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UNITED STATES DEPARTMENT OF LABOR Frances Perkins, Secretary BUREAU OF LABOR STATISTICS Isador Lubin, Commissioner (on leave) A . F. Hinrichs, Acting Commissioner + Labor Aspects o f the Chicago M ilk Industry + Prepared by the DIVISION OF WAGE ANALYSIS ROBERT J. MYERS, Chief UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1942 For sale by the Superintendent o f Documents, Washington, D. C, Price 10 cents CONTENTS Page Summary_________________________________________________________________ Introduction______________________________________________________________ Economic organization of the Chicago milk industry------------------------------Producers_________________________________________________________ Distributors_______________________________________________________ Competitive practices__________________________________________________ Characteristics of the fluid-milk market____________________________ Growth of the vendor system_____ _________________________________ Antitrust suit in Chicago_____________________________________________ Milk prices______________________________________________________________ Nature of demand for milk___________________________________________ Trend of prices paid by the distributor_____________________________ Trend of standard retail prices_____________________________________ Tendency for actual price to deviate from standard price___________ Cost components in the price of milk..--------------------------------------------Increase in importance of store distribution...__ _______________________ Labor problems in milk delivery________________________________ . _____ Types of trade served by drivers and vendors___________ . __________ Characteristics of drivers and vendors________________________________ Working conditions of drivers and vendors_________________________ Milk Wagon Drivers’ Union, Local 753______________________________ Income of drivers___________________ Income of vendors___________________________________________________ Comparison of incomes of drivers and vendors________________________ ii 1 2 3 3 5 7 7 12 14 16 16 17 20 21 23 24 26 26 27 30 36 42 49 52 Letter of Transmittal U n ited S tates D epar tm e n t of L abor , B ureau of L abor S ta tistics , Washington, D. C ., Jwm 1, 19J$. The S ecretary of L abor: I have the honor to transmit herewith a report covering a study made by the Bureau o f Labor Statistics o f the distribution o f milk in the Chicago marketing area, with particular regard to the “ vendor system.” The study was conducted in the Division o f W age Analysis, o f which Robert J. Myers is chief, and was under the general direction o f Sidney C. Sufrin. The field investigations were supervised by Philip L. Jones, with the assistance o f John F. Laciskey and Paul E. W arwick (supervisor o f the Chicago field staff). Background research was conducted and the report written by M ary Gresham, assisted by Joseph W . Bloch. A . F. H inriohs, Acting Commissioner. Hon. F rances P e r k in s , Secretary o f Labor. m PREFACE This bulletin is primarily concerned with the “ vendor system” o f distributing consumer goods, under which the distribution function is performed not. by the traditional employed “ deliveryman” but by an independent small entrepreneur. Although well established in several industries as early as the twenties, the vendor system appears to have expanded rapidly during the depression and has since pro vided the livelihood o f many thousands. The system presents serious problems to labor unions and to administrators o f social legislation. Its importance is attested by decisions o f the United States Supreme Court, the most recent o f which involved the bakery industry in New Y ork City. (Bakery and Pastry Drivers and Helpers Local 802 v. W ohl, 62 Sup. Ct. 816. May 30,1942.) A s a conveniently small segment o f the economy, vitally related to the public welfare, the Chicago milk industry provides an appropriate background fo r an initial study o f the vendor problem. A n appre ciable proportion o f the milk drivers in that city have been supplanted by vendors and the relatively favorable standards o f work maintained by the powerful milk drivers’ union have been threatened. The factors influencing the Chicago milk industry, however, are exceed ingly complex, and it would be a mistake to ascribe to the vendor system all o f the ills which beset the milk-wagon driver. In any study o f this industry, moreover, it is necessary to recognize the price o f the product as an important factor in the problems o f the wage earner. This study was undertaken in the late fall o f 1941 and was hurried to completion after the attack on Pearl Harbor. As this bulletin goes to press, substantial changes in the organization for distributing milk have already occurred as a result o f the war program, and it is doubtful whether many o f the conditions described herein will again prevail while the war continues. These changes, however, are not believed to reduce the significance o f the study as an approach to the permanent problem involved in vendor distribution. Preliminary copies o f this report in mimeographed form were sub mitted fo r criticism to the cooperating distributors, the union, and a number o f other interested individuals and agencies. A ll comments received were given careful consideration in the final revision o f the bulletin. nr Bulletin J^o. 715 o f the United States Bureau o f Labor Statistics Labor Aspects o f the Chicago M ilk Industry Summary In the bitter, competitive struggle in which the Chicago milk industry has been engaged during the past 8 or 9 years, the milk vendor has played an important part. Recognized not as an employee o f the distributor, but as an independent, small businessman who buys roducts outright and sells them to his own customers, the vendor has Ben closely associated with cut-rate milk distribution and with the rising trend o f sales through retail stores. The vendor system and the growth o f store distribution have consequently contributed to the displacement o f employed milk drivers, and have constituted a serious threat to the drivers5union. A study by the Bureau o f Labor Statistics in the winter o f 1941-42 reveals that the price charged by vendors per single quart o f milk delivered to the home is typically about V/2 cents lower than the price received by employed drivers. The price differential, however, does not appear to be due to any greater efficiency on the part o f the vendors, whose stops are, in fact, somewhat more scattered than those o f the drivers. On the other hand, this commendable saving to the consumer is made at a considerable cost to the vendor, for vendors5 weekly incomes, averaging $46 in the week o f the Bureau’s survey, are some $6 lower than the incomes o f employed drivers. About two-thirds o f the vendors fail to attain the $48 basic wage paid to union drivers. Vendors also have less favorable working conditions than drivers. Nearly four-fifths o f the vendors work 7 days a week, while drivers work 6, and the weekly hours o f vendors are somewhat longer than those o f drivers. Vendors must sometimes press other members o f their families into service without extra remuneration; neither the vendors nor their helpers are ordinarily protected by a minimum wage nor by other forms o f social security. In consequence, the vendor system menaces the working standards even o f those drivers who are able to retain their jobs. The limitations o f the Bureau’s study, restricted as it was to the milk industry in the Chicago market, forbid the formation o f any definitive conclusions regarding the vendor problem in general. In view o f the complex economic and legal background o f the vendor problem, however, it is apparent that its solution will be difficult. Insofar as the Chicago milk market is concerned, the recent organiza tion o f the vendors by the union is unlikely by itself to relieve com pletely the pressure on labor standards, since the union can exercise at best only limited control over the vendor’s income or his hours o f 1 P 2 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY work. A program o f education regarding income and costs, however, should be beneficial, for many vendors do not appear to know whether they are making money or not. A ny wartime restrictions on de liveries may be expected to affect vendors more drastically than drivers and thus may reduce the relative importance o f the vendor problem in the months immediately ahead. In the long run, however, an extension o f existing legislation may be required to achieve the double aim o f assuring economical milk distribution and safeguarding labor standards. Introduction The present study by the Bureau o f Labor Statistics is primarily concerned with the distribution o f fluid milk in the Chicago market area with specific reference to the drivers and vendors in that market. The problem in Chicago was clearly defined in the opinion o f the Supreme Court delivered by Mr. Justice Black in November 1940.1 With the approach and continuance of the depression of the early thirties, the milk business, like other industries, was in acute distress. Loss of profits from decreased demand stimulated dairies to devise new and cheaper methods to obtain and serve customers. Under the long-existing practice in Chicago, dairies had owned milk trucks and wagons, and had operated them with em ployee drivers—chiefly members of the A. F. of L. local. A major part of the business consisted of door-to-door deliveries to retail customers. Some of the A. F. of L. drivers also delivered milk to retail stores, those stores in turn selling to their customers. What appears to have been an insignificant part of the milk supply of predepression Chicago was delivered by retail milk “peddlers” who bought from the dairy at wholesale and sold at retail from their own trucks or wagons. But with the depression this practice of sale by “peddlers” expanded, branched out into sales to retail stores, and developed into what is called the “vendor system” ♦ * * With the spread of this new competitive system, the business of the dairies employing union milk-wagon drivers decreased. Many of the union drivers lost their jobs and were dependent upon their union's relief funds and upon public relief agencies for their support. The vendor system is not restricted to Chicago nor to the milk industry, but appears in other cities and other industries. W hile not born o f the depression, its growth was undoubtedly encouraged by the economic maladjustments o f the 1930’s. It is a manifestation o f the trend toward replacement o f employees by independent outside salesmen and commission men that has been evident during the past decade. Such a system presents possibilities o f serious social and economic repercussions. There is the danger o f its nullifying, in part at least, existing social legislation designed for the protection o f labor. I f vendors are businessmen, they are presumably outside the juris diction o f the Fair Labor Standards Act, and in addition they appear not to be subject to the Federal Social Security law, State unemploy ment compensation laws, nor State workmen’s compensation acts. An employer lacking any compulsion to pay a minimum hourly rate and also free from certain State and Federal taxes has an opportunity to operate at a lower cost than that o f the employer who is subject to such added burdens. The forces of competition thus tend to en courage tlie conversion o f employee salesmen to independent com mission salesmen or to vendors. 1 Milk Wagon Drivers’ Union, Local No. 753 et al. v. Lake Valley Farm Products. Inc. et al., 3 1 1 U . S. 9 1 . ECONOMIC ORGANIZATION OF THE CHICAGO M ILK INDUSTRY 3 I t was with the purpose o f investigating the vendor system in the light o f these repercussions that the survey was conducted. A n under standing o f the vendor problem makes it necessary to discuss the characteristics o f the fluid-milk industry, its price structures and the changes in these structures, the traditional methods o f distribution and the changes in these methods. The vendor system has stimulated, if not actually caused, these changes and they have, in turn, created problems o f unemployment and pressure on wages, as well as other labor problems. The first three sections o f the report, therefore, present as background a picture o f the Chicago industry as a whole. Economic Organisation o f the Chicago M ilk Industry The Chicago milk-marketing area, with a population in 1940 o f 3,567,628, includes Chicago, Evanston, Wilmette, Kenilworth, W innetka, Glencoe, and Oak Park.2 This area receives its supply o f raw milk from sections o f Illinois, Indiana, Wisconsin, and Michigan, known as the Chicago “ milkshed.” During the 2-year period from September 1939 to September 1941, approximately one-half (49.4 per cent) o f all the milk shipped to Chicago handlers came from W iscon sin, 43.3 percent from Illinois, 5.7 percent from Indiana, and 1.6 percent from Michigan. (Chart 1.) The products o f the milk industry are fluid milk (that is, pasteurized milk which is delivered to homes or sold at the store),3 cream, butter, buttermilk, cheese, ice cream, ice cream mix, evaporated and condensed milk, dried or powdered milk, casein, etc. For the purposes o f this report, the discussion is restricted primarily to fluid milk and its distribution in the Chicago market area. Producers During the year 1941 an average o f 17,533 producers delivered 2.8 billion pounds o f milk to handlers in the Chicago marketing area for which they received 48.5 million dollars.4 O f the total amount produced, 43.2 percent was used as fluid milk, the remainder going into cream, cheese, manufactured milk, and other milk products. (Chart 1.) Production in 1941 was 243 million pounds greater than in 1940, but the distribution according to class changed somewhat in 1941; the proportion used as fluid milk decreased from 47.6 percent o f the 1940 production to 43.2 percent o f the 1941 total, while a larger proportion was used in manufactured milk. The war demands fo r condensed, evaporated, and powdered milk fo r export probably caused this increase in production and utilization for nonfluid purposes. The production goal set by the Department o f Agriculture for 1942 is even higher than the production for 1941. A n announcement 2 U . S. D ep artm en t o f A g r ic u lt u r e : C om pilation o f s ta tis tic a l m a te ria l covering th e Chicago m ark etin g area, A p ril 1 9 4 1 , sec. 4. Prepared by th e D airy D iv ision o f th e Surplus M ark etin g A d m in istra tio n . * A very sm all proportion o f fluid m ilk is sold in a raw (u n p asteu rized ) sta te . Such m ilk h a s to he labeled as “ certified” an d con form w ith rigid rules an d regu lation s o f the board o f h ealth fo r certified m ilk . 4 F ederal M ilk M ark et A d m in istra to r, Chicago, 111. R eporter, January 1 942 . LABOR ASPECTS OF THE CHICAGO MILK INDUSTRY SOURCE AND UTILIZATION OF MILK ENTERING CHICAGO MARKETING AREA DURING RECENT TYPICAL PERIOD ECONOMIC ORGANIZATION OP THE CHICAGO M ILK INDUSTRY 5 by the Secretary o f Agriculture states that “ Wartime foods for 1942 call for increases o f 20 percent in the production o f evaporated milk, 46 percent in dry skim milk, and 33 percent in the output o f cheese over the estimated production totals fo r 1941.” 5 Producer cooperatives.— The first producer cooperative organization in the Chicago milkshed was the M ilk Shippers’ Union, established in 1887.6 A fter a brief and unsuccessful existence, it was succeeded in 1896 by an incorporated body bearing the same name. In 1909 the Milk Producers’ Association was formed. The principal activities o f these organizations were price bargaining and opposing proposed legislation requiring tuberculin testing o f dairy herds. A city ordi nance in 1926, providing that only milk from tuberculin-tested herds could be sold in Chicago, was instrumental in causing the disbanding o f this organization since most o f the members could not conform to the ordinance.7 The Pure M ilk Association, one o f the largest producers’ coopera tives in the country,8 was incorporated as an organization o f dairy farmers in the Chicago milkshed in 1926. “ Being a bargaining asso ciation o f producers, the primary object o f the Pure Milk Association is to establish and maintain relations with milk distributors, and to meet with them to discuss market conditions and arrive at agreements as to prices to be paid the producers fo r milk.” 9 Before the end o f 1935, the association had a membership o f 17,000 farmers and in June 1935 they supplied 72 percent o f the fluid milk sold by all licensed dealers in Chicago during that month. Membership had declined to approximately 12,000 by 1939.1 In November 1941 the Pure Milk 0 Association claimed its members produced approximately 80 percent o f the supply o f fluid milk shipped to the Chicago market.1 1 D istributors During 1941, 144 dealers1 distributed to Chicago consumers more 2 than 400 million quarts o f m ilk 1 valued at over 40 million dollars.1 3 4 More than 3,000 vehicles1 were licensed fo r the purpose o f distrib 5 uting milk. The m ajor portion was distributed to the ultimate consumer through 12,000 licensed stores1 and through hospitals, in 6 stitutions, restaurants, and hotels, while the smaller portion was delivered directly to homes. * F ederal M ilk M ark et A d m in istra to r, Chicago, 111. R eporter, Jan uary 1942 . * R ep ort o f th e F ed eral T r a d e C om m ission on th e Sales an d D istrib u tio n o f M ilk an d M ilk P roducts, C hicago Sa les A r ea , 7 4 th C ong., 2 d sess., H . D oc. 4 5 1 , p. 5 8 . » Ib id ., p . 5 9 . 8 “ I t is ra th e r w ell recognized th at th e cooperatives sell a significant po rtion o f th e to ta l volu m e o f m ilk sold to d istribu tors in m a n y m ark ets ♦ * * such a s N ew Y o rk C ity, P h ilad elph ia. P ittsb u rgh , Chicago, an d M ilw au kee. B y an d large, cooperative association s o f m ilk producers a re fou n d to be significant fa cto rs in th e tra d e an d th e stru ctu re o f the m ark et in m o st large m ilk m ark ets a s w ell a s in m a n y s m a ll ones. I t is in th e m arkets w here th e su p p ly is organized th a t such devices as th e classified-price plan o f sellin g m ilk to d istrib u tors and th e several plan s o f p ro ratin g am on g producers th e proceeds o f sales to distrib u tors are to be fou n d .” E . W . G au m n itz and O. M . R e e d : Som e Problem s Involved in E sta b lish in g M ilk P rices, U . S. D ep artm en t o f A g ricu ltu re, 1 9 3 7 , pp. 2 6 an d 2 7 . * R eport o f th e Federal T rad e C om m ission , op. cit., p. 60. 10 T e stim o n y presented by the P u re M ilk A sso cia tio n a t th e A . A . A . H earin gs o f Proposed M ark etin g O rder, C hicago, 193 9 . 11 E stim a te by A . H . L a u terb a ch , m an a ger o f th e P u re M ilk A sso c ia tio n , in a personal in terview . 12 C ity o f Chicago, C ollector’ s Office, L icen se D iv ision . 13 F ederal M ilk M a rk et A d m in istra to r, C hicago, 111., op . cit. 14 E stim a te d by th e B ureau o f L abor S ta tistic s. 18 C ity o f Chicago, C ollector’s Office, L icen se D iv ision . » Ibid. 4 8 4 5 4 6 * — 42- 2 6 LABOR ASPECTS OF THE CHICAGO M IL it INDUSTRY Despite early tendencies toward concentration, as late as 1915 the industry in Chicago was still characterized by numerous small units. A t that time there were 1,260 milk dealers in Chicago.1 Then, in 7 July 1916 the Commissioner o f Health issued an order “ requiring that, with the exception o f certified milk, all milk sold or used in Chicago be pasteurized.” 1 As a result, hundreds o f small dealers were forced 8 out o f business because they were not equipped for pasteurization and could not meet the requirements for additional capital. B y 1918 there were only 603 milk dealers in Chicago, and 2 dealers handled 40 percent o f the fluid milk the year after the compulsory pasteuriza tion ordinance.1 9 Thus pasteurization played an important part in the development o f concentration in the milk industry. A paraphernalia of machinery and skills * * * came into use. The oldfashioned milk can gave way to the sanitary glass bottle; again an investment in bottles and machinery for their sterilization was too much for the petty financial resources of the producer. It was also too much for the small peddler with a meager investment and an incapacity to adapt to the new order. Over a period of 50 years—from 1875 to 1925—thousands of itinerants disappeared; and a few giant companies in each local market came to dominate the milk trade.2 0 Although it is now possible to purchase a small pasteurization plant fo r two or three thousand dollars, the investment necessary to go into business even on a small scale is greater than such a figure would indi cate. There are other items which are important to a successful business that must be considered, such as trucks for distribution, and advertising. W hile it is true that the investment required is rela tively small and many small plants do exist in the industry, the fact remains that in all tlie larger markets by far the greater part o f the sale and distribution o f fluid milk is in the hands o f only a few dealers. The two largest companies handling fluid milk in Chicago are the Borden-Wieland, division o f The Borden Co., and the Bowman Dairy Co., Inc. The Borden Co., the second largest concern2 engaged in processing, 1 manufacturing, and distributing milk and milk products in the United States, was organized and incorporated in 1899.2* A fter 1927, it ex 2 panded rapidly and by 1932 had acquired 207 separate enterprises in 18 different States and in Canada, o f which 53 were engaged chiefly in processing and distributing fluid milk. In 1935 the W ieland Co. o f Chicago merged with Borden Farm Products o f Illinois and in that year sold approximately 21 percent o f the total fluid milk in Chicago.2 8 The Bowman Dairy Co., the largest fluid-milk distributor in Chi cago, was incorporated in Missouri in 1886 and operated until 1891 in St. Louis. Since 1889 the company has been operating a fluid-milk business in Chi cago * * *. The company’s enormous business in the Chicago sales area was built up by purchasing milk companies and routes in Chicago and country plants and properties in the Chicago milk-shed.2 4 17 R eport o f F ed eral T rad e C om m ission , op. cit., p. 20. 18 R oss, H . A . : T h e M ark etin g o f M ilk in th e C hicago D a iry D istrict, 1 9 2 5 . U n iversity o f Illin o is, A g ric u ltu ra l E x perim en t S ta tio n , vol. 18, B u ll. 2 6 9 , p. 4 6 4 . 19 D uncan, C. S . : T h e Chicago M ilk Inqu iry, Jou rnal o f P o litica l E c on om y, A p ril 1 9 1 8 . 20T ill, Ir e n e : M ilk— The P olitics o f an Industry, in Price and Price Policies by W a lto n H a m ilto n and A sso ciates, M cG ra w -H ill B ook C o., In c., N . Y ., 1 9 3 8 , pp. 4 5 0 and 4 5 1 . 21 N a tio n a l D a iry P rod u cts Co. is th e la rg est such concern. 23 O rig in a lly incorporated as B o rd en 's Condensed M ilk C o., in 1 9 1 9 th e corp orate nam e w a s ch anged to T h e B orden Co. 28 R ep ort o f th e Federal T ra d e C om m ission , op. cit., p. 2 7 . 24 Ibid., pp. 2 7 , 28. COMPETITIVE PRACTICES 7 In June 1935, when there were 131 licensed distributors in Chicago, these two largest accounted for 553,004 quarts or nearly 50 percent o f the total daily sales o f fluid milk in Cnicago.2 No data are avail 5 able on how much o f the present market these two companies serve, but it is probable that their proportion has declined somewhat since 1935. Dealer associations,— Prior to 1935, distributors in Chicago tended to join one o f two dealer associations. The Chicago Milk Dealers’ A s sociation, incorporated in 1895, had in 1935 about 100 members in Chicago and its environs. M ilk Council, Inc., had 18 members, in cluding the 5 largest milk dealers in Chicago at the time o f the A g ri cultural Adjustment Administration marketing agreements in 1933. These 2 organizations merged in January 1935 to form the Associ ated Milk Dealers, Inc., which in June o f that year had a membership o f 82 dealers in Chicago.2 6 The principal activities o f the Associated Milk Dealers are negoti ating with the M ilk W agon Drivers’ Union with regard to wages and other working arrangements, negotiating with the Pure Milk Association regarding contract matters other than price arrange ments, and representing the dealers’ interests at hearings o f the Agricultural Adjustment Administration on producers’ prices. A t the time o f the Federal Trade Commission’s report (1935), it was stated that nearly all the distributors under contract to purchase milk from the Pure M ilk Association belonged to the Associated Milk Dealers, Inc., while a majority o f the distributors purchasing from independent producers were not members o f Associated Milk Dealers. Kecently, the Chicago M ilk Dealers’ Association has again become active as a separate organization. Its membership appears to con sist o f small dealers, most o f whom had previously belonged to the Associated M ilk Dealers, Inc. Competitive Practices Characteristics o f the F luid-M ilk M arket A ll milk products are made from the same raw material— cow’s milk purchased from the farmer—but they “find their way into different markets where customs are unlike, ways o f thought are d if ferent, and the mechanisms for price making bear little resemblance to each other.” 2 Butter, cheese, and manufactured milk move in a 7 national market and prices are set by whatever competition exists in that market. Fluid milk, on the other hand, moves in an entirely d if ferent market with unusual customs and practices and exceedingly complicated price structures. Although products other than fluid milk are distributed in Chicago by milk drivers and vendors, it is in the distribution o f fluid milk tnat the vendor system has nad the most serious repercussions. In that part o f the milk industry, the retail price structure, traditional methods o f distribution, and union wage standards have all felt the impact o f the vendor system. A n analysis o f some o f the economic 25 Ibid ., p. 8. 2 Ibid., p. 7. 6 27 T ill, Irene, op. cit., p. 4 6 1 . 8 LABOR ASPECTS OF THE CHICAGO M ILK INDUSTRY characteristics which distinguish fluid milk from most other com modities is, therefore, necessary in order fully to understand the problems involved in vendor distribution. Public control— Chicago regulations.— Fluid milk and all milk pro duced for the fluid-milk market are subject to the regulations o f the city municipal government.2 Unsafe milk was an evil that resulted 8 from concentrations o f populations in cities. City governments were the first to recognize that milk could spread disease and as a result the first regulations to correct the evil were municipal in character. This custom o f municipal responsibility for the safety o f the milk supply has continued to the present time. The existing standards and requirements for milk and milk prod ucts fo r the Chicago milk market are set forth in the Mayor K elly M ilk Ordinance, passed by the city council in January 1935, and the Chicago Board o f Health is responsible for the enforcement o f this ordinance.2 Practically every step in the production, handling, and 9 distribution o f milk is regulated, beginning at the farm and con tinuing until the milk reaches the consumer. The regulations governing dairy farms require certification by a veterinary as to the health o f each animal in the dairy herd, and regulate the feeding o f cow s; the construction and cleanliness o f the dairy barn; the grading and draining o f the cow y a rd ; the location, construction, and cleanliness o f the milk house; the location and operation o f the water supply; treatment o f utensils; cooling o f m ilk: and numerous other farm activities. Dairy farms must be inspected at least once every 6 months. Once the farmer has satisfactorily met all these requirements for his dairy farm, he can deliver his milk to one o f the country milk stations or to a distributor who sells his milk in the Chicago market. H aving been accepted by the distributor, the milk is usually trans ported in refrigerated tanks mounted on special motortrucks or in specially built railroad cars to a pasteurization plant. The regulations fo r pasteurization plants deal in detail with such matters as material, drainage and cleanliness o f floors, condition o f walls and ceilings, types o f doors and windows, lighting and ventila tion, protection from contamination, cleaning and sterilizing o f con tainers and apparatus, and numerous other matters. In addition, the ordinance states the temperature for pasteurization,3 for cooling 0 after pasteurization, and the maximum permissable bacterial plate count. In order to be sold as fluid milk, milk must conform to the fo l lowing standards: (1) The milk fat content must be not less than 3.25 percent, (2) the milk solids-not-fat content must be not less than 8.5 percent, and (3) milk must be clean, free o f sediment, and have a normal flavor, odor, and appearance. The milk must then be delivered in vehicles owned by distributors or vendors which meet the2 9 8 28 Som e o f th e m ilk produced fo r th e fluid-m ilk m ark et is used fo r purposes other th a n fluid m ilk, bu t all m ilk w hich en ters th e m ark et m u st be produced under the con ditions required fo r its use as fluid m ilk. 29 T h e ordinance o f the city o f Chicago and th e rules and regu lation s o f th e board o f health ad opted in connection w ith th a t ordinance are p attern ed very closely a fte r the m ilk ord in ance and code o f th e U n ited S ta tes P u blic H e a lth Service. 80 T h e p a steu rization process con sists o f h eatin g to a tem perature o f n o t less th a n 144 degrees F . and hold in g a t th a t tem perature fo r a t le a st 3 0 m in u tes or h o ld in g a t a t e m perature o f 1 6 0 degrees F . fo r 15 seconds. COMPETITIVE PRACTICES 9 board o f health specifications, and all pasteurized milk “ shall be sold not later than midnight o f the day beginning 25 hours after the day o f pasteurization.” 3 1 These are only a few o f the many rules and regulations affecting milk in the Chicago market. No milk can legally enter or be sold in the Chicago market area until satisfactory compliance with all these requirements has been determined by inspectors o f the Chicago Board o f Health. The enforcement program o f the board has been vigorous. This type o f milk ordinance is typical o f most o f the large cities in the country, although there are some variations in the specific requirements. Thus by local statute a sheltered market has been created and maintained for the purchase and sale o f fluid milk. Economic effects o f a sheltered market.— The very mechanics o f a system o f local inspection have tended to limit the milkshed and re strict supply. In the interest o f municipal economy it is cheaper to inspect nearby farms and plants within a set area. Also, there is little doubt that the size and shape o f the milkshed has been influenced at times by political pressures. In such a market the price o f fluid milk within the market is pro tected from the competition o f fluid milk from outside the market. Distributors in the Chicago market do not have to compete with dis tributors in other markets where wages may be lower, or where pro ducers may be receiving less, or where surpluses (market milk not sold as fluid m ilk) may be larger. They do not have to fear dumping, since local inspection has erected a wall against supply from outside. A s a result, the fluid-milk price can be maintained within the market despite lower prices in other markets or even at the very edge o f the city limits just beyond the domain o f municipal control. It is for these reasons that milk prices vary so widely from market to market. Recognition o f the inadequacies and evils o f such a system was partly responsible for the Department o f Agriculture’s statement in the 1940 Y earbook 8 that “ There is a real opportunity to remove 1 2 the barriers to interstate trade in milk and cream and other dairy products by devising a system under which each State and each municipality will accept inspection by accredited inspectors located in other States.” The classified-price plan .— Closely related to the sheltered market are the price structures used in purchasing milk from farmers in the large markets. A n understanding o f these price structures is funda mental to the analysis o f the economics o f the milk industry. The system o f pricing milk has evolved gradually during the past 20 years as a result o f attempts to solve problems o f both producers and distributors. The inflexibility o f these price structures, however, became an important factor in the expansion o f the vendor system during the depression period o f the 1930’s. The development o f large-scale organization and operation o f the milk-distributing business changed the relationship between the pro ducer and his market. As a result o f this development, the few large distributors purchased supplies from numerous relatively small 81 M ayor K elly M ilk Ordnance, 1 935 , sec. 1 5 4 -1 6 . 82 U . S. D epartm en t o f A g ricu ltu re, Y earbook o f 1 9 4 0 : F a rm ers in a C hangin g W o rld , p. 6 6 2 . 10 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY producers. Such a situation obviously placed the distributor in the stronger bargaining position and producers felt that they were not getting fair treatment. In an attempt to gain equal bargaining power with distributors, producers began to market their milk through cooperatives in the early 1900’s.3 3 The immediate problem facing the cooperatives was one o f selling all the milk produced by each o f their members. C oop eratives formed “ during the period of the W orld W ar and imme diately thereafter * * * apparently bargained with distributors for flat prices fo r all milk. They were successful for a time in se curing flat prices that they considered satisfactory, probably be cause o f the high level o f prices for milk used in manufactured dairy products.” 3 Also, “ before the first W orld W ar the presence 4 o f surpluses in the fluid-milk market was less troublesome; sanitary regulations were not so stringent, and the differences between the production cost o f fluid and manufacturing milk was smaller. It made little difference whether milk was sold fluid or used for butter, cheese, or condensed milk.” 3 5 A s the surplus problem became more acute, due to the stimulation o f fluid-milk production, and sanitary regulations became more rigid, the situation changed. A producer could sell all his milk to cream eries, cheese factories, or condenseries which were located outside o f his fluid-milk market. In this case the farmer’s production costs were relatively low, since none o f the fluid-milk regulations would apply. T o produce for the fluid-milk market, however, and to meet the sanitary regulations in a market like Chicago where the ordinance was rigid, required a greater capital investment and higher costs. Furthermore, the perishability o f fluid milk made it imperative for producers to sell all their milk each day. Since the milk stream cannot be turned off and on at will, the farmers were confronted with a serious problem o f selling their total daily output o f milk during the high season o f production. Such considerations caused the pro ducers to demand a higher price i f they were to produce for the fluidmilk market. The distributor was confronted with the problem o f meeting a demand for fluid milk which fluctuated daily, depending on the season o f the year, the temperature, the weather, and other variables. H e had to be assured o f a supply sufficient to meet the daily demand. As a result, surpluses— consisting o f milk that must be disposed o f in some way other than as fluid milk— were unavoidable. The dis tributor desired a price system which would lessen his risk o f loss in disposing o f these surpluses. The effort to overcome some o f these difficulties confronting both producers and distributors resulted in a system o f pricing milk according to the form in which it was sold by the distributor. A p parently, the existing plan was first used on an extensive scale in Boston, Washington, and Philadelphia about 19183 — and came into 6 use in Chicago the follow ing year. A t the present time this system, known as a classified-price plan, is in effect in most large markets. 83 O aum nitz, E. W ., and Reed, O. M ., op. c it., pp. 2 0 , 2 1 . w Ibid., p. 2 9 . 85 R oadhouse, C. L ., and H enderson, J. L . : The M ark et-M ilk In d u stry , M cG ra w -H ill B ook C o.. In c., N ew Y ork, 1 9 4 1 , p. 4 7 1 . 88 G au m n itz, E . W ., and Reed, O . M ., op. cit., p. 31. COMPETITIVE PRACTICES 11 Although the specific plan may vary from market to market, the principle remains the same—the dairy farmers receive fo r raw milk a price determined by the end use to which the milk is put. There may be as many as eight different prices in one market depending on the classification o f uses for milk in that market. Under such a price system the distributor can measure each day’s supply to meet the demand fo r fluid milk, convert the remainder into other products, pay fo r the raw milk in terms o f the quantity used for each purpose, and thereby avoid an over-supply o f fluid milk which would endanger the retail or wholesale price structure. W ith the distributor thus protected, the producer has a better chance o f disposing o f all o f his milk daily. Under a classified-price plan, the distributor pays more fo r raw milk which is used as fluid milk than fo r milk used for any other purpose. The problem therefore arises as to how to give each producer an equitable share o f the fluid-milk market. In Chicago this problem was solved in different ways at different times. The plan in operation at present is known as the “ market-pool plan.” Under the market-pool plan, each producer’s share o f the Chicago fluid-milk market is determined by the total quantity o f all classes o f milk sold in the entire market. Producers therefore ship milk to the dealers, who dispose o f it and who pay into a p o o l3 a sum determined 7 by the use o f the milk. Producers then receive from the pool an aver age or “ blend” price o f all milk sold in the market. This price is com puted by multiplying the quantity sold in the market for each use by the price set fo r that class o f milk and dividing the total amount in dollars by the total quantity o f milk sold in the market for all uses. As a result o f this plan, the receipts o f each producer are determined by the over-all distribution o f milk as between low-priced and highpriced outlets. The ultimate use o f the milk from a particular farm has nothing to do with the payment to that farmer. In the Chicago market the classes o f milk and p rice3 o f each class 8 in December 1941 under Federal Market Order No. 41,39 as amended, were: P rice per cw t. to farm er Class I.—All milk disposed of in the form of fluid milk, except such milk as is used for purposes for which no approval by health authorities in the marketing area is necessary and all milk not accounted for in other classes________________________________________________________________ $2.93 Class II.—All milk, except skim milk, disposed of in the form of flavored milk and flavored-milk drinks, and all milk disposed of in the form of cream, sweet or sour, cottage cheese, buttermilk, frozen cream, ice cream, and ice-cream mix-------------------------------------------------------------------- 2.-55 Class III.—All milk whose butterfat is used to produce a milk product other than one of those specified in class II and class IV, and all milk disposed of for those purposes for which no approval by health authori ties in the marketing area is necessary________________________________ 2.23 Class IV.—All milk the butterfat from which is used to produce butter and cheese except cottage cheese, and all milk accounted for as actual plant shrinkage, but not to exceed 2 percent of the total receipts_______________ 1.87 87 T h is p ool is operated by th e F ed eral M ilk M ark et A d m in istra to r. 88 A l l prices to farm ers are based on fluid m ilk o f 3 .5 percent b u tter fa t. T h ese prices are su b je ct to b u tte r fa t and location differentials. M ilk is bought from the farm er by the hundred pounds (4 6 .5 q u a r ts ). , " T h i s order becam e effective in Septem ber 1 9 3 9 a n d w ith som e am en d m en ts h a s re m ained in effect. 12 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY The “ blend” or average price which the farmer received for all milk in December 1941 was $2.60 per hundredweight. G row th o f the V endor System The vendor system o f distributing milk had been used in the Chi cago market at least as early as the year 1921. Prior to 1931, how ever, the vendors usually maintained regular retail routes and sold at prevailing prices; they caused little trouble to the Milk W agon Drivers’ Union or to the distributors who had agreements with this union. The expansion o f the vendor system thereafter was made possible only by the existence o f conditions in the Chicago market favorable to its growth. Seen in retrospect, the principal reason for the expansion o f the vendor system lay, not so much in the com petitive advantage to be gained by the use o f vendors instead o f drivers, but rather in the chance to break away from the inflexibility o f the organized market’s price structure and the traditional method o f distribution. The Chicago market in the early thirties presented a golden opportunity to the aggressive investor willing to reap a reward by circumventing established practices in the face o f strong opposition. Several factors contributed to assuring success to such a venture: (1) Although most distributors in the market were purchasing milk through the Pure M ilk Association under the “ classified-price” plan, milk was available at a lower cost on a “ flat-price” basis. Prices o f fluid milk to the farmer declined very slightly during 1930 and 1931 as compared with the sharp decline in manufactured-milk prices. This disparity served to increase the flow o f fluid milk, not only from regular producers but from producers who had not shipped fluid milk prior to 1930. As a result, milk to be used for fluid purposes could be purchased from individual producer-members o f the cooperative at a “ flat price” equal to or higher than the “ blend price” they re ceived through the cooperative fo r all milk, and many nonmember producers were willing to sell their fluid milk for whatever terms they could get. The Pure Milk Association did not have sufficient control to protect the high fluid-milk price from these two sources o f competition. (2) The major part o f the milk in the market was distributed by firms employing union drivers under a contract guaranteeing the highest base wage in the history o f the industry.4 It was possible 0 to avoid this added cost by distributing through vendors. Unemploy ment among milk drivers resulting from the depression had increased the number o f potential vendors. (3) Store distribution had not been exploited despite the lower costs o f such distribution as compared with home delivery. Retail prices o f home-delivered and store milk had been maintained at the same level for more than 7 years,4 and as a result there had been 1 little incentive for store buying. Some cut-rate stores had appeared in Chicago before 1932, but they were not very numerous. (4) The decline in consumer incomes resulting from the depression created strong consumer pressure fo r milk at lower prices. 40 A 5-year con tract w as n egotiated in M a y 1 9 2 7 betw een u n ion d ealers a n d L o c a l 7 5 3 se ttin g rates fo r retail routem en a t $ 5 0 per week plus com m issions. 41 See follow in g section on M ilk Prices, p. 16. COMPETITIVE PRACTICES 13 In May 1932, Meadowmoor Dairies, Inc., entered the Chicago mar ket prepared to distribute milk through vendors exclusively. Mead owmoor was not the first firm to oppose the organized market but it was the largest and one o f the most successful. It attracted the greatest amount o f notoriety and before long became the symbol o f cut-rate competition. Meadowmoor, along with some other distributors, made the most o f all their advantages in the Chicago market. They bought milk from farmers at a flat price, distributed through vendors, and began an aggressive exploitation o f store distribution. W ith the lower costs made possible by this method o f operation, they were able to “ under price” all distributors who were under contract to pay cooperative fluid-milk prices and to pay the union wage scale. B y means o f price cutting and promoting the cut-rate method of store distribution, as well as through the nonunion vendor system, Meadowmoor rapidly rose from a position o f obscurity to one o f im portance in the Chicago market. Under the pressure o f this com petition, prices to the farmer began to break, the union agreed to two reductions (amounting in all to $10 per week) in base rates o f milkwagon drivers,4 retail prices o f milk began to fall, and the volume 2 o f sales o f the large distributors declined. The explosion o f a bomb which damaged the Meadowmoor plant on the day it opened was only the beginning o f the violence which attended its early career. Stores were bombed, windows smashed, milk trucks overturned, and drivers and vendors were beaten during the long period o f unsettled market conditions and legal controversy which followed. The strenu ous opposition o f the Pure Milk Association, the Associated Milk Dealers, and the union to the increasing number o f cut-rate distribu tors, however, failed to dislodge the vendor system, and failed to reestablish the pre-1930 equilibrium. The Milk W agon Drivers’ Union attempted to organize the vendor companies and convert them to an employee wage system. Proselytism by appeal, however, was consistently rebuffed by the vendors and the cut-rate distributors, and even after other means less reasonable were devised, the vendor companies remained aloof from any rela tionship with the organized market. Picketing o f the vendors’ primary outlet, the cut-rate stores, began in 1934, and might well have compelled an agreement had it been able to continue unmolested, but injunctions against picketing were secured by the vendor companies. Tw o legal disputes involving these injunctions reached the United States Supreme Court, the more important o f which the union lost. The victory o f the union in the Lake Valley case,4 in which the bill 3 for injunction was dismissed, was greatly overshadowed by the union’s unsuccessful legal defense against Meadowmoor Dairies, Inc.4 4 In their strenuous efforts to force Meadowmoor to conform to the established practices o f the market, the drivers succeeded only in erecting a wall around the Meadowmoor business through which not 42 A new con tract, effective M a y 1, 1 9 3 2 , reduced th e rates by $5 in an sw er to th e dealers* plea fo r a reduction to m eet com p etition. In D ecem ber o f the sam e year the union agreed to an other $5 reduction in base rates. 43 Milk Wagon Drivers’ Union, Local 753 et al. v . Lake Valley Farm Products, Inc. et ah. 3 1 1 U . S. 91. 44 Milk Wagon Drivers’ Union, Local 758 et ah v. Meadowmoor Dairies, Inc., 3 1 2 U . S. 2 87. 4 8 4 5 4 6 ° — 4 2 --------3 14 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY even a peaceful picket could penetrate. The record and decisions o f the courts hearing the case leave no doubt as to the extent and direction o f the violence, but Mr. Justice Reed in his dissent stated: “ There is no finding that violence was planned or encouraged by the union.” W hat moved the membership to violence was undoubtedly the threat to their jobs and income offered by the Meadowmoor com petition and a “ gangster” stigma that had been attached in the minds o f the drivers to that kind o f competition in Chicago. Meadowmoor filed the original bill o f complaint on February 2, 1935, but the final decision o f the Supreme Court was not handed down until February 10,1941, when the Supreme Court o f the United States sustained the lower court’s permanent injunction against picketing. The period o f fluctuating prices and sharp changes in established practices inaugurated by the cut-rate distributors brought distress to the members o f the Pure M ilk Association and the Associated Milk Dealers. In 1933, producers and dealers sought relief through the Agricultural Adjustment A ct in the form o f controlled producer and retail prices, but this proved to be ineffective. Numerous viola tions and widespread dissatisfaction caused the abandonment o f retail price control after a few months and finally resulted in the cancella tion o f the market agreement in early 1935. The various methods devised to control and limit competition, thereafter, eventually led to charges o f violation o f the Sherman A ct and to the indictment o f the entire organized market under that charge. A n titru st Suit in Chicago The antitrust suit in Chicago, probably the most significant legal controversy in the history o f the industry, had a definite influence, direct an4 indirect, obvious and subtle, on many phases o f the Chicago milk business. The case was unique in antitrust history in that it was the first prosecution to be conducted on the principle that all restraints in a given industrial situation should be attacked simultaneously.4 The object o f the Department o f Justice was to 5 assure a free competitive market fo r Chicago milk with one grand action. The indictment charging violation o f the Sherman A ct was handed down by a grand jury on November 1, 1938. Fourteen corporations and associations and 43 individuals were indicted and arraigned before the District Court o f the United States for the Northern District o f Illinois, Eastern Division. The principal defendants were: Ten major distributors selling approximately 65 percent of fluid milk sold in Chicago; 4 6 The Associated Milk Dealers, Inc., dominated by the major distributors; The Pure Milk Association, controlling 80 percent of milk produced on approved dairy farm s; The Milk Dealers’ Bottle Exchange, a corporation engaged in collecting, ex changing, and distributing milk bottles, cans, and other containers used by dis-* 45 A rn old , T h u r m a n : B ottlen ecks o f B usiness, R eynal an d H itch cock , N ew Y o rk , 1 9 4 0 , p. 1 9 2 . _ *0 T h e B orden C o., B ord en -W ielan d , In c., B ow m a n D airy Co., Sidney W a n z e r and Sons, In c., H u n d in g D a iry Co.. C apitol D a iry Co., W e s tern -U n ited D a iry C o., W e ste rn D a iry Co., U n ited D airy Co., and In tern a tio n a l D airy Co. A c tu a lly , these con sist o f on ly seven sep arate organ ization s. COMPETITIVE PRACTICES 15 tributors— dominated and controlled by major distributors who owned 80 percent of stock; The Milk Wagon Drivers’ Union, Local 753,4 75 percent of whose members T were employed by major distributors; The president of the Chicago Board of Health and the chief sanitary officer in charge of the dairy section, board of health. Four complaints were registered against the defendants, all acting together in concert, and charged with each count. In brief, they were: Count one.—The defendants had combined and conspired to fix, maintain and control artificial and noncompetitive prices to be paid to all producers for all fluid milk shipped into Chicago. Count two.—The defendants were charged with conspiring and combining to fix and maintain uniform, arbitrary, and noncompetitive prices for the sale of fluid milk in the City of Chicago. Count three.—The defendants had conspired and combined to hinder and prevent prospective independent distributors from distributing milk; to hinder and prevent existing independent distributors from distributing milk in com petition with major distributors; to hinder and prevent the sale of milk to stores and by stores; and to hinder and prevent any distribution of fluid milk except by the method and manner determined by defendants. Count four.—The defendants had combined and conspired to restrict, limit, and control, and to restrain and obstruct the supply of fluid milk moving in interstate commerce. In addition, the officials o f the board o f health were charged with performing preferential, arbitrary, and capricious action in aid o f the other defendants, and with giving preferential treatment to the Pure M ilk Association by burdening independent producers and refusing to inspect dairy farms in close proximity to approved farms. The period o f time involved in each o f the four counts o f the indict ment began in January 1935 and continued thereafter up to the date o f the indictment, November 1,1938. Since March 2,1935, the Chicago market had not been covered by a Federal marketing license, but on December 15, 1938, 1 week after arraignment in the District Court, the Pure M ilk Association petitioned the Department o f Agriculture for a hearing on a proposed milk-marketing agreement. A fter 2 years o f dilatory proceedings and prolonged legal con troversies revolving principally around the applicability o f the Sher man A ct to the Pure M ilk Association, the United States Supreme Court finally defined the points o f law involved.*8 The case was then 4 ready for trial, but no trial was ever held. Instead, the Government and the defendants came to terms and a consent decree was entered September 16, 1940.4 The defendants named in the complaint 9 included the Associated M ilk Dealers, the Pure M ilk Association, the Bottle Exchange, Local 753, and the officers and agents o f these associations, but excluded the indirect participants in the alleged conspiracy. The decree was written in the same sweeping terms as the indict ment, and thus represented a considerable victory for the Department o f Justice. Inasmuch as the Department o f Agriculture had set up a marketing agreement in Chicago, the relationship between producers and distributors with regard to setting prices, fixing quantities, etc., "A lo ca l o f th e In tern a tio n a l B roth erh ood o f T e am sters, C hauffeurs, W areh ousem en, an d H elpers o f A m erica, an affiliate o f th e A . F . o f L . 48 United States v. The Borden Co., et al. 3 0 8 U . S. 188. 49 C ivil action N o. 2 0 8 8 . C om p lain t filed Septem ber 1 4 ,1 9 4 0 . 16 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY o f milk could no longer be subject to antitrust procedure, but all the restraints, compulsions, coercions, and agreements that might spring up in the shadow o f the marketing agreement were enjoined. Thus, the Pure M ilk Association was enjoined from interfering in the activities o f independents, from interfering in the sale o f milk in Chicago, and from refusing to sell to any distributor because o f his sales policy or price. The Associated Milk Dealers and the major distributors were enjoined from agreeing upon prices to be charged, from interfering with the prices, sales policy, and method o f distribu tion o f any distributor in Chicago, and from interfering in the affairs o f the Pure Milk Association and the M ilk W agon Drivers5 Union, Local 753. The Bottle Exchange was enjoined from committing any acts o f favoritism, such as delaying the return of, or refusing to return milk bottles to distributors who did not purchase milk at agreed prices. The union was enjoined from attempting to set prices, from pre venting competition for customers, from placing restrictions on store sales, milk depots, vendors, size and type o f container, size and type o f vehicles used, the kind o f dairy products distributed, the manner o f solicitation o f business, the use o f more than one employee on the delivery truck, and the purchase o f the business o f any dairy. The union was further enjoined from denying membership to any qualified driver employed by a distributor because o f price policy, and from hindering by force or violence the delivery o f milk. The union was not prevented from using lawful means to organize the vendors. M ilk Prices N ature o f Demand for M ilk Data on consumption and prices o f fluid milk are inadequate to permit even a rough approximation o f the interrelationship. In the opinion o f some experts, changes in milk prices appear to have little effect upon consumption, particularly if the retail-price change is relatively small. Distributors and producers generally, but not con sistently, hold a similar view. Some useful work, however, has been accomplished by numerous persons outlining the broader and more important aspects o f the problem o f consumption. The per capita consumption o f milk in Chicago, as in the United States as a whole, is well below what health authorities consider to be minimum standards. The deficiency o f fresh-milk consumption is most prevalent among families in the lower income levels, many o f whom buy no fresh milk at all. A decline in income levels gen erally results in a decrease in milk consumption and, conversely, a rise m income levels brings about an increased demand for milk. An increase in middle and upper income levels, however, appears to result in very little increase, i f any at all, as compared with that which follows a rise in the income o f consumers in the lower brackets. Secondary effects o f a declining income level which is not followed by a commensurate decline in milk prices are noticeable in the in crease in store buying (assuming a price differential) and in the use o f substitute milk products. Continued high prices or continued low prices eventually exercise a telling effect at least on type o f consumption. A relatively high M IL K PRICES 17 price for fresh milk diverts many consumers from having milk de livered to their homes to buying at the store in order to save the difference in price. Other consumers turn to evaporated milk, which is consistently cheaper than fluid milk. There is a large untapped market o f thousands o f families who need and want more milk than they can buy with limited incomes. The experience o f the Chicago relief milk program, despite its lim ited scope, throws important light on this problem. Over 60,000,000 quarts, or almost 8 percent o f the total amount o f fluid milk consumed, was distributed as relief milk in Chicago during 1940 and 1941. In addition to relief recipients there is probably a considerable number o f potential consumers in Chicago who could be drawn into the mar ket by lower prices, possibly without disturbing the prices paid and services received by those able to pay. The Department o f Agriculture has stated that— There is no reason why prices cannot be classified on the basis of the con suming groups and of different services attached to different segments of the supply. Thus, while a small reduction in the general retail price of milk might not lead to an appreciable expansion of consumption, a somewhat larger reduction reflecting in part lessened processing and service applied to the lowincome market where milk consumption is particularly inadequate might increase total consumption considerably and even increase the returns to producers over those obtained under the traditional pricing system.6 0 Such an endeavor, supported by a well-organized educational cam paign, would possibly be very effective in increasing consumption and the results in improved health o f children and adults who at the pres ent time do not receive proper nourishment might be well worth the cost o f such an undertaking. T rend o f Prices Paid by the D istributor In Chicago, during the period from 1923 to 1930, the reported prices paid to farmers for fluid milk (class I ) fluctuated between $2.25 and $2.67 per hundredweight (approximately 5 to 6 cents per quart). In 1931 the price declined only slightly, but the decline continued in 1932. The fluid-milk price could not be maintained in the face o f the sharp decline in manufactured-milk prices during this depression period and the Pure Milk Association was finding increasing difficulty in meeting the competition o f new or irregular sources o f supply. B y the early part o f 1933 the price had reached the lowest level in the history o f the Chicago market, $1.45 per hundredweight (a little more than 3 cents per quart). (Chart 2.) Faced with this situation, dairy farmers saw in the Agriculture Adjustment A ct o f 1933 a possible solution. Producers and dealers therefore worked out an agreement for the Chicago market and pre sented it to the Department o f Agriculture on May 12, the day the A ct was signed. The agreement finally put into effect in August 1933 provided that producers receive $1.75 per hundredweight for fluid milk and set resale prices and a schedule o f fair trade practices. The agreement was accepted voluntarily by all dealers who could be induced to sign it and was imposed upon others by the issuance o f a blanket license covering all handlers in the market. 80 U . S. D epartm en t o f A g ricu ltu re, Yearbook o f 1 9 4 0 , F arm ers in a C h an gin g W o rld , p. 8 39. 00 CHART t LABOR ASPECTS OF THE C H IC A G O M IL K IN D U S T R Y PRICES OF FLUID MILK IN THE CHICAGO MARKETING AREA SSS O MICE REPORTED N W ENTW PRICES ARE R H O EPORTED A SIM PLE A E W RAPE HAS BEEN U SED Smtc« : AGRICU RAL M ETIN SERVICE, DEPARTM LTU ARK G ENT OF AG RICU RE LTU M ILK PRICES 19 The resale-price-fixing policy o f the agreement was subject to so much attack and the violations were so numerous that it was finally abandoned and a new policy was put into operation in January 1934. Under the new plan, agreements were to be made between producers and the A . A. A ., and distributors would be licensed to live up to the agreement. Not only were resale prices left unregulated, but the producers’ prices were to be fixed with greater attention to active com petitive levels. The price to farmers for fluid milk was set at $1.75 per hundredweight and the spread between the price o f fluid milk and manufactured milk was narrowed. This agreement remained in effect until March 2, 1935, when it was canceled at the request o f the Pure Milk Association. B y this time prices to farmers were almost at the 1931 level. From then until September 1939 there was no A . A . A . control in Chicago. The general improvement in business conditions in 1937 brought the farmers’ prices back to the 1931 level o f $2.32 per hundredweight, but from this point prices consistently declined under the strain o f cut-price competition within Chicago and the antitrust indictment, until in June 1939 the price was equal to the low point o f 1933 (a little over 3 cents per quart). In December 1938, the Pure Milk Association petitioned the Depart ment o f Agriculture fo r a hearing on a proposed milk-marketing agreement and the resulting Federal marketing order went into effect September 1,1939. B y November 1939 the price had advanced to 4% cents, and after that time was below 4 cents only during one brief period in 1940. The year 1941 was one o f consistently rising prices for fluid milk. B y the end o f that year the farmer was receiving the highest price in the entire history o f the industry, 6% cents per quart. (See chart 2.) This increase in price was due, in large part, to the stimulus o f largequantity “ lend-lease” buying o f manufactured milk products,5 which 1 may be expected to increase during the war period. Whether or not the war and post-war period will necessitate a significant curtailing o f milk for the fluid-milk market to meet the need for manufactured milk remains to be seen. A ll distributors are subject to the price regulations o f the marketing order whether their business is purely intrastate or interstate.5 As a 2 consequence o f Federal control o f producers’ prices in Chicago the cut-rate distributors, compelled to pay the same price as other dealers, lost an important competitive advantage which they had enjoyed in an unregulated market and which had contributed so much to their early success. 51 P rin cip ally evaporated , condensed, an d powdered m ilk . 62 In the case o f United States v. Wrightwood D airy Co. ( 1 0 U . S. L a w W eek , p. 4 1 9 2 ) , Feb. 2, 1 9 4 2 , the Suprem e C ourt s t a t e d : “ W e conclude t h a t th e n a tion al pow er to regulate th e price o f m ilk m ovin g in te rsta te in to th e Chicago, 111., m ark etin g area, extends to such con trol over in tra sta te tran sa ctio n s there as is necessary and ap prop riate to m ake th e regu lation o f th e in tersta te com m erce e ffe c tiv e ; an d th a t it includes a u th o rity to m ake lik e regu lation s fo r th e m ark etin g o f in tra sta te m ilk w hose sale and com petition w ith the in tersta te m ilk affects th e price stru ctu re so as in tu rn to affect ad versely th e congres sional regu lation .” 20 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY T re n d o f Standard R etail P rices5 3 Standard retail prices are the prices established and announced by the larger distributors in the market. Prior to 1932 practically all milk in the Chicago market was sold at these prices. From the middle o f 1923 until the beginning o f 1931, the retail rice o f fluid milk in Chicago was 14 cents a quart for both store and ome-delivered milk. A fter a 1-cent drop in January 1931, store and home-delivered prices held around 13 cents for the entire year. It was not until 1932 that retail prices o f milk, under the pressure o f competi tion o f distributors and vendors who were selling milk below the “ standard” price, began a downward spiral. B y the early part o f 1933, the standard price o f fluid milk had dropped to 9 cents a quart, but the A . A . A. market agreement set the retail price at 10 cents a quart in August o f that year and before the end o f the year increased the price to 11 cents. There was no differential between the price o f home-delivered milk and milk bought in stores until 1934. In January o f that year, as a result o f competition from roadside stands and cut-rate stores, the chain stores started charging 1 cent less per quart than the homedelivered price. The entire year was one o f unstable prices with store prices o f milk reaching as low as 6 cents a quart and home-delivered prices falling to 8 cents a quart. B y the latter part o f 1935, a 1-cent differential between regular store and home-delivered price had been generally established, and in 1938 this differential was increased to 2 cents per quart, where it remained until early in 1940. In January 1940, immediately after a 2-cent increase to 13 cents per single quart fo r home-delivered milk, the larger dairies introduced multiple containers, half-gallon and gallon, for home deliveries. A t the same time, the Meadowmoor D airy announced that its milk would be available at stores for 8y2 cents per single quart, a price which other distributors were compelled to meet in store selling. During most o f 1940 5 the tjqheal prices to Chicago consumers for milk delivered to 4 their homes was 13 cents per single quart, 22 cents per half-gallon, and 40 cents per gallon.5 In February 1940, Chicago dealers reported 5 a 10- to 15-percent increase in dollar sales in the three areas where they first introduced multiple containers.5 Part o f this increase in 6 sales may have been due to a shift from store or depot to homes, al though during most o f 1940 the store price remained more than 4 cents below the home-delivered price. In the summer o f 1941 the established retail price o f milk again rose 1 cent and another increase o f 1y2 cents, effective in the fall, brought the standard price to 151^ cents a single quart for homedelivered milk. A t the same time, stores raised their prices generally E 88 T h e discu ssion o f prices in th is section o f th e report is based on the re ta il prices released m o n th ly by th e A g ric u ltu ral M ark etin g Service o f th e D ep artm en t o f A gricu ltu re. A ccord in g to th e A g ric u ltu ra l M ark etin g Service, these prices are based on v olu n tary reports o f th e larger distributors in Chicago and represent th e established or p revailin g prices. T h ey do n o t reflect the prices o f m ilk sold below the established price. M T h e U n iv ersity o f Illin o is, D ep artm en t o f A g ricu ltu re E conom ics, estim ated th a t, by 1 9 4 0 , 52 percent o f th e com m ercial m ilk on retail routes in Chicago w as sold in ga llo n - and h a lf-g a llo n -lo t qu antities (eith er in qu art con tain ers or m u ltiple c o n ta in e rs ). A . E . 1 5 7 5 , F ebru a ry 1 9 4 1 , p. 28. 85 D ep artm en t o f A gricu ltu re, A g ricu ltu re M ark etin g Service, F lu id M ilk P rice R eport, m o n th ly release. 58 C hicago Federal M ilk M ark et A d m in istra to r, R eporter, February 1 9 4 0 . M IL K PRICES 21 to 13 or 1 3 ^ cents.5 A ccording to the distributors, the increase in 7 retail prices was necessitated by the increase in prices to farmers, which began in the summer o f 1940 and was still continuing. Tendency for A ctual Price to D eviate From Standard Price Beginning in the early 1930’s, actual prices o f milk delivered by some distributors to homes as well as to cut-rate stores were below the standard price, but no detailed information is available on the trend o f such prices. During the winter o f 1941-42, however, data were obtained by the Bureau o f Labor Statistics5 on actual prices o f “ grade A ” m ilk 5 8 9 sold in quart bottles6 by 152 drivers and 164 vendors. Milk de 0 livered in half-gallon and gallon containers was not included in the data. Selling milk to different customers at different prices per quart is not unusual in the Chicago market. The giving o f quantity discounts is an accepted practice among both drivers and vendors, having been encouraged since January 1940 by the need o f meeting the competition o f half-gallon and gallon containers. During the winter o f 1941-42, prices per quart received by drivers fo r home-delivered milk ranged from 12 to 15y2 cents, while vendors sold milk to homes at from 11 to 1812 cents per quart. (Chart 3.) 87 The ch ain -store price w as 13 cen ts a quart. 68 T h e B u reau ’ s survey o f vendors and drivers in th e Chicago m ark et w as m ade during N ovem ber and D ecem ber 1 9 4 1 and J an u ary 1 9 4 2 . T h e basic d a ta fo r th is stu d y w ere secured by field rep resentatives o f th e B ureau from 2 p rim ary s o u r c e s : ( 1 ) F ro m 36 m ilk distribu tors in th e Chicago m ark et, an d ( 2 ) from 1 6 8 d rivers an d 1 8 0 vendors en gaged in m ilk d istribu tion in the C hicago m arket. B efore u n dertak in g th e survey, officials o f th e B ureau o f L a bor S ta tis tic s discussed th e stud y w ith officials o f th e Illin o is S ta te D ep artm en t o f L abor, in d u stry trade association s, M ilk W a g o n D riv ers’ U nion L o cal 7 5 3 , th e P u re M ilk A sso cia tio n , th e Chicago B oard o f H ea lth , th e A g ric u ltu ra l A d ju stm e n t A d m in istra tio n , the C hicago Federal M ilk M ark et A d m in istra to r, an d w ith other in dividu als interested in th e m ilk in d u stry in Chicago. i?rom these d iscu ssions a great deal o f in fo rm a tio n w as secured w hich w as extrem ely help fu l in the lau n ch in g and conducting o f th e survey itself. In choosing th e firm s to be included in th e stud y, a lis t o f a ll firm s ( 1 7 3 in num ber) w as first secured fro m a Chicago B u siness D ire ctory. W ith th e assistan ce o f th e F ederal M ilk M ark et A d m in istra to r’ s office in C hicago th is lis t w as reduced to 1 4 4 distribu tin g firm s, a fter elim in atin g those no longer in business, ow ned an d operated by a fa m ily , too sm a ll, or otherw ise n o t rep resentative. F rom th is lis t 4 5 firm s w ere selected by th e fo l low in g m e t h o d : T h e 3 la rg e st distribu tors in th e C hicago m ark et w ere in c lu d e d ; th e rem ainder w ere divided into groups o f firm s op erating 1 rou te, firm s w ith 2 to 6 rou tes, a n d firm s w ith 7 or m ore routes. A rep resentative sam ple w as then chosen from each o f th ese groups. V is its o f th e B u reau ’ s field rep resentatives to these 4 5 firm s resulted in obtain in g 36 u sable s c h e d u le s ; 1 firm w a s ou t o f bu siness, 1 d istribu ted cream on ly, 3 refused to cooperate, an d 4 w ere s tric tly fa m ily businesses. T h e 3 6 distribu tors scheduled cu rren tly handle th e m a jo r p ortion o f th e m ilk in th e C hicago m ark et, and are estim ated to represent ap proxim ately 75 percent o f a ll w orkers en gaged in th e m ilk -d istrib u tin g in d u stry in Chicago. T h e prin cipal d a ta secured fro m th e d istribu tors d ealt w ith drivers since th e firm s h ave lit t le in fo rm a tio n about vendors. T h e 1 6 8 drivers w ere chosen a t random fro m the pay rolls o f the 36 firm s and th e 1 8 0 vendors w ere taken a t random from a C hicago B oard o f H e a lth lis t o f ven dors and com panies from w hom th e y purchased m ilk. E x cept fo r th e possible underrepresen tation o f ‘ ‘ w holesale drivers,” both groups are considered rep resen tative o f th e in du stry. The vendors and drivers w ere interview ed in th eir hom es by B u reau field agents. M a n y firm s w ere u n w illin g to su p ply in fo rm a tio n on t o ta l value an d qu an tity o f sales an d on actu al hours w orked by drivers. T h ey considered sales d a ta too con fidential to release and th ey claim ed to h ave no accu rate records o f a ctu a l hours. A few vendors an d drivers also w ere relu cta n t to give som e o f the in fo rm a tio n requested. D espite th e lack o f com plete cooperation, how ever, th e resu lts o f th e survey m a y be taken to present a n adequate picture o f the portion o f th e in d u stry surveyed d u ring th e w in ter o f 1 9 4 1 -4 2 . F u rth er d e ta ils regarding scope an d m ethod o f survey an d copies o f questionnaires used m a y be secured by ad dressing th e U . S. D ep artm en t o f L a bor, B u reau o f L abor S ta tistic s. W a sh in g to n , D . C. 89 T h e term “ grade A ” m ilk is here used to design ate stan d ard fresh m ilk an d excludes hom ogenized, v ita m in D , an d all other “ specia l” m ilk s. In practice, there are no “ grad es” o f fresh m ilk sold in the Chicago m ark et. A ll m ilk en terin g th e Chicago m ark et carries th e design ation “ grade A .” 80 A lth o u g h som e m ilk w as delivered to stores in paper con tain ers, it w as n o t included in th is a n aly sis. R elief m ilk w as also excluded. 4 8 4 5 4 6 ° — 4 2 --------4 to to ACTUAL PRICES RECEIVED BY SELECTED VENDORS AND DRIVERS FOR GRADE "A" MILK IN ONE QUART BOTTLES DELIVERED TO HOMES 90 80 “W ST" — .90 901 — 80 80 70 70 60 60 50 | VEMOORS DELIVERED TO STORES 50 I DRIVERS 70 I4J CE N TS PER QUART CENTS PER QUART g " LABOR ASPECTS OF THE CHICAGO MILK INDUSTRY CHICAGO, WINTER, 1941-1942 M IL K PRICES 23 Variations in price were more common in sales o f milk delivered to homes than in sales to stores. A s compared with the drivers, a larger proportion o f vendors varied the price according to the customer.6 1 Three-fourths o f the vendors who delivered to homes and approxi mately one-third (32.5 percent) o f those who delivered to stores, sold milk for more than one price per quart. Less than two-fifths (36.4 percent) o f the drivers serving homes and only 13 percent o f those serving stores received more than one price for a quart o f milk. For the m ajor portion (60.6 percent) o f their milk delivered to homes in quart bottles, drivers received the standard price o f 15i/2 cents per quart, while vendors received the standard price for only 2.2 per cent o f their home-delivered milk. The average price o f all milk delivered in quart bottles by drivers to home trade was 15 cents and the average for vendors was 13.7 cents a quart. The standard price o f 12 cents per quart bottle was received for 85.1 percent o f the milk delivered to stores by drivers and for 33.1 percent o f the milk sold to stores by vendors. There was only a slight differ ence between the average price received by drivers and vendors for milk sold in quart bottles to stores (11.9 cents and 11.5 cents, respec tively). During this same period, roadside stands just outside the marketing area were selling pasteurized milk for as little as 11 cents a single quart, 21 cents a half-gallon and 39 cents a gallon. Cost Components in th e Price o f M ilk The retail price o f a quart o f milk must include the costs o f buying raw milk from the farmer, transportation costs to the distributor, the distributor’s pasteurization and other plant costs, and delivery costs. The farmer producing for the Chicago market was receiving approxi mately 6y2 cents per quart in December 1941. According to estimates o f distributors, the cost o f transporting milk to the plant plus the cost o f processing amount to somewhat less than 2 cents a quart, with ad ministrative costs amounting to possibly an additional quarter o f a cent per quart. This means that m December 1941 the cost o f milk at the distributors’ platforms ready for delivery was approximately 8y2 cents a quart. The difference between this price o f 8y2 cents and the retail price represents primarily the cost o f delivery plus any profit which the distributor, vendor, or retail store may be able to realize. Cost o f de livery includes primarily the wages o f drivers, reliefmen, and certain other employees, social security contributions, special delivery costs, and maintenance and depreciation on trucks. It is estimated that the wages and commissions o f drivers delivering to homes typically amount to about 4 cents per quart o f milk or other equivalent unit de livered. This wage, it should be noted, is not solely fo r delivery o f milk, but covers other services rendered by the driver, such as sales promotion, collections, and bookkeeping. Cost o f delivery to stores is considerably lower than that for home delivery, but the cost to the consumer is augmented by the store’s han dling charges. 911 6 4 vendors an d 1 5 0 drivers delivered m ilk to hom es an d 1 5 1 ven dors an d 1 4 6 drivers delivered m ilk to stores. 24 LABOR ASPECTS OF THE CHICAGO M ILK INDUSTRY Despite the roughness o f these estimates it is apparent that a very substantial portion o f the retail price obtained for a quart o f milk is for delivery cost. Consequently, any improvement in the efficiency o f distribution should result in an appreciable saving to the consumer in the form o f lower retail prices. More efficient distribution might be accomplished by “ every-other-day” deliveries, eliminating special de liveries, or consolidation and better planning so as to secure shorter and more concentrated routes. A ny possible gains o f this type, how ever, must be balanced against a possible reduction in the quality o f consumer service and the threat o f serious unemployment among workers engaged in milk delivery. Increase in Importance o f Store D istribution According to the best available information it seems evident that well over half the fluid milk sold at retail in Chicago at the present time is distributed through stores. The shift from home delivery to store distribution has taken place largely during the past decade. In 1929 only about one-fifth o f all fluid milk sold to consumers in Chicago was distributed through stores, but by 1939 the proportion had increased to 46 percent and in 1940 approximately half o f all milk retailed in Chicago was bought from stores.6 Sales data submitted to the Bureau 2 o f Labor Statistics by the three largest distributors in Chicago show an increase in store sales from 29 percent in 1936 to 51 percent o f total fluid milk sold at retail in the winter o f 1940-41. None o f these esti mates includes fluid milk sold at wholesale to restaurants, hotels, hos pitals, and institutions. I f this were added to the milk wholesaled to stores, the percentage o f milk being delivered to homes would probably be less than 40 percent o f the total fluid milk distributed in the Chicago marketing area. The increasing importance o f store sales in Chicago is indicated by the information concerning number o f store routes operated which was obtained from the distributors included in the Bureau’s survey. O f 25 distributors who had been in business since 1932, only 13 had store routes in 1932 and the number o f routes operated was only 61. B y 1939, 15 o f the 25 distributors operated 296 store routes; in 1940, 17 o f them operated 302 store routes; and in 1941 the number o f store routes o f these 17 distributors increased to 306. In December 1941, only 8 o f the 25 distributors had no store routes. (Table 1.) The use o f paper containers instead o f glass bottles may play an im portant role in the growth o f store sales. Prolonged legal controversy delayed the introduction o f paper containers in Chicago until October 1940, but the use o f the new containers seems to have grown quickly since that time. Milk in paper occupies less space and weighs con siderably less than milk bottled in glass. These advantages are im portant to the distributor, to the store, and to the consumer. Despite the controversy over the relative costs o f paper and glass bottling, there is reason to believe that, with consumer resistance declining, the use o f paper containers will eventually result in a further increase in store sales. During the war period, however, the supply o f paper containers may be scarce. 62 E stim a te s from U n iversity o f Illin o is, A g ric u ltu ra l E x p erim en tal S ta tio n bu lletin s and D epartm en t o f A g ric u ltu ra l E conom ics. 1 9 3 9 and 1 9 4 1 . 25 M ILK PRICES The trend from home deliveries to store sales o f milk is not peculiar to the Chicago market, but is characteristic o f most o f the large markets. Store sales first developed as an important part o f total sales in Boston and New York. Chain stores helped to bring about the transition, having changed the buying habits o f a large body o f consumers. Many persons who form erly bought from stores operat ing on a “ credit and delivery” system began buying from those on a “ cash and carry” basis in order to secure lower food costs.6 3 T able 1.— Total number of routes and number of store routes operated by drivers for 25 identical distributors in Chicago, 1982-^1 Routes serving stores exclu sively A ll routes operated by drivers1 Year 1939 1030 1940 1941 _ _ _ ____ ___________ ______ _______ ___ Number of firms with 1 store route or more 4,144 2,661 2,288 2,469 13 15 17 17 Number of store routes 61 296 302 306 i Includes store routes, home routes, and routes serving both stores and homes. A n important factor tending to increase the sale o f milk through stores is the price differential between home-delivered milk and that obtained from stores. Store distribution is more efficient than the home-delivery system in the sense that the consumer does not pay fo r certain man-hours o f work, tires, trucks, and gasoline. Store prices o f milk in many cities range from 2 cents to 5 cents lower than rices o f home-delivered milk. Increasing numbers o f consumers ave taken advantage o f the saving. The differential between store and home-delivered price may have been more important in ^ the growth o f store distribution than the absolute level o f store prices. A t this time, however, purchasing at the store may have become a consumer habit which would not be easily broken even i f the differ ential were decreased. W hile it is true that the growth o f the vendor system encouraged the trend toward store distribution, sales o f milk to stores in Chicago at the present time are by no means confined to vendors. On the contrary, the large firms employing drivers have captured much o f the chain-store trade as well as the trade in other retail stores. None theless, the increased efficiency in distribution and the intense com'ition which have resulted in relatively lower prices o f milk to the icago consumer were stimulated for the most part by firms selling through vendors. Present indications are that the trend toward store distribution is growing and probably will continue to grow. Recent restrictions on the sale o f tires may act to encourage this trend by curtailing home E S U niversity o f Illin o is, D epartm ent o f A g ricu ltu ral Econom ics, R eport 9 8 6 , 1 9 3 8 (m im eo g ra p h e d ). “ Scientific stud ies m ade by several colleges and un iv ersities ha ve show n th a t prices a t food chain stores h ave ranged fro m 8 .4 percent to 1 4 .3 percent below th ose o f in dividu al retailers operating in th e sam e cities, th e average price being a t le a st 10 percent lo w er.” 26 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY deliveries. In some cities “every-other-day” deliveries have been in augurated, while in many others plans are being made to reduce the number o f milk wagons. This situation presents a serious problem to the workers, a problem which appears to be technological in character. The change in the method o f distribution from a system by which milk was primarily delivered to homes to one by which most milk is distributed to stores, o f necessity, leads to a displacement o f drivers. The present demand fo r labor resulting from the war effort, however, can be expected to reduce the distress resulting from the transition. Labor Problems in M ilk D elivery The relative importance o f vendors in the Chicago market in terms o f value or quantity o f milk handled could not be determined accu rately in the Bureau’s survey because o f the unwillingness o f most distributors to supply data on sales. Some information is available, however, on the numbers o f vendors and drivers engaged in milk dis tribution in the Chicago market and numbers o f vendor and driver routes operated during recent years. The number o f drivers deliver ing milk in Chicago is estimated at approximately 3,000 and the Chicago Board o f Health lists 700 vendors to whom licenses were issued during 1941. Some o f these vendors did not operate exclu sively in the Chicago market and it is unlikely that all o f them were ever operating at the same time. A ccording to information secured by the Bureau from distributors, the number o f firms serving vendors and the number o f vendor routes operated have gradually increased during the past 10 years. O f the 36 firms covered in the survey only 9 sold through vendors in 1932, and these served 187 vendor routes. B y 1939 fully 21 served vendor routes (numbering 335); 24 served 394 vendor routes in 1940; and 25 served 433 vendor routes in 1941. Similar information was obtained regarding driver routes operated by the 28 firms employing drivers. Driver routes o f these 28 firms declined from 4,144 in 1932 to 2,297 in 1940, but increased to 2,480 in 1941. Thus in 1941 the 36 firms in cluded in the Bureau’s survey were operating 2,480 driver routes and 433 vendor routes. Since evidence from the survey indicates that, in general, a vendor serves fewer customers than a driver, it would appear that the amount o f milk delivered by vendors in the Chicago market was a small proportion o f the total. T ypes o f Trade Served by D rivers and Vendors The sales o f the vendors and drivers interviewed were almost equally divided between retail sales to homes and sales to stores and other types o f trade. Somewhat more than half o f the products handled by drivers were delivered to homes, while vendors distributed a slightly larger proportion o f their sales to stores and outlets other than homes. These proportions may not be applicable to the market as a whole, however, since the Bureau was unable to ob tain the amounts or types o f sales from all o f the firms included in the survey. (Table 2.) 27 LABOR PROBLEMS IN M IL K DELIVERY T able 2 .— Value of sales of milk-wagon drivers and vendors in Chicago, III., by type of trade and type of product sold, during one week, winter 1941-4% Type of trade Num ber serv Grade A milk ing type of trade All other prod ucts Total all prod ucts Drivers Total sales........................................................ 1163 $36,525.23 $18,501.46 2 $55,532.21 Homes................................................................ Stores................................................................. O th er8 .......................................................... .... 147 137 40 19,303.04 16,419.00 803.19 9,300.30 8,341.55 859.61 8 29,096.77 4 24,772.64 1,662.80 Vendors Total sales...................................................... . 180 $42,215.03 $14,774.16 « $57,624.18 Homes................................................................ Stores.................................................................. O th er8 .............................................................. . 164 148 16 20,851.12 21,028.23 335.68 5,448.93 9,124.81 200.42 2 26,665.99 >30,442.09 536.10 1 For 5 additional routes surveyed there was no record of sales. 2 Includes 2 routes with sales totaling $505.52 for which the value of grade A milk and all other products were not reported separately. 8 Includes 2 routes with sales to homes totaling $493.43 for which the value of grade A milk and all other products were not reported separately. 4 Includes 2 routes with sales to other stores totaling $12.09 for which the value of grade A milk and all other products were not reported separately. 8 Includes factories, hotels, restaurants, bakeries, schools, and institutions. « Includes 2 routes with sales totaling $634.99 for which the value of grade A milk and other dairy products were not reported separately. 2 Includes 2 routes with sales to homes totaling $365.94 for which the value of grade A milk and other dairy products were not reported separately. 8 Includes 2 routes with sales to stores totaling $269.05 for which the value of grade A milk and other dairy products were not reported separately. O f the total value o f all dairy products ($55,532) handled during a week by 163 drivers from whom such information was secured, 52.4 percent was delivered to homes, 44.6 percent went to stores, and the remainder to other types o f trade, such as factories, schools, hotels, and institutions. Over half (52.8 percent) o f all products ($57,624) handled during a week by 180 vendors was sold to stores and less than 1 percent was distributed to factories, institutions, and other types o f trade. Characteristics o f D rivers and Vendors The typical driver distributing milk in Chicago in the winter o f 1941-42, according to the information received from interviews, was about 42 years old, and had been a milk-wagon driver for nearly 15 years. H e had served his present employer for more than 11 years. The typical vendor was approximately the same age, but had been a vendor fo r only about 4 years. The ages o f drivers and vendors ranged from under 25 years to over 60. A greater percentage o f vendors (45.3) than o f drivers (40.7) reported ages below 40 years, but 25.6 percent o f the vendors were 50 years or older as compared to 13.7 percent o f the drivers. (Table 3.) 28 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY T able 3.—Distribution of milk-wagon drivers and vendors by age, Chicago, winter 1941-4% Drivers Vendors Age Num ber Under 25 and 80 and 32 and 34 and Simple percentage Cumula tive per centage Number Simple percentage Cumula tive per centage 25 years............................. under 30 years................. under 32 years_________ under 34 years................. under 36 years................. 2 13 6 11 10 1.2 7.8 3.6 6.6 6.0 1.2 9.0 12.6 19.2 25.2 4 18 12 9 15 2.2 10.1 6.7 5.0 8.4 2.2 12.3 19.0 24.0 32.4 86 and under 38 years................. 88 and under 40 years.. _ 40 and under 41 years. __ 41 and under 42 years. __ 42 and under 43 years................. 12 14 4 6 7 7.2 8.3 2.4 3.6 4.2 32.4 40.7 43.1 46.7 50.9 13 10 4 8 5 7.3 5.6 2.2 4.5 2.8 39.7 45.3 47.5 62.0 54.8 43 and 44 and 45 and 46 and 47 and under 44 years................. under 45 years................. under 46 years................. under 47 years................ under 48 years................ 8 8 11 11 5 4.8 4.8 6.6 6.6 3.0 55.7 60.5 67.1 73.7 76.7 2 7 5 6 8 1.1 3.9 2.8 3.4 4.5 55.9 59.8 62.6 66.0 70.5 48 and under 49 years................. 49 and under 50 years............. 60 and under 55 years................. 55 and under 60 years................. 60 years and over......................... 8 8 14 8 1 4.8 4.8 8.3 4.8 .6 81.5 86.3 94.6 99.4 3 4 25 14 7 1.7 2.2 13.9 7.8 3.9 72.2 74.4 88.3 96.1 Total i__________________ 167 100.0 100.0 179 100.0 100.0 1 Excludes 1 driver and 1 vendor who did not report ages. Over twice as many drivers (54.4 percent) reported from 10 to 20 years o f service as reported under 10 years (25.8 percent). These long periods o f service reflect the reduced rate o f hiring drivers dur ing the past decade. In fact, the number o f drivers reporting less than 10 years o f service is surprisingly large, in view o f the sharp reduction in the total number o f drivers employed by the Chicago milk industry during the years since 1932.64 (Table 4.)6 T able 4.—Distribution of milk-wagon drivers and vendors by total length of service, Chicago, winter 1941-4% D rivers1 Vendors 1 Total length of service Number Simple Cumulative percentage percentage Number Simple Cumulative percentage percentage Under 1 y e a r .. . .......................... 1 and under 2 years.................... 2 and under 4 years.................... 4 and under 6 years.................... 6 and under 8 years..................... 6 3.6 6 11 10 3.6 6.6 6.0 3.6 3.6 7.2 13.8 19.8 14 25 51 23 19 7.8 13.8 28.2 12.8 10.6 7.8 21.6 49.8 62.6 73.2 8 and under 10 years................... 10 and under 12 years................. 12 and under 14 years................. 14 and under 16 years................. 16 and under 18 years................. 18 and under 20 years................. 10 18 18 24 22 8 6.0 10.8 10.8 14.6 13.4 4.8 25.8 36.6 47.4 62.0 75.4 80.2 16 15 3 3 4 1 8.9 8.3 1.7 1.7 2.2 .6 82.1 90.4 92.1 93.8 96.0 96.6 20 and under 25 years................. 25 and under 30 years................ 30 years and over..... ........... ....... 18 10 5 10.8 6.0 3.0 91.0 97.0 3 1 2 1.7 .6 1.1 98.3 98.9 Total..................................... 166 100.0 100.0 180 100.0 100.0 1 Excludes 2 drivers who did not report length of service. 6i See section on M ilk W a g o n D rivers’ U nion, Local 7 53, p. 36. 29 LABOR PROBLEMS IN M IL K DELIVERY Inform ation regarding the number o f years the vendors have oper ated as such, stands in contrast to the length o f service o f the drivers. Over four-fifths (82.1 percent) o f them had operated for less than 10 years, nearly halt (49.8 percent) had operated for less than 4 years, and only about 3 percent (3.4) had operated as vendors fo r 20 years or more. In many cases the vendor’s length o f service dated from the time o f his transformation from a driver to vendor relationship. A l most h alf (87) o f the vendors interviewed had formerly been em ployed as milk-wagon drivers, and 17 others had been connected with the dairy industry in some other capacity. O f the remaining vendors, 11 had been delivering other products, 8 had been salesmen, 10 had been mechanics or maintenance men, 11 had been clerical workers, and the remaining 36 represented almost as many other occupations. The distributions o f drivers and vendors by length o f association with present distributor follow the same patterns as the distribu tions by length o f total experience. The drivers show longer periods o f continued association than the vendors. (Table 5.) A study o f the individual reports indicates that a larger proportion (72 percent) of vendors had made no change in source ox supply as compared with drivers who had remained with the same employer (62 percent). This difference, however, appears to be determined primarily by the relatively snorter life o f the vendor system, since an analysis o f changes made during the past 10 years reveals that the proportion o f vendors who changed sources o f supply was larger than that o f driv ers who changed employers. T able 5.—Distribution of milk-wagon drivers and vendors by length of service with present distributor, Chicago, winter 1941-42 D rivers1 Length of service with pres ent distributor Number Simple per centage Vendors Cumula tive per centage Number Simple per centage Cumula tive per centage Under 1 year................................. 1 and under 2 years___________ 2 and under 4 years.................... 4 and under 6 years.................... 6 and under 8 years.................... 8 9 12 15 16 4.8 6.4 7.2 9.1 9.6 4.8 10.2 17.4 26.5 36.1 23 41 49 17 15 12.8 22.8 27.3 9.4 8.3 12.8 35.6 62.9 72.3 80.6 8 and under 10 years.................. 10 and under 12 years................. 12 and under 14 years................ 14 and under 16 years................. 16 and under 18 years................. 10 19 24 16 12 6.0 11.5 14.6 9.6 7.2 42.1 63.6 68.2 77.8 85.0 15 7 6 2 4 8.3 3.9 2.8 1.1 2.2 88.9 92.8 95.6 96.7 98.9 18 and under 20 years 20 and under 25 years................. 25 and under 30 vears_________ 3ft years and over _ _ _ _ _ 8 11 3 3 4.8 6.6 1.8 1.8 89.8 96.4 98.2 2 1.1 98.9 100.0 100.0 166 100.0 100.0 180 100.0 100.0 Total.................................... 1 Excludes 2 drivers who did not report length of service. Am ong the several factors making for continuity o f employment or source o f supply, the practice o f selling dairy products by brand name probably exerts the strongest influence. Vendors and drivers are reluctant to abandon the product name upon which their routes were built. Furthermore, conditions o f employment under a stand ard union agreement tend to be equalized throughout the market. A 30 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY clause in the union contract forbids “ stripping the route” fo r two years after termination o f employment, and it is not improbable that a study o f contracts signed by vendors and distributors would reveal a similar restriction. W orking Conditions o f D rivers and Vendors Function .— The Chicago “ milkman,” whether an employee or ven dor, performs the function o f bringing the product from the loading platform o f the distributor to the household doorstep or store re frigerator, either by wagon or truck. In addition, the “ milkman” is the sole point o f contact between the industry and the customer, and as such he must solicit the trade, sell the product, bill the cus tomer, collect his receipts, adjust complaints, and in general keep the customer and distributor satisfied. The performance o f this composite function has been made more difficult by the inclusion in the milkman’s sales o f an array o f products other than the classic grade A milk. These other dairy products consist o f vitamin D , homogenized, soft-curd, and 4-percent milk, flavored milk, buttermilk, several grades o f sweet cream, sour cream, certified milk, cottage cheese, butter, eggs, and numerous special prod ucts. One large dairy in Chicago sells 30 dairy products, which, packed in various sizes and types o f containers, amount to over 90 different packages. The 1-quart bottle o f grade A milk, however, is still the prm cipal item in the list and the storm center o f competition. Custom and tradition have formulated two practices, both instituted during the days o f inadequate refrigeration which make the delivery job more hazardous than it would ordinarily be. The practice o f daily delivery often carries the milkman into harsh weather and other d if ficulties to place the bottle on the doorstep, while early-morning deliv ery is accomplished only by some work being done in the dark. To be sure, these traditional practices have built for the milkman a niche in American folklore, but they have also subjected him to ailments and accidents beyond the minimum hazards o f the job itself. The daily routine o f the Chicago milk-wagon driver begins around 4 :4 5 a. m., which is the earliest starting time permitted by the union contract. The driver loads his wagon or truck at the plant door with the items ordered on the previous afternoon, and after icing his load, begins his deliveries after 5:15 a. m.6 Deliveries and collections oc 5 cupy him during the balance o f the morning, and often extend into the early afternoon. H e reports back to the station where he unloads his extras, makes out tickets for bottles, jugs, and cans returned, lists his collections, which he turns over to the cashier, writes up his daily report, orders his next-day’s deliveries, and unhitches his horse or re fills his gasoline tank. Once a month he must balance his accounts, make out statements, write up a new book and transfer accounts from the old to the new. Legal and economic relations to the distributor.— There is no differ ence between the functions performed by drivers and vendors. The w F o r m a n y years th e union restricted deliveries du ring th e m on th s fro m Septem ber to June to th e s ta rtin g tim e o f 8 a. m ., but th is restriction w as dropped by th e current agreem ent. LABOR PROBLEMS IN M ILK DELIVERY 31 difference lies in the legal and economic relations o f each to the distribu tor. Milk-wagon drivers are employed by dairy firms or corporations and receive a guaranteed wage plus, as a rule, a commission based on weekly or monthly sales. The distributor furnishes the product, the, ice, and the truck or wagon used for delivery, and provides fo r its operation, maintenance, and repair. The driver receives the protec tion or benefits o f such social legislation as workmen’s compensation, old-age insurance, unemployment insurance, etc., which are paid for, at least in part, by the distributing firms. In addition, through the trade union, a driver is afforded a certain security in his job, while his wages, hours, and working conditions are protected by the union contract. A s small businessmen, milk vendors have certain responsibilities o f business ownership requiring them to arrange for the purchase o f the milk and other dairy products in which they deal, as well as pro vision fo r ice or other means o f refrigeration.6 The vendor pur 6 chases milk and other products from the distributor, sells to whoever will buy, and charges whatever the trade will bear. The vendor must carry all the direct and indirect expenses o f distribution; he must provide and maintain his own equipment, hire his own reliefman, helper, or driver,67 and finance the risks o f business. The difference between the cost o f his milk and his receipts, less the expenses o f doing business, is his net income. Part o f this income, theoretically, rep resents payment fo r services rendered, and part is a return on his in vestment and profit fo r risks undertaken. It is probable that the typi cal vendor, in his neglect o f bookkeeping practice, underestimates or disregards his indirect expenses such as bad debts, depreciation, and license fees. The net income o f the vendor plus any personal satis faction he may derive from his status as an independent business man are his compensation for giving up the security o f a guaranteed wage, unemployment insurance, workmen’s compensation, old-age insurance, and trade-union protection. Regularity o f employment and how s o f work .— W hile milk de liveries are subject to day-to-day fluctuations, the fluid-milk industry is not a seasonal industry; the quantity o f sales varies less than 5 percent between the low month and peak month.6 A fairly steady 8 flow o f work is available to those engaged in the distribution o f milk. Although the milk-delivery business is operated largely on a 7-day week plan, the individual drivers and many o f the other employees are required to work only 6 days. The distributing firms usually employ reliefmen, one for each six drivers, who substitute for drivers when the latter are off duty. In contrast to the drivers, the m ajority o f vendors (78.3 percent o f those interviewed) worked 7 days a week; only 20 percent worked 6 days; while the remainder worked less than 6 days a week. Only 13 o f the 180 vendors reported the use o f reliefmen.* 60 M o st o f th e d istribu tors in the su rv ey (8 4 p ercent) furn ish ed p a rt or a ll o f th e ice used by ven dors, m a in ly fo r th e purpose o f assu rin g proper care fo r th eir products. ** O ccasion a lly th e ven dor’s volum e o f business grow s beyond h is ow n cap acity to handle it an d n ecessitates sp littin g th e rou te. In such a n event a ven dor m ay h ire a driver, becom ing, in th e term inology o f th e m ark et, a “ m aster ven dor.” “ V a ria tio n in qu an tity o f a ll fluid m ilk sold in th e C hicago m ark et com puted from F ederal M ilk M ark et A d m in istra to r’s R eports fo r 1 9 4 0 an d 1 9 4 1 . 32 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY The Bureau was unable to obtain information from distributors on actual hours worked by drivers. The union contract provides that drivers work a 9-hour day and a 54-hour week. That actual hours o f drivers often exceed this, however, was indicated from information secured from the drivers who were interviewed. The average num ber o f hours worked by all drivers during the week surveyed, based on memory and not on records, was approximately 56 hours. Similar information obtained from vendors indicated that they worked a somewhat longer week than drivers, the average being a little over 58 hours for the week surveyed. The vendors probably underestimated the number o f hours they worked, since it is doubtful whether they included in the hours reported the time spent by them selves or by members o f their families on bookkeeping at home. The bookkeeping work by drivers tends to be included because much o f it is required by the distributor and is performed on the distributor’s premises during regular working hours. Characteristics o f routes—drivers and vendors.— Drivers and vend ors interviewed in the survey usually served mixed routes, that is routes having both store, and home stops. (Table 6.) Approximately 80 percent o f the drivers and 77 percent o f the vendors interviewed operated this type o f route. A slightly larger proportion (13.9 percent) o f vendors than o f drivers (10.1 percent) delivered to homes only, while the same proportion o f each had store routes exclusively (8.9 percent). Vendor routes, however, wure primarily (62.1 per cent) in residential areas, while drivers’ routes were more evenly distributed between residential and “ other than residential” areas (53.7 percent and 46.3 percent, respectively). (Table 7.) The significant difference in vendor and driver routes was in their length, vendor routes being much longer on the average than driver routes. (Table 8.) Vendors traveled an average o f 37 miles daily (from plant back to plant) to serve their customers, while driver routes averaged only 22 miles. More than half o f the driver routes (53.7 percent) were less than 20 miles in total length, and 15.4 percent were less than 8 miles long. Only 16.7 percent o f the vendor routes were under 20 miles from station to station and less than 2 percent (1.2) were under 8 miles. Nearly one-fifth o f the vendors (19.5 percent) had routes 52 miles or more in total length, while very few driver routes (4.9 percent) were that long. The difference in the length o f route is even more striking when distance from first to last stop is considered separately. (Table 9.) Vendors traveled twice as far as drivers between the first stop and the last (30 miles and 15 miles, respectively). The distance from plant to first stop and last stop to plant was approximately the same fo r both vendors and drivers. Vendors traveled substantially greater distances than drivers on all types o f routes— store, home, and combination (table 9). Vendor routes serving residential areas averaged 40 miles in length, while those in areas other than residential averaged 32 miles. Driver routes were slightly shorter on the average in residential areas than in areas other than residential (22 miles and 23 miles, respectively). (Table 10.) In terms o f the number o f customers, driver routes were much more concentrated than those o f vendors. Despite the relative short 33 LABOR PROBLEMS IN M ILK DELIVERY ness o f their routes, drivers averaged 150 stops daily while vendors averaged 117 stops daily. In residential areas drivers made 160 stops per day to 122 stops by vendors. Both drivers and vendors had more stops per day in the residential areas than in areas other than residential. (Table 7.) T able 6. —Number of milk-wagon drwers and vendors by type of routes operated, Chicago, winter 1941-42 Drivers Vendors Type of route Number of drivers Number of routes Number of vendors Number of routes Total.................................................................. 168 168 180 190 Home stops only............................................ Store stops o n ly ............................................ Combination routes...................................... 17 15 136 17 15 136 25 16 139 26 19 145 T able 7. —Avet'age number of stops per route for drivers and vendors by type of area served, Chicago, winter 1941-4% Vendors 1 Drivers1 Type of area served Number of routes All areas Number of routes Average num ber of stops - ____ __ Residential Other than residential , Average num ber of stops _ 165 150 186 117 _ 93 72 160 138 118 68 122 109 1 Number of stops were not reported for 3 driver and 4 vendor routes. T able 8 . —Distribution of milk-wagon drivers’ and vendors’ routes by length of route from plant back to plant, Chicago, winter 1941-4% Drivers1 Vendors1 Total length of route Number of routes Percentage Number of routes Percentage Under 4 miles.................................................. 4 and under 8 miles....... ............................... 8 and under 12 miles..................................... 12 and under 16 miles................................... 16 and under 20 miles................................... 20 and under 24 miles................................... 3 22 23 23 16 17 1.9 13.5 14.2 14.2 9.9 10.5 1 1 9 10 8 17 0.6 .6 5.2 5.7 4.6 9.8 24 and under 28 m iles. ................................ 28 and under 32 miles................................... 32 and under 36 miles................................... 36 and under 44 miles. ................................ 44 and under 52 miles................................... 52 miles and over........................................... 6 12 12 15 5 8 3.7 7.4 7.4 9.3 3.1 4.9 9 15 15 41 14 34 5.2 8.6 8.6 23.6 8.0 19.5 T o ta l. ................................................... 162 100.0 174 Average length (miles)................................ 22 The lengths of 6 driver and 16 vendor routes were not reported. 100.0 37 34 LABOR ASPECTS OF THE CHICAGO M ILK INDUSTRY T able 9.—Average length of route of milk-wagon drivers and vendors in Chicago, by type of route served, winter 1941-42 All types Home stops only Store stops only Combination home and store stops Length of route Average N um ber length of N um ber Average N um ber Average N um ber Average length of length of length of of routes of routes of routes of routes route route route route ' Drivers Miles Miles Miles Total............................................. 1 162 22 17 24 16 23 1 130 Miles 22 Station to first stop.................. First to last stop....................... Last stop to station...... ............ 162 162 162 3 16 4 17 17 17 6 12 6 15 15 15 4 15 4 130 130 130 8 16 3 Vendors Total............................................. 3 174 37 3 24 39 <18 31 5 132 38 Station to first stop.................. First to last s t o p -.................... Last stop to station.................. 174 174 174 2 30 6 24 24 24 3 32 4 18 18 18 5 17 9 132 132 132 2 32 4 1 Excludes 8 Excludes 8 Excludes 4 Excludes 5 Excludes T able 6 routes for which this information was not reported. 16 routes for which this information was not reported. 2 routes for which this information was not reported. 1 route for which this information was not reported. 13 routes for which this information was not reported. 10.—Average length of routes operated by milk-wagon drivers and vendors in Chicago, by type of area served, winter 1941-42 j Average length of route Type of area served Number of routes Total length Station to first stop First stop to last stop Last stop to station Miles Miles Drivers Miles Miles All areas................................................................... 1 162 22 3 15 4 Residential............................................................. Other than residential........................................ 187 75 22 23 3 3 15 16 4 4 Vendors A ll areas................................................................... 8 174 37 2 30 6 Residential.............................................................. Other than residential........................................ 104 70 40 32 2 3 32 26 6 3 1 Does not include 6 routes for which no length of route was reported. 8 Does not include 16 routes for which no report was made, 14 of which were in residential areas, and 2 of which were in areas other than residential. The vendors’ stops were more remunerative, on the average, than the drivers’ stops. W hen the value o f all weekly sales to each stop was computed, the average value per stop on vendor routes proved to be $2.61 a week and on driver routes $2.28 a week. This difference was due entirely to the influence o f store deliveries. The average value o f sales to each stop on home-delivery routes was the same for both driver and vendor routes ($1.26 a week). F or store stops, 35 LABOR PROBLEMS IN M IL K DELIVERY vendors averaged $26,94 and drivers averaged $23.02 per stop during the week surveyed. (Table 11.) T able 11.—Average value of sales of milk-wagon drivers and vendors in Chicago during 1 week,1 by type of customer, winter 1941-42 Drivers Type of customer (stop) Number of routes Number of stops Vendors Average weekly sales per stop Number of routes Number of stops Average weekly sales per stop Total sales All stops.......................................... Home....................................... Store......................................... 161 145 145 24,080 22,951 1,129 $2.28 1.26 23.02 187 167 162 21,781 20,635 1,146 $2.61 1.20 26.94 185 165 159 21,487 20,353 1,134 $1.94 1.00 18.77 19,963 18,887 1,076 $0.72 .27 8.66 Grade A milk A ll stops.......................................... Hom e....................................... Store......................................... 159 143 142 23,635 22,509 1,126 $1.53 .85 15.12 Products other than grade A milk All stops.......................................... Home....................................... Store......... ............................... 157 140 122 22,749 21,697 1,052 $0.80 .43 8.51 181 149 137 1 Drivers and vendors not included in this table did not report sales data. Vendors’ stops showed a similar excess value per stop in terms o f weekly sales o f grade A milk alone, whether for the home or the store trade. In the case o f products other than grade A milk, drivers sold on the average slightly more per stop (80 cents) than vendors (72 cents). There was not sufficient information available on the total quantities o f grade A milk or other products sold to determine the concentra tion o f routes in terms o f quantity delivered. It would appear, however, that the quantity o f milk and other products delivered by vendors was not proportionate to the length o f their routes. Longer routes involve a greater net expense o f resources in the form o f oil, gas, tires, time, and energy unless the quantity delivered is com mensurate. Centralized control over a large number o f routes is apparently more efficient than individual control over a few routes. Helpers.— Helpers were employed by both drivers and vendors interviewed in the survey, but vendors employed such assistance much more frequently tnan drivers. A significant proportion o f these helpers were 16 years o f age or younger. Their earnings were relatively low. Their duties were relatively simple, consisting pri marily o f watching the milk truck while the driver or vendor made his calls and perform ing other slight tasks. It is not a common practice in the Chicago market for drivers to employ helpers and when they do the helper is usually given a parttime job. O f the 168 drivers interviewed, only 12 employed a total o f 15 helpers during the week surveyed. Two o f these helpers earned 30 cents for a 3-hour day, another earned 50 cents for a 36 LABOR ASPECTS OF TH E CHICAGO M IL K INDUSTRY 7.5-hour day, while 1 was paid 80 cents fo r working an 8-hour day. Weekly pay reported for the others varied from $1 for boys working an hour or so a day to $10 for 1 employed 4 hours a day. The ages o f these helpers varied from 11 years to 54; 8 o f them were 14 years or under, 3 were 16, 2 were 17, and 2 over 20 years. Most o f them started work from 6 a. m. to 8 a. m., and finished their jobs 3 to 5 hours later. None o f the drivers reported paying social security taxes fo r their helpers. O f the 180 individual vendors interviewed, 55 employed a total o f 60 helpers during the week. These helpers worked from 1 to 7 days and from 3 to 72 hours per week, and earned a weekly wage ranging from $1 to $35. Most vendors’ helpers worked 6 or 7 days per week, less than threetenths (28.3 percent) being employed from 1 to 5 days. Only 4 helpers worked less than 6 hours per week, while 13 worked 20 but less than 30 hours, and 17 worked more than 40 hours, most o f these in excess o f 45 hours. There was no very close relation between the amount o f time worked and earnings. F or example, $10 was earned by 2 helpers, 1 o f whom worked 21 hours, the other 42. Similarly, 7 workers earned $5, but their weekly hours ranged from 12 to 35, while 1 worker earning $5.25 worked 45.5 hours. The helpers, employed from 1 to 5 days, worked from 3 to 25 hours, and earned from $1 to $25 per week. These earnings did not vary widely from those o f the 19 helpers working 6 days a week ($2 to $35), or from the 24 working 7 days a week ($3 to $28). No less than 26 o f all the helpers earned $6 or less, while 40 earned $18 or less, and only 10 earned $25 or more. The ages o f the 60 helpers who worked for vendors varied from 14 to 54 years. Only 1 was 14 years, 9 were 15, 9 were 16, 10 were 17, 6 were 18, 4 were 19,12 were 20 and under 25, and 9 were 25 and over. A ll were employed during the early morning hours, usually from 5 or 6 a. m. to 8 or 9 a. m. Only a few o f the vendors reported paying unemployment compensation or old-age insurance for their helpers. M ilk W agon D rivers’ U n io n , Local 753 Jurisdiction .— The M ilk W agon Drivers’ Union, Local 753, is a local o f the International Brotherhood o f Teamsters, Chauffeurs, W are housemen, and Helpers o f America, an affiliate o f the American Fed eration o f Labor. Local 753 extends its jurisdiction over all outside workers employed by Chicago milk dealers and has enlisted virtually all these workers. In addition to those engaged in distributing milk to the consumer, solicitors, adjusters, route foremen, tank men, truckers, and van men are eligible for membership, and are covered by the standard union agreement. Vendors are eligible for membership, but, inasmuch as they are not employees, strictly speaking, they occupy a unique position in the union structure. F or purposes o f wage determination, workers engaged in distribu tion are divided into six classes according to the type o f route covered, type o f trade served, or service performed. B y far the largest cate gory, and the one in which this study is primarily interested, is that o f “ retail routemen,” who sell either entirely to the home trade or on a mixed home and store route. LABOR PROBLEMS IN M IL K DELIVERY 37 “ Store routemen” sell to stores only, and have no home trade. “ Com mission wholesale routemen” sell to the store trade and that part o f the wholesale trade upon which commissions are paid. “ Noncommis sion wholesale men” deliver wholesale bulk milk to institutions, hos pitals, etc., where milk is not resold. “ Assistant route foremen,” or reliefmen, take over either retail or wholesale routes on the routemen’s day off. “ Special,” or extra men, maintain no routes, but are on hand to service special orders or complaints. Trend o f wages.— Local 753 was organized on September 13, 1902. The first printed agreement, establishing a $15 wage scale plus commis sions o f six-tenths o f a cent per p o in t6 was put into effect in A pril 3 1905.*0 B y 1911 a membership o f 1,700 was reported. Base rates 7 rose slowly to $22 weekly by 1918, but rapid increases followed there after ($4 in 1918, $9 in 1919, and $6 in 1920). In 1921 the workweek was first defined in terms o f 6 instead o f 7 days. Further gains in base rates were registered during the twenties (table 12), reaching a high level o f $50 in 1927, while membership steadily increased to 7,400 by 1930.7 Making allowance for changes 1 in the general price level, it is evident that real earnings o f the milkwagon drivers had been increasing at a remarkable rate. The union had won fo r its members important gains from an industry that showed an increasing ability to pay. The increase in the union scale in the form o f additions to the base rate rather than changes in commission rates appeared to press more heavily upon the unit costs o f the smaller dealers.7 Furthermore, 2 the union’s efforts to protect the home-delivery system and the rigidity o f m ilk prices helped to maintain a favorable market for the large, well-advertised distributprs. Wage rates o f the retail routeman tended to follow the level o f prices rather than the level o f employment, falling to a low o f $40 per week during the period between December 1, 1932, and May 1, 1935, and rising thereafter, with but one break, to the $18 scale o f the current agreement (table 12). In 1937, the commission rate o f 60 cents per 100 points above 1,333 points was increased to 75 cents, and an additional 15 cents paid per 100 points in excess o f 4,000 per week, but it is unlikely that total earnings reflected the increase in commission rates. Stren uous price competition, only part o f which was financed by the dealers, led to unofficial reductions at the point o f sale. The burden o f these concessions fell on the routeman. Other out-of-pocket expenses resulting from competition for trade further reduced the drivers’ net earnings and constituted a constant source o f complaint. Negotiations fo r a new contract in 1940 failed to provide agreement on wages before the expiration o f the old contract. A few days prior to May 1, 1940, the organized dealers posted notices in their plants stating that a new wage scale with a base o f $30 was going into effect, and an 8-day stoppage o f work was thereby precipitated. The union refers to this stoppage as a lock-out; the employers term it a strike. Negotiations were resumed after a truce; agreement was 60 See p . 39, fo o tn o te 75, fo r th e cu rrent definition o f a “ p o in t.” 70 M cIn to sh , L. N ., A r b itra tio n B etw een A sso ciated M ilk D ealers, I n c ., an d L o ca l 7 5 3 , 1940. Record o f Proceedings. n W eber, H en ry , Chicago T ribune, Jan u ary 27, 1 9 4 0 . T2C f. C hristenson , C. L ., C ollective B a rg a in in g in C hicago, 1 9 2 9 -3 0 . U n iv ersity o f C hicago P ress, Chicago, 1 9 3 3 , pp. 1 8 2 - 1 8 3 . 38 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY reached on a 54-hour week and a seniority clause in the contract, but no agreement on wages was consummated. Previous to this agree ment there had been no provisions relating to hours o f work or seniority in the union contract. The determination o f the wage scale was then handed over to an arbitration committee. The arbitration hearings7 were held in the summer o f 1940 at a 3 time when a 4 ^ -cen t differential between home and store prices pre vailed, and the argument centered principally about the measures nec essary to decrease this differential so as to preserve home delivery. The dealers repeated a proposal they had been making for many years, call ing for a lower base rate ($30) and a higher commission rate, which, the dealers estimated, would have meant a $10 reduction in total earn ings. This, the dealers maintained, would lead to a lower home price and a revival o f home trade. The union countered this proposal by stating that the differential was primarily due to a low store price which was below reasonable costs, and that a reduction in wages might be used simply to finance this highly competitive store trade. Both parties agreed that the industry’s ability to pay was not an issue.7 4 Presentation o f the evidence o f both parties to the arbitration com mittee occupied 6 weeks. The award o f the arbitrator rejected the dealers’ proposal, but pro vided for a cut o f $4.26 in the base rate to be applied against all the occupations falling under the new 54-hour week. The decision, handed down on September 5,1940, was, by agreement, retroactive to June 1, 1940, an arrangement which necessitated a return by the workers o f wages received since June 1 in excess o f the new scale. The wage scale fixed by the arbitrator remained in effect until May 1, 1941, when the current agreement, restoring the base rate to $ 4 8 , became effective. T able 12.— Union wage rates for retail routemen, Chicago, 1920-41 Basic rate 1 per week M ethod of determina tion ______ Apr. S , 1024 O Apr. 30, 1027 ___________________________________ Apr. 30, 1032 N n v. 30, 1032 _________________________________ Apr. 30, 103.1 ______ A pr. 30, 1936 _____________________________________ $41.00 45.00 50.00 45.00 40.00 41.00 Negotiation. D o. D o. Do. Voluntary reduction. 1935 arbitration award. 1036, tn Ont. 31, 10.36 ______ _________________________ N n v. 1, 1036, tn Apr. 30, 1037 _________ May 1, 1037, tn A pr. 30, 1 0 3 8 _____________________________________ May 1 , 10.33, tn Apr. 30, 1040 ___________________ ______________ .T a 1, 1040,2 tn Apr. 30, 1041 __________________________________ im May 1 , 1941, onw ard __________________ _______ 42.50 43.00 45.00 48.00 43.74 48.00 Period in effect May 1, May 1, May 1, May 1, 1090, tn 1024, tn 1027, tn 1032, tn D a p 1, 1032, t.n May 1, 193.1, tn May 1, D o. D o. Negotiation. D o. Arbitration. Negotiation. 1 Commission rates varied during this period. 2 Rate for month of M a y not determined; arbitrator’s award retroactive to June 1. Sources: Federal Trade Commission, op. cit., pp. 16-17,1940, Arbitration Proceedings, and current agree ment. Principal features o f current agreement.— The current agreement covers the period from May 1,1941, to A pril 30,1943, but the matter o f wages and hours may be opened for negotiation 60 days prior to May 1, 73 A r b itra tio n betw een th e A sso ciated M ilk U nion. L ocal 7 5 3 . 1 9 4 0 , Record o f P roceedings. 74 Ibid., p. 5197 . D ealers, In c., an d M ilk W agon Drivers* 39 LABOR PROBLEMS IN M IL K DELIVERY 1942. The follow ing wage scale is embodied, covering all the occupa tions under the jurisdiction o f Local 753: C lassification B ase rate per w eek Retail routemen---------------------------------------------------------------- $48.00 47.00 Inexperienced men_______________________________________ Route foremen------------------------------------------------------------------ 55.00 Assistant route foremen---------------------------------------------------- 53. 00 Solicitors or adjusters--------------------------------------------------------- 55.00 Store routemen----------------------------------------------------------------- 48. 00 Commission wholesale routemen__________________________ 49. 50 Special and extra men------------------------------------------------------- 47.00 Truckers and van day men------------------------------------------------- 52.00 Truckers and van night men---------------------------------------------- 53. 00 Tank day men------------------------------------------------------------------ 52. 00 Tank night men--------------------------------------------------------------- 53. 00 Noncommission wholesale men------------------------------------------ 56.26 Commissions for retail routemen are computed at the rate o f 75 cents per 100 poin ts7 in excess o f 1,333 and 90 cents per 100 in 5 excess o f 4,000 points. The same rates apply to commission wholesale men, except that the base is set at 2,000 points. The commission on butter sold at retail is 1 cent per pou n d; on eggs, 1 cent per dozen; on cheese, 1 cent per jar. The unionized dealers operate under the principles o f a union shop; that is, they may hire “ members o f the union or those who will become members within 30 days, subject to acceptance by the mem bership.” The usual initiation fee is $100, and annual dues are set at $72. Departmental seniority, based upon length o f service, pre vails in rehiring and lay-offs, “ provided that preference with respect to service shall not interfere with the selection o f competent drivers properly qualified to serve the types o f trade involved.” “ Stripping the route” by discharged drivers is prohibited.7 * 6 9 7 Retail routemen and store routemen work a 6-day week o f 54 hours, including time spent at lunch and on book work. Actual hours worked often exceed 54, but there are no provisions for the payment o f either straight-time or penalty rates fo r a 6-day route running above 54 hours. I f a route is too large to be serviced within the proper time schedule, an adjustment in the length o f route or size o f load is to be made by the employer. Wholesale men work 48 hours, excluding a 30-minute lunch period. The employer agrees not to hire helpers on wagons or trucks. A ll workers covered by the agreement are entitled to a 2-week vacation with fu ll pay and commission at the end o f any 52 weeks’ service with one firm. A ll matters in dispute, with the exception o f those pertaining to wage scales and hours, are adjusted by a committee consisting o f three representatives o f the employer and the union. 75 A ccord in g to th e union agreem ent, “ a po in t o f goods sold on retail w agon s shall con sis t o f one qu art o f m ilk, one pin t o f m ilk, four o n e-h alf pin ts o f m ilk, three one-third qu arts o f m ilk, one qu art o f skim , o n e-h a lf p int or tw o g ills o f cream , one qu art o f bu tter m ilk .” 79 “ T h e union agrees a t a ll tim es, as fa r as in its power, to fu rth e r th e in terests o f th e em ployer. I t is m u tu a lly agreed betw een th e p arties herein nam ed t h a t th e custom ers an d consum ers o f th e em ployer belong to an d are p a rt o f th e assets an d good w ill o f the said m ilk d e a le r : th a t the driver solicits, serves, and sells such cu stom ers and consum ers in a rep resentative cap acity on ly, and i f fo r an y reason w h atsoever a n y m em ber o f th e said union term in ates his em ploym ent or is discharged or dism issed, or fo r an y reason said em ploym ent ceases an d is term inated , it is understood th a t a n y such driver or his agen ts sh a ll n o t call upon, solicit, sell, or in terfere w ith or d ivert th e cu stom ers or con sum ers form erly serviced by him on b eh alf o f his form er em ployer fo r a period o f 2 years fro m th e d a te o f his term in ation o f em p loy m en t.” — U nion agreem ent. 40 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY Trend in employment.— The growth o f different methods o f dis tribution during the 1930’s brought about a severe loss in volume and earnings to the larger distributors, but the M ilk W agon Drivers’ Union suffered the greater blow. Membership dropped steadily from 7,400 in 1930 to 4,550 in 1940, a 39-percent decline. I t is unlikely that at any time there were more than 700 vendors operating in Chicago.7 Consequently, even considering the possibility o f vendors 7 carrying heavier loads, only a small part o f the loss in jobs can be attributed directly to the use o f vendors in place o f drivers. The impact o f the vendor system was disastrous to the union membership primarily because it was used to sponsor and promote aggressively the system o f store distribution which, in turn, caused a decline in home deliveries. Union membership figures, submitted to the Bureau for the past 5 years, cover only the later phase o f the decline during the past decade, but they are indicative o f the changes taking place in the industry. (Table 13.) The sharp decline in the number o f retail routemen was partly absorbed by increases in the other categories, but for the most part the decline is reflected in the loss in total membership. Trends in the number o f routes operated by Chicago distributors in 1932, 1939, 1940, and 1941 are indicated by other data submitted to the Bureau. Twenty-five distributors, operating 4,144 driver routes in 1932, reported a decline to 2,661 driver routes by 1939. During the latter part o f 1940, these same 25 firms operated 2,288 driver routes, indicating a continuing decline, but by the winter o f 1941 a slight recovery to 2,469 driver routes was registered. (Table 1.) A decline in the number o f routes operated ordinarily results in a more than proportional decline in employment, inasmuch as workers other than the routemen, such as reliefmen, foremen, etc., are necessary for the maintenance o f the routes. T able 13.—Membership reported by Milk Wagon Drivers9 Union, Local 753, 1937-41 Year Classification 1937 1938 1939 1940 1941 Retail routemen ........................... Wholesale routemen2..................... O thers3................................................ 5,020 180 690 4,350 150 1,000 3,500 225 925 3,100 525 925 3,250 525 925 Total.......................................... 5,890 5,500 4,650 4,550 4,700 i Vendors are probably included in this group. * Includes commission and noncommission men. * Includes van and tank truckers, special delivery men, route foremen, and assistant route foremen. w I n 1 9 4 1 ap p roxim ately 7 0 0 vendor licen ses w ere issued by th e licen se d ivision o f the c ity o f C hicago. Principal problems confronting the union.— During the early part o f the 1930’s the union became concerned over the growth o f the vendor system. It “believed that the vendor system was a scheme or device utilized for the purpose o f escaping the payment o f union LABOR PROBLEMS IN M ILK DELIVERY 41 wages and the assumption of working conditions commensurate with those imposed under union standards ” .7 The increase in store 8 distribution o f milk, which was encouraged by the use o f vendors, involved a still greater threat to union security; store distribution imperiled the very jobs and livelihood o f thousands o f drivers dependent upon the continuance o f the home-delivery system. The union fought against the vendor system and attempted to dis courage the growth o f store distribution, but in both efforts was un successful* A series o f adjustments followed. The first reaction o f the distributors to the decline in home delivery was to eliminate the low-volume routes and consolidate the remaining routes, dropping the unnecessary men. When it became apparent that store distribution was to play a permanent role, and an increasingly important one, each o f the large dealers, with one conspicuous excep tion, set about to carve out a piece o f the store trade. Store stops were taken off the mixed routes and combined into strictly store routes, and the consolidation o f retail and mixed routes continued. W ithin the scope o f ordinary collective-bargaining practices, the union could only fight a delaying action; it could not prohibit the cre ation o f store routes, but it could, and did, refuse to agree to any revi sion in commission rates on store deliveries. Store-route and commis sion wholesale men, delivering approximately four times the number o f points usually delivered on a retail route, receive the same commis sion rate and have a greater opportunity to reach the high premium rate. A s a consequence, they earn incomes far in excess o f their base pay. The union’s attempt by this means to discourage the transfer to store stops out o f the mixed routes has been ineffective. W ith the large distributors entering into store competition, the union’s main concern gradually centered around the distribution o f the lucrative store business among the drivers. The union opposed the creation o f store routes at the expense o f the retail routemen, and at tempted to keep the differential between the retail price o f home-de livered milk and store milk as small as possible. The union’s attitude in this matter was expressed by a spokesman7 as follow s: 9 We all readily realize that there is a difference in service between the two meth ods of distribution. The consumer who wants to save 1% or 2 cents, which is justified by the labor distribution cost as between the two methods of distribution, has the right to do so. If a customer would rather save that money than have the service of having milk delivered to his home every morning and all the other attentions that a milk-wagon driver renders, the customer has a right to that. Those who want their milk delivered to the home will be glad to pay the reasonable difference. I f after a reasonable differential is established based upon actual labor distribution costs there is unemployment, we then have a case of technological unemployment * * * (resulting) from the displacement of one method of milk distribution by another method of milk distribution. If the dealers will remove their subsidies from the store distribution and allow a reasonable differential on the price of their milk between store delivery and home delivery, you would then get a condition where each type of distribution would find its justifiable level. 78 Milk Wagon Drivers9 Union et al. v . Lake Valley Farm Products , Inc. et at., 3 11 U . S. 9 1 . 79 R isk in d, D avid, attorn ey. A r b itra tio n B etw een th e A sso ciated M ilk D ealers, In c., and M ilk W agon D rivers’ U nion, Local 7 5 3 , 1 940 . Record o f Proceedings, pp. 5 2 9 3 -5 2 9 4 . 42 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY When the union’s major efforts to eliminate the vendor system were frustrated by the Meadowmoor case and the antitrust indictment, emphasis was placed upon organizing the vendors as union members. In this, the union has been quite successful. The enrollment o f ven dors into the union had been proceeding on a small scale ever since the vendor had appeared on the market, but the greater proportion have been organized only recently. Even the Meadowmoor Dairies, Inc., which had resisted the union for 9 years, gave up the immunity o f its injunction to sign a union contract in January 1942# The union vendor.— From the standpoint o f organization, the vendors no longer constitute a problem to the union. For example, almost all (96 percent) o f the vendors scheduled in the Bureau’s survey held union cards. The union vendor occupies a special position with respect to his membership in a union.8 He is not an employee, therefore receives 0 no wages; he has no regulated hours or days o f work as set out in the union agreement; he cannot, by the nature o f his position, receive a paid vacation or have his route automatically protected if he does take a vacation; he receives no protection from the union’s seniority provisions. On the other hand, membership in the union safe guards his source o f supply, inasmuch as organized dealers and inside workers are bound by the union agreement to service only union vendors. Nonunion dealers supplying nonunion vendors have found certain outlets o f distribution— principally the large stores— reluctant to handle their product, and have found it expedient to come to terms with the union. The unionization o f vendors,8 being ineffectual insofar as stand 1 ardizing income, hours, and conditions o f employment is concerned, has done only a little to lessen the conflict between the driver and the vendor. The organization o f vendors by the union, however, is a relatively recent development and it is perhaps too soon to determine the exact function o f the union with regard to vendors. Income o f D rivers The total income o f drivers consists, in general, o f a base wage plus commissions. W ages o f the 168 drivers interviewed in the survey amounted to 87.6 percent o f their total weekly income o f $9,082 and commissions represented 12.4 percent o f their total income. Certain necessary expenditures, however, must be deducted from total income to arrive at a net earnings figure. These expenditures during the period studied represented 3.5 percent o f the total income o f the drivers. (Table 16.) Methods o f wage 'payments.— The traditional method o f wage pay ments to outside wage earners in the Chicago milk industry is on a weekly basis but commissions are usually paid once a month. Over 80 T h e po rtion o f th e union con tract w ith distribu tors ap p lyin g to th e ven d or provides o n ly th a t “ processor agrees to service o n ly vendors in good stan d in g w ith th e union or those presentfhg an O. K . card signed by the secretary-treasurer sign ifyin g intention to jo in .” 81 T h e le g a lity o f orga n izin g ven dors h a s been open to question. C f. C onsen t D ecree, United States of America v. The Borden Co. et al. T h e decree did n o t prevent th e union iza tio n o f ven dors bu t stated (p. 4 3 ) “ it is n o t intended th a t th is provision sh a ll be con stru ed to be a n ad m ission by a n y o f th e p arties hereto or a finding by th e cou rt t h a t th e u n io n ization o f ven dors is la w fu l or u n la w fu l.” 43 LABOR PROBLEMS IN M IL K DELIVERY time pay is very rare and is not provided for in tlie union contract except in the case o f workers who work an extra day during the week. Such workers receive straight time pay for the extra day’s work. O f the 36 firms scheduled in the survey, 28 employed drivers8 for 2 distribution, 11 o f these using drivers exclusively. The Milk W agon Drivers’ Union, Local 753? had identical union agreements with 25 o f the firms employing drivers and one other plant paid the union scale o f wages. Tims, an overwhelming proportion o f the drivers studied earned the standard base wage o f $48 per week. Table 14 reveals that all o f the largest commissions were earned by drivers delivering exclusively to stores; these averaged $36.21. Drivers making part or all o f their deliveries to homes averaged only a little over $4 per week. T able 14.—Distribution of 157 Chicago milk-wagon drivers, by average weekly commission and type of route, winter 19^1-42 Type of route Home stops only A ll routes Average weekly commission Number of drivers Percent age 2 2 3 2 2 13.3 13.3 20.1 13.3 13.3 7.0 4.5 5.1 3.2 1.9 12.1 1 2 6.7 13.3 1 6.7 100.0 15 100.0 Number of drivers Percent age Mrmfl rAAAivad $0.01 and under $1_ _ $1 and iindar $2 $2 and nndA.r $3 $3 and under $4. $4 and nndpr $S 8 23 19 13 20 21 5.1 14.6 12.1 8.3 12.7 13.4 $5 and under $6___ $ft and nndar $8 and under $10____ $10 and under $12___ $12 and under $14___ $14 and over................ 11 7 8 5 3 19 Total.................. 157 Average weekly com mission 1_____ _____ $7.15 Store stops only Number of drivers Percent age Combination home and store stops Number of drivers , 8 21 17 10' 18 19 6.3 16.3 13.3 7.8 14.1 14.8 7.8 3.9 6.3 3.9 1.6 3.9 100.0 14 $4.04 Percent age 100.0 10 5 8 5 2 5 14 100.0 128 $36.21 $4.34 i Based on all drivers. W eekly commissions earned ~ drivers.— “ Gross commissions,” the by gross amounts in addition to base wages which were paid for deliv eries in excess o f the minimum, were obtained from the firms scheduled for 848 drivers. A ll commissions were reported for a full month (September or October 1941) but these have been converted to a weekly average by the Bureau. A n attempt was made to eliminate noncommission drivers from the tabulations and it is believed that all o f the 848 were eligible fo r a commission i f they could earn it. The number and size o f commissions actually earned are indicated in table 15. I t will be noted that the commissions ranged from none at all to over $46, but that more than half o f all the drivers (52.8 percent) earned less than $3 per week during the period o f the survey. The average commission was $7.06. Approximately 10 percent o f the• * •* The rem aining eight firm s distributed their m ilk through vendors. 44 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY drivers earned $22 or more, while 6.5 percent were reported as earn ing no commissions. Presumably most o f the drivers earning very large commissions were routemen selling to stores. T able 15.—Distribution of 848 Chicago mine-wagon drivers, by average weekly commission and size of establishment, September and October 1941 Establishments having outside personnel of— All establish ments Under 20 per sons Average weekly commission N um ber Per cent age N um ber Per cent age 20 to 100 per sons 100 to 300 per sons 300 or more persons Num ber Per cent age N um ber Per cent age N um ber Per cent age None received............................. $0.01 and under $1____________ $1 and under $2........................... $2 and under $3........................... $3 and under $4........................... 55 164 122 106 74 6.5 19.4 14.4 12.5 8 .7 . 22 53.8 1 1 3 2.4 2.4 7.3 7 2 4 5 3 8.9 2.5 5.1 6.3 3.8 5 9 6 6 8 4.9 8.8 5.9 5.9 7.8 21 153 111 94 60 3.4 24 3 17.6 15.0 9.6 $4 and under $5.......................... $5 and under $6........................... $6 and under $8........................... $8 and under $10......................... $10 and under $12....................... 48 43 46 39 23 5.7 5.1 5.4 4.6 2.7 2 3 4 1 3 4.9 7.3 9.8 2.4 7.3 4 8 7 8 7 5.1 10.1 8.9 10.1 8.9 7 9 9 8 6 7.0 8.8 8.8 7.8 5.9 35 23 26 22 7 5.6 3.7 4.2 3.5 1.1 $12 and under $14 and nndpr $18 and nndpr $22 and nndpr $26 and under $14....................... $18 $22 $2fi $30____________ 19 13 8 16 13 2.2 1.5 .9 1.9 1.5 1 2.4 11 6 2 1 13.8 7.6 2.5 1.3 2 4 3 3 5 2.0 3.9 2.9 2.9 4.9 5 3 3 12 8 .8 .5 .5 1.9 1.3 ________ $30 and under $38 $88 and nndpr $4fi $46 and over................................. 17 28 14 2.0 3.3 1.7 3 1 3.8 1.3 6 4 2 5.9 3.9 2.0 11 21 11 1.8 3.4 1.8 Total................................... 848 100.0 79 100.0 102 100.0 626 100.0 Average weekly commission». $7.06 41 j 100.0 $2.96 $9.71 $11.50 $6.27 * Based on all drivers. Size o f establishment measured by the number o f outside personnel had a significant influence on the amounts the drivers earned in com missions. O f the 41 drivers employed in plants with less than 20 out side workers, more than half were reported as earning no commissions, while the corresponding proportion fo r the largest firms was only 3.4 percent. Average commissions also tended to increase with size o f firm, although the average fo r the largest firms, due to the con centration o f commissions within the lower ranges, was lower than that for medium-sized concerns. Inform ation on gross commissions was also obtained from the 168 drivers interviewed in the Bureau survey. Drivers who delivered relief milk only and a few drivers who worked for firms reported as paying no commissions were excluded, leaving 157 drivers presumed to be eligible for commissions. Only 5.1 percent o f these reported earning no commissions for the week surveyed and all o f these oper ated combination routes. Commissions ranged to over $14, with 40.1 percent o f all drivers receiving less than $3 and 12.1 percent receiving $14 or more. The average commission was $7.15. very nearly the same as the average obtained from plant records. Expenditures o f drivers.— Business expenditures o f drivers during the period surveyed included charges by the company for loss or 45 LABOR PROBLEMS IN M ILK DELIVERY breakage o f bottles or for stolen milk, losses due to selling milk be low the company’s established price, or to paying the sales ta x 8 for 3 the consumer, bad debts resulting from carrying customers beyond the credit period set by the company, license fees, and extra helpers’ wages. (Table 16.) T able 16.— Consolidated weekly income and expenditures of 168 Chicago milk- wagon drivers during one week, winter 1941-42 Item Weekly income Ratio per $100 and expendi of total income tures Total income_______________________________________________________ ________ $9,082.49 100.00 Wages........ ........................................................................................................... .. Commissions_______________________________ _____ ______________________ 7,959.50 1,122.99 87.64 12.36 Total operating expenses_______________________ _____ ______________________ 320.59 3.53 31.28 121.64 50.20 11.68* 10.47 53.57 41.75 .34 1.34 .55 .13 .12 .59 .4fi Company charges__________________________ ______ ______________ ______ Loss on sales. _ ____________________________ _____ ______________________ Sales tax_____ ____________ _______________________ _____ _________________ Equipment and refund to stores ____ _____________________________ License fees_____________________________________________________________ Bad debts______________________________________________ ______ _______ Helpers’ wages_______________________ ______ _______ _____ ______________ N et in com e________________________________________________________________ Number of drivers_________________________________________________________ Average net income_________ ______________________________________________ $8, 761. 90 168 $52.15 96.47 The principal deductions from drivers’ total income resulted from the effort o f drivers to retain their customers. To meet the competi tion o f other drivers and o f vendors, some drivers allow customers to have milk at less than the price established by the distributor; or they may continue to serve customers after the company has ordered delivery stopped. Nearly 2 percent (1.9) o f drivers’ total income was dissipated by selling below the established price or by paying the sales tax for customers and a further 0.6 o f 1 percent was lost due to bad debts. Five drivers donated equipment— such as refrigerators or signs— or made cash refunds to stores, as a means o f retaining the stores’ patronage. Wages o f helpers amounted to 0.5 o f 1 percent o f total income,8 4 while only 0.3 o f 1 percent o f the total income o f drivers was for charges by the company. Expenditures reported by individual drivers during the week sur veyed ranged from none at all to $12 or more. Over half o f the drivers (52.2 percent) had expenditures o f less than 60 cents, with one-fifth reporting no expenditures during the week. The average weekly expenditure o f all drivers interviewed was $1.91. (Table 17.) Net weekly income o f drivers.— The average net income o f all drivers interviewed in the Bureau’s survey was approximately $52 a week. As was to be expected, this average was slightly lower than the average o f the 848 drivers taken from plant records, since earnings from plant records did not include deductions o f necessary expendi tures o f drivers except those for company charges.8 Nearly 70 per 5 88 I n Chicago there is a 2-percent sales ta x on a ll retail sales. “ U nder th e un ion con tract, em ployers can n ot “ em ploy helpers on w agon s or truck s to avoid th e paym ent o f a rou tem an’ s scale o f w ages.” 85 See section on E xpen ditu res o f D riv ers an d table 1 6 . 46 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY cent (69.5) o f all drivers earned from $45 to $55, less than 10 percent earning more than $65 and only 5.4 percent earning less than $40. (F or a distribution o f drivers by classified net incomes see table 24 and chart 4.) T able 17.—Distribution of 168 Chicago milk-wagon drivers, by weelcly operating expenditures, tvinter 1941-42 W eekly expenditure N um ber of drivers Percent age N on e....................................... $0.01 and under $0.20......... $0.20 and under $0.40_____ $0.40 and under $0.60_____ $0.60 and under $0.80......... 34 32 14 8 11 20.1 19.0 8.3 4.8 6.5 $0.80 and $1.00 and $2.00 and $3.00 and $4.00 and 9 19 7 7 6 5.4 11.3 4.2 4.2 3.6 under $1.00_____ under $2.00_____ under $3.00. under $4.00_____ under $5.00_____ W eekly expenditure N um ber of drivers Percent age $5.00 and under $6.00. ............... $6.00 and under $8.00................. $8.00 and under $10.00________ $10.00 and under $12.00.............. $12.00 and over............................ 4 5 2 5 5 2.4 3.0 1.2 3.0 3.0 Total................................... 168 100.0 Average weekly expenditure per driver 1 .............................. . $1.91 1 Based on all drivers. Drivers who operated routes with home stops only earned from $43 to $58 a week, the entire group o f 17 averaging $50 a week. On mixed routes (those serving both homes and stores) earnings averaged only slightly less ($49.28); three-fourths (75.1 percent) o f the drivers who served mixed routes earned from $45 to $55, while none earned more than $70 a week. Drivers delivering exclusively to stores, how ever, averaged $81 per week, with all except 1 o f them (14 in number) earning $65 or more during the week surveyed. One earned more than $100. Annual earnings o f drivers, 191$ . — Annual earnings, rather than hourly, daily, or weekly wages, are most important in determining the standard o f living o f workers. Annual earnings8 o f outside 6 employees fo r the calendar year 1940 were obtained from the pay-roll records o f the 26 firms included in the survey.8 They include wages 7 and commissions, less charges made against the employee by the com pany, but do not take into account certain necessary expenditures o f the type listed in table 16. Only 815 drivers and 153 reliefmen em ployed by the 26 distributing firms are included in the Bureau’s tabu lations o f annual earnings, but these are believed to be representative o f the permanent and regularly-employed workers in the industry. The absence o f marked seasonality in the fluid-milk industry per mits a fairly steady flow o f work to milk-wagon drivers. W hile the period o f time worked by the 815 drivers ranged from 1 to 52 weeks, only 6.4 percent o f them worked less than 39 weeks in 1940. (Table 18.) The cases o f relatively short employment periods were usually due to sickness, accidents, shifting from one firm to another or similar factors.8 Nearly three-fourths (72.6 percent) o f all drivers worked 8 80 A n n u al-earn in gs d a ta are fo r w ork w ith th e d istribu tors by w hom th e w orker w as em ployed a t th e tim e o f th e su rv ey. T h ey do n o t include earn in gs received fro m m ore th a n one em ployer. 87 A n n u a l earn ings fo r 1 9 4 1 w ere n o t ava ilab le a t the tim e field w ork w as done fo r th e presen t stu d y. T w o o f the 2 8 firm s em ployin g drivers did n ot rep ort annual earn in gs. 88 T h e stoppage previously m ention ed, la s tin g fo r 8 da ys du ring 1 9 4 0 , affected th e nu m ber o f w eeks w orked and th e earn in gs o f m an y o f th e w orkers in th e p la n ts under un io n con tract. 47 LABOR PROBLEMS IN M ILK DELIVERY from 49 to 51 weeks (inclusive) in 1940 and 9.9 percent worked the full 52 weeks. Annual earnings o f drivers ranged from under $500 to over $5,000, but nearly two-thirds (66.0 percent) o f them earned from $2,250 to $2,750. Only about 3 percent (2.8) o f the drivers earned less than $1,000 and less than 3 percent (2.6) earned $5,000 or more. The aver age amount earned by all drivers during 1940 was $2,640. Belief men, who also enjoyed fairly regular employment, averaged $2,480 during 1940. (Table 19.) T able 18.—Distribution of 815 Chicago milk-wagon drivers, by weeks worked and annual earnings, 1940 T able 19.—Average annual earnings of 815 drivers and 153 reliefmen in Chicago, by number of weeks worked, 1940 Drivers All workers Reliefmen N um ber of per sons Per cent age of total Aver age annual earn ings N um ber of per sons Per cent age of total Aver age annual earn ings N um ber of per sons Per cent age of total 1 and under 39 weeks............. 39 and under 49 weeks........... 49 weeks.......................... ........... 50 weeks__________ __________ 51 weeks_____________________ 52 weeks...................................... N ot reported.............................. 56 84 222 126 369 94 17 5.8 8.7 22.9 13.0 38.1 9.7 1.8 $1,158 2,478 2,675 2,856 2,798 2,432 2,527 52 74 187 111 294 81 16 6.4 9.1 22.9 13.6 36.1 9.9 2.0 $1,171 2,517 2,705 2,899 2,850 2,446 2,521 4 10 35 15 75 13 1 2.6 6.5 22.9 9.8 49.0 8.5 .7 $978 2,189 2,514 2,539 2,593 2,348 0) Total................................. 968 100.0 2,614 815 100.0 2,640 153 100.0 2,480 Number of weeks worked Aver age annual earn ings i Too few workers to justify computation of an average. Influence o f size o f establishment on annual earnings.— Size o f plant, as determined by the number o f outside workers, had some influence on annual earnings. Drivers and reliefmen in the medium-sized plants (with outside personnel o f 20 to 100 and 100 to under 300) earned more on the average than comparable workers in the smallest or the •largest plants. The lowest annual earnings, averaging $1,940 during 1940, were reported by drivers and reliefmen in the smallest plants (having less than 20 outside workers) and the highest annual earnings, 48 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY averaging $2,953, were reported by the group o f medium-sized plants employing 100 but less than 300 outside workers. (Table 20.) T able 20.—Average annual earnings of 968 drivers and reliefmen in Chicago, by number of weeks worked and size of establishment, 1940 Establishments having outside personnel of— Number of weeks worked Under 20 persons Percent age of total and under 39 w eek s...................... 39 and under 49 weeks........................ 49 weeks_____________ 60 weeks_____ _______ 51 weeks........ ............... 52 weeks........................ 1.9 1.9 17.3 1.9 59.7 Total.................. Average annual earnings 100.0 20 and under 100 persons Percent age of total Average annual earnings 100 and under 300 persons Percent age of total Average annual earnings 300 or more persons Percent age of total Average annual earnings 1 Not reported. Number of workers.. 17.3 $903 (0 0) 2,842 (0 1,966 1,940 52 4.9 $815 3.6 $1,235 5.3 $1,254 4.9 14.6 5.8 50.4 2.9 16.5 2,320 2.756 2.756 2,868 2,329 2,527 6.0 1.2 9.6 79.6 2,526 10.0 28.1 14.1 34.3 8.2 2,501 2,672 2,857 2,712 2,678 100.0 2,647 100.0 100.0 2,619 1()3 (0 2,938 3,071 2,953 83 730 5 i Too few workers to justify computation of an average. In com e o f V endors Vendors5 earnings can only be estimated in terms o f their gross in come from sales, less expenses. I f the vendor’s costs o f doing Business are subtracted from his sales and other income, the residual will rep resent the amount he receives for his services as a deliverer o f milk and as enterpriser. Only 175 vendors (operating 183 routes) reported complete inform a tion on sales, commissions, and operating expenses, and the gross income o f these 175 during the week covered was $55,904. Total costs o f all vendors for the week surveyed represented 85.6 percent o f their gross income, leaving a net income o f $8,074, or an average income o f approximately $46. (Table 21.) Investment o f vendors.— Vendors5 investments are substantial but not greater than those required by many other small businessmen. The primary investment is fo r a truck. Some vendors, however, have a fairly large additional investment in routes, purchased either from another vendor or from the firm whose milk they distribute. The dis tributor financed the purchase o f only 16 percent o f all trucks used by vendors included in the Bureau’s survey. Prices paid fo r trucks by vendors included in the survey ranged from $25 to $4,100, the average price being $805. These trucks were from 1 to 20 years old and varied in size from half-ton to 5 tons. The average age o f all trucks, regardless o f size, owned by vendors interviewed was 4 years. (Table 22.) Less than one-fourth (22.1 percent) o f the routes owned by vendors had been purchased either from the distributor or another vendor while over half o f the routes (58.4 percent) had been developed by the vendors themselves. In the remaining cases (19.5 percent), routes were either secured from relatives, friends, or the company at no cost 49 LABOR PROBLEMS IN M ILK DELIVERY to the vendor or the source was not reported. Information was ob tained from vendors on the cost o f 37 routes which had been purchased. Nearly two-thirds o f these routes (64.9 percent) were purchased from the distributor and the remainder from other vendors, the price paid varying from $75 to more than $2,000. More than half o f them (51.3 percent) cost less than $1,000 and 27.1 percent o f them cost $2,000 or more. (Table 23.) T able 21.— Consolidated income and expenditures of 175 Chicago milk vendors during 1 week, winter 1941-4% Weekly in come and ex penditures Item Total income . Ratio per $100 of total in come ___ _ __ $55,903.99 100.00 Sales____________ ______________ _____________________ ____ Other inopme—commissions__________________________________ 55,802.89 101.10 99.82 .18 Cost of dairy products_____________________ ____________ ________ 43,083.60 77.07 Gross operating profit__________________________________________ 12,820.39 22.93 Operating expenses: Delivery expenses ,, _ __ 3,940.83 7.05 ........ _ _ 2,711.42 4.85 1,327.45 442.61 231.59 130.43 63.95 108.24 401.27 5.88 2.39 .79 .41 .23 .11 .19 .72 .01 1,229.41 Operatic and maintenance of trucks 2.20 482 .50 717.24 2 9 .67 .8 6 1.2 9 .0 5 Gas and oil_____________ _______ _____ ______________ Truck repairs________________ ______ ______ __________ Insurance _ _ T_ . _ __ _ _ Tires and tubes ...... . Washing and greasing __ _ Garage , . .r„ _ _ ___ __ Depreciation ........... . Miscellaneous _______ _ _ __ . _ Wages paid (including insurance) . .... Drivers and reliefmen.................................................................................. . Helpers _ _T Extra help._ . ^ __ ____ S e llin g e x p e n s e s _________________________ ____________________________________ 386.47 .6 9 129.44 216. 62 32.24 8 .1 7 .2 3 .3 9 .0 6 .0 1 _ 419.49 .7 5 _ _ . _ ____ _ _ ___ ...... . . _ 2 0 .9 2 202.62 187.14 8 .8 1 .0 4 .3 6 .3 3 .0 2 $ 8 ,0 7 3 .6 0 175 $46.13 14.44 Sales tax absorbed Bad debts Equipment and refunds to customers Miscellaneous.. __ _ Other expenses _ , _ __ ... Ice ._ _ __ Bottle cost _ _ . T _ ..... , __ _ _ __ License fees____ _________________________________________________________ Sundry expenses _ _ Net. income _ . .. Number of vendors_________________________________________ _________ ___________ Average net income _ _ _ _ ___ . . T able 22.—Average age and average price paid for trucks used hy milk vendors in Chicago, winter 1941-4% Size of truck U ton. _. __ - ton _ _ __r ____ _ 1 ton.______________________ 1H tons. ............. ...................... 2 tons and over. ______ . Total Number of trucks Average age Average price (years) paid 76 35 50 17 5 3.8 3.9 4.5 4.4 3.8 $628 662 951 1,060 2,160 183 4.0 805 High price $1,200 1,475 3,300 1,886 4,100 Low price $50 75 25 100 1,100 50 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY T able 23.—Distribution of 87 routes purchased by Chicago milk vendors, by cost of route Cost of route Number Percentage Under $250 ....................................... ............. .............................................................. $250 and under $500......................................... .................................................... ......... $500 and under $1,000.............................. ........... ................. ............................... ......... $1,000 and under $1,500............................................................_................................... $1,500 and under $2,000........... ..................... - .............................................................. $2,000 and over........... ......... ........................................................................................... 5 8 6 5 3 10 13.5 21.6 16.2 13.5 8.1 27.1 Total.......... ......... ......... ........................................................ ................................. 37 100.0 Costs o f vendors,—Vendors’ operating costs included the cost o f m ilk; bottle costs; the operation, maintenance, and depreciation o f trucks; wages and insurance o f drivers, helpers, reliefmen, and extra help; and other expenses for stolen or spoiled milk, bad debts, and such items. B y far the largest current expenditure o f vendors consisted o f the cost o f products purchased, amounting to more than three-fourths (77.1 percent) o f the total vendor income. The next largest item in the vendors’ cost (4.9 percent) was for the operation and maintenance o f trucks. The wages o f helpers and reliefmen, including social insur ance, amounted to 2.2 percent o f the vendors’ total income. A negli gible part o f this was for social insurance since the great m ajority (97.1 percent) o f vendors carried no insurance fo r their employees. Although the cost o f his truck is usually a vendor’s major invest ment, depreciation was not an important item among the vendors re porting, since it amounted to less than 1 percent o f total income. Straight-line depreciation was computed by the Bureau on the basis o f the price paid by vendor, using 8 years as average length o f life o f a truck. The Bureau o f Internal Revenue estimates the useful lives o f “ auto trucks and delivery wagons, gasoline and electric” at from 4 to 8 years in the dairy-products industry.8 F or those few trucks 9 (14 in all) that were more than 8 years old in 1941, useful service was arbitrarily assumed to end at the close o f that year. Net weekly income o f vendors.— There is a strong probability that drivers’ net earnings are less affected by slight changes in consumption than the incomes o f vendors. This is due, in part, to the base wage below which drivers’ earnings cannot easily fall. In addition, vendors’ incomes probably tend to fluctuate more closely with total sales than do earnings o f drivers. Although the milk industry cannot be con sidered a seasonal one, consumption, in general, tends to be somewhat lower during the winter months, the period in which the Bureau’s survey was made. F or this reason, vendors’ incomes as shown in this study may be slightly below their usual level. The average weeldy income o f the 175 vendors (including 8 master vendors) was $46,9 and the average for vendors operating only one 0 route was $44 a week. Nearly one-half (47.8 percent) o f all vendors had incomes o f $40 or less for the week surveyed, with a significant proportion (28.4 percent) below $80 a week, and 11.4 percent making 89 U . S. T reasu ry, B ureau o f In te rn a l Revenue, B u lle tin “ F ” (revised Jan u ary 1 9 4 2 ) , Incom e T a x D epreciation and O bsolescence-Estim ated U sefu l L ives and D epreciation R ates, p. 3 4 . 90 Th e eight master vendors included in the sam ple had an average incom e o f $ 9 1 .0 5 fo r the w eek surveyed. PERCENTAGE DISTRIBUTION OF VENDORS AND DRIVERS BY NET WEEKLY INCOME CHICAGO, WINTER, 1941-1942 LABOR PROBLEMS IN MILK DELIVERY 40- PERCENT 50 50 VENDORS DRIVERS WEEKLY INCOME Cm 52 LABOR ASPECTS OF THE CHICAGO M IL K INDUSTRY less than $20 a week. There were, however, 14.4 percent o f vendors with weekly incomes o f $65 or more. (Table 24 and chart 4.) Vendors delivering exclusively to homes had an average wreekly in come o f $39, with one-third o f them making less than $30 and onefourth making from $55 to $70 a week. A ll o f the 15 vendors oper ating store routes only had weekly incomes o f more than $50, except for 2 who made less than $20 during the week surveyed.. Vendors oper ating combination routes had an average weekly income o f $43, with more than half o f them (50.7 percent) making less than $40 a week and 22.7 percent making less than $30 a week. Fully 10.2 percent o f the vendors owning combination routes, however, had incomes o f more than $70 during the week surveyed. Comparison o f Incomes o f D rivers and Vendors The income level o f the vendors in the survey was, on the average, lower than that o f drivers. Approximately 90 percent (88.6) o f the drivers earned $45 or more a week, while nearly one-half (47.3 percent) o f the vendors had weekly incomes below $40. None o f the drivers earned less than $20 a week, but 11.4 percent o f the vendors had incomes that low. (Chart 4.) A larger proportion o f vendors (14.4 percent) than o f drivers (9.6 percent) had incomes o f $65 or more, but the inclu sion o f master vendors (those owning more than one route) influenced this income group. T able 24.—Percentage distribution of net weekly income of Chicago milk-wagon drivers and vendors, by type of route, winter 191^1-^2 Drivers Vendors Type of route Type of route N et weekly income All routes Under $20..................... $20 and under $25___ $25 and under $30___ $30 and under $35___ $35 and under $40___ 6.0 38.6 30.9 8.3 1.2 $65 and under $70.— $70 and under $75___ $75 and over_________ Total.................. 100.0 168 $52.15 16.1 Combin ation home and store stops All routes Store stops only Combin ation home and store stops 11.4 5.1 6.9 9.7 14.2 12.5 8.3 12.5 8.3 8.3 6.6 41.3 33.8 8.8 1.5 10.3 9.1 6.3 8.0 4.6 8.3 16.8 20.0 13.3 60.0 1.5 2.9 4.6 6.9 4.2 20.0 6.7 33.4 .7 5.1 5.1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 17 15 136 i 175 24 15 136 $50.02 17.6 $80.59 $49.28 17.6 $46.13 63.4 $38.98 70.8 $84.86 13.3 $43.13 67.6 5.9 47.0 35.3 11.8 6.7 1 Excludes 5 vendors for whom complete information was not reported. 1 had store stops only, and 3 ran combination routes. Home stops only 0.7 .7 2.2 2.9 3.0 1.2 5.4 N um ber........................ Average weekly in come.......................... Percentage under $48. Store stops only 0.6 .6 1.8 2.4 $40 and under $45___ $45 and under $50. - . $50 and under $55___ $55 and under $60.__ $60 and under $65___ Home stops only 12.5 8.3 13.3 13.3 13.3 11.0 5.1 6.6 11.0 17.0 11.9 8.9 6.6 6.6 4.4 Of these, 1 had home stops only, LABOR PROBLEMS IN M ILK DELIVERY 53 The base rate o f drivers under the union contract in Chicago is $48 a week and by and large this can be considered as the prevailing wage o f drivers in that market. Only 16.1 percent o f the drivers received less than that amount during the week surveyed, while nearly two-thirds (63.4 percent) o f the vendors interviewed had weekly incomes o f less than $48. More than two-thirds (67.6 percent) o f the vendors oper ating combination routes received incomes below the $48 level. Over 70 percent o f the vendors with door stops only and 13.3 percent o f those with store stops only had incomes below $48 (table 24). I f the union’s base wage be allowed as a fair remuneration for the vendor’s own labor, it is apparent that most vendors operated their business at a loss. The relatively low income level o f vendors covered in the survey would appear to justify the claim o f the union that vendors constitute a threat to the wage standards o f drivers in the Chicago market. To what extent the organization o f vendors by the union can offset any o f the ill effects o f the vendor system on drivers remains to be seen. It appears doubtful, however, whether the union can establish an effec tive lower limit on the vendors’ income or an upper limit on their hours o f work.