Full text of Labor Aspects of the Chicago Milk Industry : Bulletin of the United States Bureau of Labor Statistics, No. 715

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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
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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________________________
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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

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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 1939.10 In November 1941 the Pure Milk
Association claimed its members produced approximately 80 percent
o f the supply o f fluid milk shipped to the Chicago market.11
D istributors

During 1941, 144 dealers12 distributed to Chicago consumers more
than 400 million quarts o f m ilk 13 valued at over 40 million dollars.14
More than 3,000 vehicles15 were licensed fo r the purpose o f distrib­
uting milk.
The m ajor portion was distributed to the ultimate
consumer through 12,000 licensed stores16 and through hospitals, in­
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-




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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.17 Then, in
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.” 18 As a result, hundreds o f small dealers were forced
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.19
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.20

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 concern21engaged in processing,
manufacturing, and distributing milk and milk products in the United
States, was organized and incorporated in 1899.22* A fter 1927, it ex­
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.28
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.24
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.25 No data are avail­
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.26
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.” 27 Butter, cheese, and manufactured milk move in a
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.

26 Ibid., p. 7.
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.28 Unsafe milk was an evil that resulted
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.29 Practically every step in the production, handling, and
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,30 for cooling
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.” 31
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
12 that “ There is a real opportunity to remove
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.33
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.” 34 Also, “ before the first W orld W ar the presence
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.” 35
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 191836— and came into
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 l37 a sum determined
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 rice38 o f each class
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.40 It was possible
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,41 and as a result there had been
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,42 retail prices o f milk began to fall, and the volume
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,43 in which the bill
for injunction was dismissed, was greatly overshadowed by the
union’s unsuccessful legal defense against Meadowmoor Dairies, Inc.44
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.45 The object o f the Department o f Justice was to
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; 46
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 753,4T 75 percent of whose members
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.*48 The case was then
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, 1940.49 The defendants named in the complaint
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.60

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

SSSNO MICE REPORTED

WHENTWO PRICES ARE REPORTED A SIMPLE AWERAPE HAS BEEN USED
Smtc« : AGRICULTURAL MARKETING SERVICE, DEPARTMENT OF AGRICULTURE

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,51 which
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.52 As a
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 rices53
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 54 the tjqheal prices to Chicago consumers for milk delivered to
their homes was 13 cents per single quart, 22 cents per half-gallon, and
40 cents per gallon.55 In February 1940, Chicago dealers reported
a 10- to 15-percent increase in dollar sales in the three areas where
they first introduced multiple containers.56 Part o f this increase in
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.57 A ccording to the distributors, the increase in
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 Statistics58 on actual prices o f “ grade A ” m ilk 59
sold in quart bottles60 by 152 drivers and 164 vendors. Milk de­
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

| VEMOORS

“W

— .90

ST"

9 0 1—

80

80

70

70

60

60

50

50

DELIVERED TO STORES

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.61
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.62 Sales data submitted to the Bureau
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.63
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.65 Deliveries and collections oc­
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.66 The vendor pur­
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.68 A fairly steady
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

____ __

Residential
Other than residential ,

_

Average num­
ber of stops

Number of
routes

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 t63 was put into effect in A pril
1905.*70 B y 1911 a membership o f 1,700 was reported. Base rates
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 1930.71 Making allowance for changes
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.72 Furthermore,
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 hearings73 were held in the summer o f 1940 at a
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.74
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. SO, 1024
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 ___________________ ______________
.Tima 1, 1040,2 tn Apr. 30, 1041 __________________________________
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 ts75 in excess o f 1,333 and 90 cents per 100 in
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.76*7
9
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.77 Consequently, even considering the possibility o f vendors
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 ” .78 The increase in store
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 spokesman79 as follow s:
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.80 He is not an employee, therefore receives
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,81 being ineffectual insofar as stand­
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 drivers82 for
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

$4.04

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

100.0

10
5
8
5
2
5

14

100.0

128

$36.21

Percent­
age

$4.34

i Based on all drivers.

W eekly commissions earned ~by drivers.— “ Gross commissions,” the
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 83 for
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,84
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.85 Nearly 70 per­
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 earnings86 o f outside
employees fo r the calendar year 1940 were obtained from the pay-roll
records o f the 26 firms included in the survey.87 They include wages
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.88 Nearly three-fourths (72.6 percent) o f all drivers worked
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..................

100.0

Average
annual
earnings

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

7530

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%
Item
Total income

.

Weekly in­
come and ex­
penditures

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 ,,

_

Operatic and maintenance of trucks

__

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

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.89 F or those few trucks
(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 $46,90 and the average for vendors operating only one
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___

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___

6.0
38.6
30.9
8.3
1.2

$65 and under $70.—
$70 and under $75___
$75 and over_________

3.0
1.2
5.4

Total..................

100.0

N um ber........................
Average weekly in­
come..........................
Percentage under $48.

168
$52.15
16.1

Home
stops
only

Store
stops
only

Combin­
ation
home
and
store
stops

All
routes

Store
stops
only

Combin­
ation
home
and
store
stops

0.7
.7
2.2
2.9

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

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.