambermaids or housekeeping department. Overtime was permitted for both June Of 1958 and 1959 in the dining room, beverage, and maintenance departments. The Operator felt that his employees were satisfied under the new orders, although they had indicated a desire to work longer hours. The quality Of service had not been affected by the Orders and increases had been made in room.and food rates. In this resort, the gross income for June, 1959, was down from the income Of June, 1958, although the gross income for June, (8 4" [I 11h. 1959, had increased as compared with the predicted gross for that month. The Operator indicated that there had been no public reaction to the room and food increases and felt that the general public was not aware that the industry now had a minimum wage . 18 Resort number ten - A large resort hotel, Operating on a year-round basis and accommodating between three and four hundred persons. This resort showed a definite increase in the dining room crew. The chambermaid category was inad- vertently left blank; but in the payroll section for this department a decrease was indicated. a definite decrease was shown in the maintenance staff although an increase in wages had occurred. Also, a marked increase in the kitchen staff was indicated along with an increase in.wages. This Operator permitted overtime for both June of 1958 and 1959 in the grounds, maintenance, and auditing departments. He stated that his employees ”appeared" to be satisfied with the new Orders and that the quality of service had been unaffected. NO changes had been.made in the room, food, or beverage prices. This Operator did not feel that the public had been.made l9 aware of the new Minimmm‘flage Order in the hotel industry. 1‘ 115. Questions 15 and 16 Following are some of the problems and adverse effects these ten resort Operators expressed in regards to the new 20 Mininum‘wage Orders in the Pennsylvania hotel industry: 1. There was some dissatisfaction among employees in regards to the "spread Of hours” and splitting Of days. 2. IEmployees disliked not being able to select days Off. 3. Additional record-keeping was considered an.involved process. h. It was felt that the students working in resorts would "never get a break” . 5. Resorts reported difficulty in working out time schedules in.the kitchen and housekeeping depart- rents. 6. Adverse comment had come from the payroll depart- ment heads. 7. It was felt that the state should establish a form "that is uniform.for all resorts in keeping track of their hours and overtime earnings for all employees" . 8. .Employees indicated that they would prefer to work longer hours. 9. There was a tendency not to hire women or boys under twenty-one years Of age to avoid the new Order. 10. The new Order has given ”management and the heads Of departments a great deal Of unnecessary work and red tape" . 11. It was felt that the present Orders might eventually bring "drastic changes hurting the employers” . 12. Many felt that sixteen to eighteen.year-old minors should not be considered as minors and allowed to work longer hours if they wished. 116. In addition to mentioning the preceding problemm, the Operators presented the following remarks indicating that definite positive effects had resulted from.the new 21 Minimum Wage Order: 1. 2. 3. 1+. 5. 6. 7. 8. 9. The new Order, in some cases, had forced a rearrange- ment Of meal hours, which the guests found to be more convenient. A certain segment Of the employees preferred the shorter hours Of work. It has ”made management aware that we must keep on our toes - same as with good competition or bad competition". Meet Of the Operators indicated that the new Order was basically fair and Just to the employer and employee. Although certain increases in payroll were made necessary by the Order, and in.eome cases the number of personnel was decreased, the quality Of service to the guest has been little affected, if at Elle Although food and lodging prices had increased in most cases, the Operators did not specifically indicate that the new Order had caused these in- creases. There was a general "increase in efficiency in some departments" e~ Former employees ”are happier”. Resort Operators reported that ”little effect” had been felt on their resorts by the new Order. Ir" ;‘ 1e 2. 3. u. 5. 6e 7. 8. 9e 10s 11. i2. 13. m. 15. 16s 17. 18. 19. 20s 21s 117. FOOTNOTES More Vacation.Fun for Eve one in Penns lvania, Vacation and Travel BevelOpment Bureau, Commonwealth of Pennsyl- vania. (195?). Apps ndix e : Pennsylvania Hotel Herald, April 1, 1959. p. 2. Appe ndn 0 Personal interview with Mrs. Marion.Meyers, Secretary and Office Manager of the Pocono Mbuntains Vacation Bureau, Stroudsburg, Pennsylvania, July 15, 1959. Questionnaire Returns, July 15, 1959. Thegis, p. 115. £1922. p. 115. _ Questionnaire Returns, July 15, 1959, Resort number one. Ibid, Resort number two. Ibid, Resort number three. .2219: Resort number four. Resort number five. a 5 Resort number six. E Resort number seven. H 0‘ p. 9. D E a Resort number eight. ' H 0' H D.» U Resort number nine. H 0‘ p. D. 'e Resort number ten. H O’ p. p. ‘ H 0‘ p. Q: . Resorts number one through ten. H O‘ p. D: e 118. Chapter VIII SUMMARY AND CONCLUSION In studying the Minimum Wage Orders of 1958 and 1959 and their effect upon the hotel industry Of Pennsylvania, factual material gathered from the three sources most direct- ly involved was presented: the Department Of Labor and Indus- try, the Pennsylvania Hotels Association, and the Pocono Mountains Vacation Bureau. Much of the data received was, of course, biased in nature towards one side or the other. However, an attempt has been.made to present the issues in the minimum wage case from.these three distinct view-points. There can be no question that the Department Of Labor and Industry had good grounds for raising the minimum wage issue. Hotel, restaurant, and resort employees have long been underpaid in Pennsylvania; particularly women and minors; and members of the hotel industry would be the first to admit this. The decision of the Dauphin County Court on May 12, 1958, to set aside the first Orders as unconstitutional was the first real blow to the Department Of Labor and Industry's case. However, the decision did serve to point up some Of the fallacies made from.the date the first Board was created. In addition, the delay gave management additional time which it badly needed to gear itself for action. But most important 119. or all, for the resort industry, wage increases were delayed until after the 1958 season was over. Had these increases gone into effect in the spring Of 1958, as originally presented, disaster might have occurred in the resort industry, as Operating budgets for the resorts had already been set up the previous fall.1 The Pennsylvania Hotels Association presented diligent- ly its position in the minimum wage controversy and the bulk of credit for the concessions granted to the hotel industry should go directly to this group; particularly to its legal counsel, its officers and representatives. This group along ‘with counsel for the Pocono Mountains Vacation.Bureau pre- vented the Orders from.being put into-effect in their original form. In the end result, the Pennsylvania Hotels Association gained for its members as much as they could conceivably hOpe to Obtain.2 Somewhat later the reality Of what was happening in the hotel industry began to filter through to the Pocono ‘Mountains. Very few members of the Pocono Mountains Vacation Bureau are members of the Pennsylvania Hotels Association and the Bureau considers itself a self-sufficient Operation. However, without the strength of the Pennsylvania Hotels Association, the Bureau might have had some difficulty in reaching its objectives in the minimum wage issue. That the resort industry stood to lose a great deal 119. of all, for the resort industry, wage increases were delayed until after the 1958 season was over. Had these increases gone into effect in the spring of 1958, as originally presented, disaster might have occurred in the resort industry, as Operating budgets for the resorts had already been set up the previous fall.1 The Pennsylvania Hotels Association presented diligent- ly its position in the minimum wage controversy and the bulk of credit for the concessions granted to the hotel industry should go directly to this group; particularly to its legal counsel, its officers and representatives. This group along with counsel for the Pocono Mountains Vacation.Bureau pre- vented the Orders from being put into effect in their original form. In the end result, the Pennsylvania Hotels Association gained for its members as much as they could conceivably hOpe to obtain.2 Somewhat later the reality of what was happening in the hotel industry began to filter through to the Pocono Mountains. Very few members of the Pocono Mountains Vacation Bureau are members Of the Pennsylvania Hotels Association and the Bureau considers itself a self-sufficient Operation. However, without the strength Of the Pennsylvania Hotels Association, the Bureau might have had some difficulty in reaching its objectives in the minimum wage issue. That the resort industry stood to lose a great deal (I ,1 120. if the Orders had gone through in their original form.cannot be denied. The majority Of the smaller resorts in the Pocono Mountains depend upon minors, especially college students, for the bulk Of their labor; hence, the very real concern that the ”learner" provision be revised. In addition, their request for a larger lodging and meal allowance, which was later increased, had some Justification. Ironically, after all the time and effort spent on the minimum wage case, with the resort industry fighting for its very existence, the meetings of the Pocono Mountains Vacation Bureau from.March of 1958 to February of 1959 were devoted more to a discussion of legal fees rather than to the most important issue itself, the minimum wage controversy. Many members of the Bureau still do not realise what nearly happened in their own industry, nor do they fully appreciate the efforts of the Pennsylvania Hotels Association, as well as the efforts of their own legal counsel, officers, and representatives in this action. As recently as April, 1960, the writer was informed by the 1957 president of the Bureau that he had never "taken the time to even read the new Order.” The minimum wage Order affected Pennsylvania hotels in a number of ways. As a result Of Operation under the Order for the first two months of 1959. hotels were forced to lay Off employees, (particularly the Older and less productive workers), consolidate Jobs, reduce the hours of service in .‘I (I 1'? 121. dining rooms and generally eliminate some essential services. Payrolls in the first two months were on an average 6.5 per cent higher than in the previous year. Some hotel managers reported being forced to Open their dining rooms one hour later in the morning and closing one hour earlier in the evening to avoid overtime. Another noted that his maids and waitresses were slowing down in order to drag out the clean- up period so that they could collect overtime. Another Operator stated he did not eliminate any services, but that the service he now Offers is slower than under an unregulated Operation. Several hotels eliminated night maid service and reduced bellman service.6 However, many beneficial effects resulted under the new Minimumeage Order, and forced improvements were made in several areas. Closer planning in setting up budgets has forced the Operator to maintain tighter controls in all de- partments. More direct supervision during meal hours has become necessary. Employee work schedules, always difficult and time-consuming, have become increasingly important. ‘Hhile Operators complained Of the additional work involved, greater efficiency was reported in payroll departments.7 Most important of all, was the improvement of working conditions for the women and minors themselves. Shorter hours together with increased wages, marked a real step Of progress for this segment of Pennsylvania's industrial force. ,Q I. 122. However, more work still needs to be done in the area of improved living conditions for all employees whose lodging is provided by their employers. In addition, more standar- dized forms for record-keeping should be made available to the Operators by the Department of Labor and Industry.8 Although the Minimumeage Order of 1959 has proven to be more of an asset than a liability to the hotel indus- try Of Pennsylvania, the way has been paved for future legis- lation. Federal minimum wage action is currently in the exploratory stage. On.April 10, 1960, this matter was a highlight of the Pennsylvania Hotels Association spring resort meeting at Pocono Manor, and on April 20, the industry's representative, L. Gardner Moore, appeared before a Senate investigating committee headed by Senator Kennedy, to present the reasons for the industry's request for exemption from.the prOposed $1.25 Federal minimum wage. ‘Whether the hotel and resort industry will be considered as separate and distinct entities, only time will tell. l. 2. 3. h. 5. 6. 7. 8. 9. 123. FOOTNOTES Thesis, p. 65. Penggylvania Hotel Herald, November 26, 1958, p. 1. Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, January 13, 19 c. Minutes Of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, March 6, 1953 through February 2h, 1959. Personal conversation with Mr. LeRoy Guccini, Stroudsburg, Pennsylvania, April 6, 1960. Penns lvania Hotel Herald, March 18, 1959, pp. 1 and 6. uestionnaire Returns, July 15, 1959, Resorts One through en. Ibid. Minutes Ofthe Pennsylvania Hotels Association resort meeti , Pocono Manor, Pennsylvania, April 10, 19 O 12h. BIBLIOGRAPHY A Brief on the Industrial Complexion and the Resort Industgy Of the Pocono Mountains Area of Penns lvania, prepared by the Pocono Mountains Vacation Bureau, the Pocono Mountains Chamber of Commerce, the Mount Pocono Airport Authority. (February 13, 1956). Climatolo ical Data for Penns lvania, United States Depart- ment Of Commerce,‘Weather Bureau, (3une, July, anthugust Of 1955. 1956. 1957. and 1958). Hearing of the RestaurantI Hotels and Motel Wage Hearigg Boar f, Department O bor and dustry, ommonwea h o ennsylvania, (August 14 and 15, 1958). Membershi Bulletins, Pennsylvania Hotels Association, October 3, 1957, January 27, 1957, February 16, 1958, and September 9, 1959. Minutes of the Pocono Mountains Vacation Bureau, Stroudsburg, Pennsylvania, December 19, 1957 through 3une 25, 1959. More Travel Fun for Eve one in Penns lvania, Vacation and Travel DevelOpment Bureau, Commonwealth Of Pennsylvania, (1957). PO s l ania Hotel Herald, Pennsylvania Hotels Association, October, 1957 through June, 1959. Publicity Releases, Department Of Labor and Industry, Common- wealth of Pennsylvania, NOvember 7, 1957, December 22,1957, March 18,1959. and September 9, 1959. Questionnaire Returns, July 15, 1959, Resorts numbers one hrough ten. Recommendations of the Minimum Va e Heari Board, Department of Labor and Industry, Commonwealth of Pennsylvania, October 7 and.December 1k, 195?. The Daily Record, Stroudsburg, Pennsylvania, October 30, 1957 “d anuary. 27' 1958. The Pictures ue Poconos of Penns lvania, Pocono Mountains Vacation Bureau and Pocono Mountains Chamber Of Commerce, (1959). Cu Pu s. .6 FR 125. APPENDIX uestionna re Maili Pocono Manor Inn Pocono Manor, Pennsylvania American plan Resort-convention hotel Capacity - 375 SkytOp Club SkytOp, Pennsylvania American plan Private resort hotel Gapacity - 350 PennaStroudeotel Stroudsburg, Pennsylvania EurOpean.planv‘ Commercial resort hotel Capacity - 160‘ Shawnee Inn- Shawnee-on-Delaware, Pa. Amdrican plan Resort-convention hotel Capacity - 2&0 Inn at Buck Hill Falls Buck Hill Falls, Pa. American plan Resort-convention Hotel Capacity - 200 Bushkill Falls House Bushkill, Pennsylvania American plan ' Resort hotel Capacity b 200 Pococabana Lodge Minisink Hills, Pa. American plan Resort hotel Capacity - 200 Mo-NOmpO-Nock Inn Mountainhome, Pennsylvania {American.plan Resort hotel Capacity - 172 126. Li t Glenwood Hotel Delaware‘Water Gap, Pennsylvania American plan ‘ Resort hotel Capacity - 250 Oakgrove House East Stroudsburg, Pennsylvania American.plan Resort Hotel Capacity - 250 High Point Inn Mt. Pocono, Pennsylvania American plan Resort hotel Capacity - 150 Skyline Inn Mt. Pocono,Pennsylvania American.p1an Resort hotel Capacity - 176 Echo Lake Farms Hotel Echo Lake, Pennsylvania American plan Resort hotel Capacity - 150 'Hillow Dell House Minisink Hills, Pennsylvania Resort hotel American.plan Capacity - 1&0 Mountain Lake House Marshalls Creek, Pennsylvania American plan Resort hotel Capacity - 210 Swiftwater Inn Swiftwater, Pennsylvania American.plan Resort hotel Capacity - 6h I I I I a r C I I P..- \v _ _ . I l '1 .. . . U Penn Hills Lodge Analomink, Pennsylvania American plan Lodge and cottages Capacity - 90 Split Rock Lodge Lake Harmony, Pennsylvania American.p1an Lodge and cottages Capacity - 206 Merry Hill Inn Cresco,lPennsy1vania Anerican plan ‘ Lodge and cottages Capacity - 60 Sky-Hi Inn “ East Stroudsburg, Pa. Lodge andcottages American plan Capacity - luc- Pocono Gardens Lodge Crescc,‘Pennsylvania American.plan Lodge and octtages Capacity - 76 Fernsood Bushkill, Pennsylvania American plan Lodge and cabins Capacity - 150 Honeymoon Haven Dingmanis Ferry, Pa. American.p1an Lodge and cottages Capacity - #8 Charlton‘s Lodge East Stroudsburg, Pa. kmerican.plan 10680.. Capacity -_15 12?. Vacation Valley Echo Lake, Pennsylvania American Plan Lodge and cottages Capacity - 350 Mountain Manor Marshalls Creek, Pa. American.plan Resort inn Capacity - 50 Strickland's Mt. Pocono, Pennsylvania American.plan Lodge and cottages Capacity - lhh Lenape Village Tartan, Pennsylvania kmerican.p1an Lodge and Cottages Capacity - 100 Hawthorne Inn Mt. Pocono, Pennsylvania American.plan Lodge and cottages Capacity - 155 Mount Airy Lodge Mt. Pocono, Pa. American.plan Lodge and cottages Capacity - 210 Twin Pine Ranch Stroudsburg, Pennsylvania American,p1an. Lodge and cottages Capacity - 76 Sunset Hill Resort East Stroudsburg, Pa. American.plan Lodge and cabins Capacity - bO 1‘ [I I. I. Blue Ridge Inn East Stroudsburg, Pa. American plan Lodge and cabins Capacity - 80 Echo Valley Lodge Echo Lake, Pennsylvania American plan Lodge and cottages Capacity - 32 Birchwood Inn East Stroudsburg, Pa. American plan Lodge and cottages Capacity - 18 Paradise Valley Lodge Mt. Pocono, Pennsylvania American plan Lodge and cottages Capacity - 75 Altier's Inn East Stroudsburg, Pa. American plan Inn and.motel Capacity - 38 Tamiment Bushkill, Pennsylvania American plan resort hotel Capacity - 500 Pocono Crest Pocono Pines, Pa. American plan Lodges and cottages Capacity - 191 Heddy's Lakeview Echo Lake, Pennsylvania American plan Lodge and cottages Capacity - 60 128. Sagamore Milford, Pennsylvania American.p1an Hotel and cottages Capacity - 321 Schmitt's Mountain Rest Minisink Hills, Pa. American plan Lodge and cottages Capacity - 60 Pocmont Ledge Bushkill, Pennsylvania American.plan Lodge and cottages Capacity - 80 Onawa Lodge Mountainhome, Pennsylvania American plan Lodge and cottages Capacity - 200 El Pocono Ranch Resort Thornhurst, Pennsylvania American plan Ranch resort Capacity - 30 'White Beauty View Greentown, Pennsylvania American plan Cottages Capacity - 86 Mountain Crest Lodge Stroudsburg, Pennsylvania American.plan Resort hotel Capacity - 60 Henryville Lodge Henryville, Pennsylvania American plan Lodge and cottages Capacity - 115 129. Alpine Lodge Pocono Mountain Inn Mt. Pocono, Pennsylvania Cresco, Pennsylvania American plan American plan Lodge and cottages Lodge and cottages Capacity - 32 Capacity - 88 129. Alpine Lodge Pocono Mountain Inn Mt. Pocono, Pennsylvania Cresco, Pennsylvania American plan American plan Lodge and cottages Lodge and cottages Capacity - 32 Capacity - 88 130. June 29, 1959 Dear Sir: In order to complete the requirements for a Master of Arts degree at Michigan State University, I am now preparing a thesis relating to a study of the 1958 and 1959 Minimum Wage Orders in relationship to the resort industry of Pennsyl- vania, with special emphasis on the Pocono Mountains area. Enclosed is a questionnaire which is being mailed to fifty selected resort operators in this area. To assist in this study would you please fill out the form as completely as possible and return in the enclosed envelope by July 15? Your reply will be held confidential and it is not necessary to identify your resort or yourself by name on the form. Also, feel free to make any additional comments which.you might consider useful in this report. Your cooperation.will be greatly appreciated. Yours very truly, w. S. Garrison WSG/ag 131. ‘Questionnaire Please fill in or check as indicated: 1. Length of season 2. Type of plan: American EurOpean Other 3. Number of rooms: Singles Twins Doubles h. Total guest capacity: 0- 50 200-250 50-100 250- 00 100-150 300- 00 150-200 Over hOO ___ 5. Number of employees: A June 1 8 June 1 W ' Waiters Waitresses Busboys Dining room captains Roll boys Relish girls Bartenders Bar waiters Bar waitresses Bell Hops Chambermaids Non-service rounds Maintenance Front Office Mewstand Gift Shop Kitchen Auditing Other 6. Monthly payroll: June_l958 June 1959 *Column 3 W Dining romm Beverage Service Bell service . .L"-\‘7- .V , 4 . 0 ~. _. .7 . . h .s . A _ - 132. Chamberma ds Non-service Grounds Maintenance Front Office Newstand Gift Shop Kitchen Auditing Other «If specific payroll figures are not readily available, fill in W as follows: 7. 8. 9. 10. Insert a plus (+) sign if the payroll for June, 1959, was increased in each instance over June, 1958. Insert a minus (-) sign if the payroll for June, 1959, was decreased in each instance over June, 1958. list positions in question #5 in which overtime was per- mitted for: June 1 8 June 1 ‘What are your employees' attitudes towards the new wage orders? Satisfied Dissatisfied Unable to say Egplain How do your employees feel about the reduction in hours and tips? Satisfied Dissatisfied Unable to say Have your employees indicated that they would like to work longer hours? Yes No '~ 'v .- 11. 12. 13. 15. 16. 17. 133. Has the quality of service been effected by the new wage orders? Yes No Explain: Check changes that may have occurred as a result of the new wage orders: Increased Decreased No Change room rates food prices beverage prices other Has your actual gross income for June, 1959, increased or decreased as compared to the actual gross income for June, 1958? Have you had any public reaction to the changes in question #12? If so, what were they? ‘What has been the over-all effect of the minimum.wage order on your resort? Explain in detail. Are there further modifications you would like to see regarding the wage orders? Yes No Do you think the public is aware that the hotel industry in Pennsylvania now has minimum.wages? tllllWHlllLllIlllllllllllIIIHIMWIILIHMILIIIlllll 3 293 O3