Mr. Hiestand, and Mr. Goodell on all day Friday when I know it was a great inconvenience for them to be present at these hearings. Without objection, the Chair would submit for the record at this time statements received by the committee from the Construction Contractors Council, Master Builders' Association, the Board of Commissioners for the District of Columbia, Associated General Contractors of New Jersey, Insulation Distributor-Contractors National Association, and the American Farm Bureau Federation. Without objection, they will be included in the record. (The statements referred to follow :) STATEMENT BY MALCOLM O. GARFINK, PRESIDENT, CONSTRUCTION CONTRACTORS COUNCIL The Construction Contractors Council wishes to go on record as endorsing the principles of H.R. 9656. The Construction Contractors Council, herein called the CCC, is an employer association composed of approximately 130 union contractors and subcontractors and includes in its membership most of the union general contractors and most of the major union subcontractors in the construction field in the Metropolitan Washington, D.C., area. A list of our membership is attached. H.R. 9656 would amend the Davis-Bacon Act to provide for the inclusion of fringe benefit payments in the determination of the prevailing rates applicable to Government construction. CCC strongly endorses this principle. Heretofore, Davis-Bacon determinations have been limited to direct wage rates and have not included payments made pursuant to valid collective bargaining agreements to support or help support various funds which provide benefits such as sickness, accident, and disability benefits, and the like, for employees. The amounts contributed to such funds are very substantial and in any realistic sense are in every way equivalent to direct wage payments. By their substantial payments to the pension and welfare funds, union contractors are making a contribution to social welfare which to that extent relieve the community and public welfare agencies from what would otherwise be a heavy burden. Yet, in the determination of prevailing rates on Government work, these costs are now disregarded by reason of the present language of the Davis-Bacon Act. This has the effect of putting union contractors and subcontractors at a serious competitive disadvantage as against nonunion contractors who have not seen fit to assume these costs or to make a similar contribution to employee welfare. When the Davis-Bacon Act was originally enacted, the emphasis was naturally placed on the direct wage payments, and at that time payments for fringe benefits were largely undeveloped. Now, however, the costs of fringe benefits are a very significant and substantial part of the total wage package. Fairness and equity seem to require that the act be now amended to recognize and reflect this historic development. For these reasons, we heartily endorse the principle of H.R. 9656. GLEN H. BALLOWE, Chairman, Law and Legislative Committee. THE MASTER BUILDERS' ASSOCIATION, INC., Re bill H.R. 9656 Hon. JAMES ROOSEVELT, DEAR MR. ROOSEVELT: The Master Builders' Association, Inc., District of Columbia chapter of the Associated General Contractors of America, wishes to go on record in support of bill H.R. 9656 and requests this statement be read into the record at your hearing Thursday, March 8, 1962. The Master Builders' Association, Inc., was chartered in 1929 and is composed of 44 general contractors who perform work in and around the Washington metro politan area. It is the oldest commercial building organization in the area. Over the years this association has been responsible for the support and livelihood of thousands of people. Ours is a highly competitive field and the competition is becoming increasingly severe. During the past few years, nonunion general contractors have made a terrific inroad into this area simply due to the fact they do not have to pay fringe benefits such as health, welfare, pension, etc., which our members must pay over and beyond the prevailing wage scale listed in the specifications for the various Government projects. Our members must pay these fringe benefits under the terms of union agreements to which they are signatories, and the current agreements are in effect until May 1, 1963. We have been forced to reduce our margin of profit to a bare minimum in order to compete with these nonunion companies and we feel it grossly unfair that the prevailing wage scale has not included the gross amounts which we must pay various trades. The inroad of nonunion competition did not become alarming until recently in that those contractors were small in size and could not bid on a majority of Government contracts, however they are now well organized and many are large enough to enable them to compete on almost any size project. Union contractors used to construct all of the area schools, however, we now find it useless to bid on Prince Georges County, Montgomery County, or Virginia school work because we cannot compete due to the differential in the actual wage scale paid. The same is true of bridge projects and certain work at local military installations. At the inception of the Davis-Bacon Act, there were no fringe benefits to speak of, and consequently, the prevailing wage scale was satisfactory. Since that time, however, the amount of these benefits has steadily increased and we find ourselves now in a position where our labor may run as high as 10 percent above nonunion contractors. We feel this situation discriminates against union contractors and is a detriment to the entire community for the following reasons. The benefits which we pay various union trades is a direct contribution to social and economic welfare of our community and furthermore relieves a tremendous burden from public we'fare agencies. These benefits include sickness, accident, and other forms of health and welfare plus pensions which are now being paid these trades. The health and welfare benefits directly contribute to our current social welfare, and pension benefits will tend to decrease social security burdens at the time of retirement. These payments are made at regular intervals and accurate records are kept on each person so as to determine the amount which can be expended. The addition of fringe benefits to the prevailing wage scale will not materially increase the costs of projects as the union trades which we use are highly skilled in their particular field and production is, therefore, greater. There is, also, always an ample supply of these skilled persons available. It may be of interest to the subcommittee to know that the State of Pennsylvania has just passed a prevailing wage law. This law provides that fringe benefits including health and welfare, pension, and apprenticeship fund payments-shall be included in the predetermination of prevailing wages. In conclusion, we strongly support passage and enactment into law of bill H.R. 9656 and trust the subcommittee will, likewise, support it. MARCH 6, 1962. Hon. ADAM C. POWELL, Chairman, Committee on Education and Labor, MY DEAR MR. POWELL: The Commissioners of the District of Columbia wish to submit a report on H.R. 9657 or H.R. 5704, 87th Congress, identical bills to establish standards for hours of work and overtime pay for mechanics employed on work done under contract for, or with the financial aid of, the United States, for any territory, or for the District of Columbia, and for other purposes. The purpose of each bill is to establish a standard workweek of 40 hours and a standard workday of 8 hours for laborers and mechanics on Governmentfinanced contracts. The existing 8-hour day provisions of several statutes. most of which are applicable to the District of Columbia, would be replaced by a single statute providing for both an 8-hour day and a 40-hour week. Each bill further provides for liquidated damages for breach of the bill's labor standards by a contractor, and establishes criminal penalties for willful violations. Contracting officers would be authorized to withhold contract payments for the benefit of employees determined to have been underpaid, and employees would be given a right of action for overtime pay. The Commissioners favor the enactment of H.R. 9657 or HR. 5704. They note, however, that while section 203 of each bill repeals sections 1 and 2 of the act of August 1, 1892, as amended, establishing an 8-hour workday for persons employed in the performance of Government contracts, the section does not repeal sections 892 and 893 of the act of March 3, 1901 (31 Stat. 1189, 1334), as amended, entitled an act to establish a code of law for the District of Columbia. These sections of the act of March 3, 1901, are reenactments of sections 1 and 2 of the act of August 1, 1892. The Commissioners accordingly urge that sections 892 and 893 of the Act of March 3, 1901, also be expressly repealed, rather than be repealed by implication, and they suggest the following amendment of each bill to accomplish such an express repeal: In line 22 on page 10, insert after the semicolon: "sections 982 and 893 of the Act of March 3, 1901 (31 Stat. 1334; D.C. Code, 1961 ed., secs. 22-3407, 3408) ;". The Commissioners have been advised by the Bureau of the Budget that, from the standpoint of the administration's program, there is no objection to the submission of this report to the Congress. Very sincerely yours, WALTER N. TOBRINER, President, Board of Commissioners, District of Columbia. STATEMENT OF NEW JERSEY CHAPTER OF ASSOCIATED GENERAL CONTRACTORS The New Jersey Chapter of the Associated General Contractors desires respectfully to urge passage of the proposed amendment to the Davis-Bacon Act so that the definitions of "wages"; "scale of wages"; "wage rates"; and "prevailing wages" as used in section 1 would include, in addition to the basic hourly rate of pay, all other so-called fringe benefit payments that a contractor or his subcontractor is obliged to pay to a fund established under a bona fide collectivebargaining agreement, the purpose of such fund being to provide hospital care and other welfare benefits, pensions, insurance benefits and the like. Evidently it was the intent at the time of the original passage of the DavisBacon Act to establish some means of determining what the foregoing definitions were intended to include in connection with construction contracts and other related matters. Since the enactment of the orginal law the practice of including fringe benefits in collective-bargaining agreements, and particularly those in the construction trade, has gained tremendous momentum. These fringe benefits, for all of the foregoing purposes, often approximate 30 to 35 cents per hour per man and unless the foregoing definitions regarding wages include these fringe benefit payments required of the contractor then the definitions would seem to be meaningless. Competition is the life of trade in these United States and the inclusion of fringe benefit payments in the definitions in the present act would tend to provide more equitable treatment for all contractors engaged in bidding on public works. Under the present practice those contractors who do not contribute to the welfare and future pensions of their employees are given a tremendous economic advantage over their fellow contractors who do make such provisions for catastropic occurrences to their employees. Thus, the contractor having in mind the welfare of his employees is penalized and evidently prevented from entering competitive bidding to the end that he finds himself without contracts and his employees without work. In view of all of the foregoing, the New Jersey chapter of the Associated General Contractors respectfully urges passage of H.R. 9656. INSULATION, Philadelphia, Pa., March 7, 1962. I am the executive secretary for the following associations of insulation contractors: Philadelphia Insulation Contractors Association, Inc., 10 members in Phila. Middle Atlantic Insulation Contractors Association, Inc., 30 members in six States. Insulation Distributor-Contractors National Association, Inc., 100 members in 50 States. All of the employers in these associations, whose total annual business runs into the millions of dollars, and who employ more than 10,000 men on whose wages welfare payments are made, feel that these welfare payments should be included in the computation of prevailing wages. The support of the committee for bill 9656 to amend the Davis-Bacon Act will be appreciated by the employing contractors of the insulation industry. Sincerely yours, ELLWOOD F. JONES, Executive Secretary, PICA, MAICA, and IDCNA. STATEMENT OF MATT TRIGGS, ASSISTANT LEGISLATIVE DIRECTOR, AMERICAN FARM BUREAU FEDERATION We appreciate the opportunity of setting forth the views of the American Farm Bureau Federation relative to the proposal to amend the Davis-Bacon Act to include provision for fringe benefits in contracts for federally assisted construction. Farm Bureau is an organization of more than 1,600,000 farm families, memgers of 2,674 county farm bureaus in 49 States and Puerto Rico, entirely supported by dues voluntarily paid by members. The interest of farmers in this issue is simply this. We believe that inflationary wage trends, in part caused by Davis-Bacon determinations, are a major factor in the continuing deterioration in the value of the dollar, the continuing deficit in our international balance of payments, and the failure of our economy to grow as rapidly as would otherwise have been the case. Farmers have a general interest in these matters as citizens and a specific interest in the adverse effect of such factors on farm costs, market potentials and farm incomes. 1. The upward trend in wage rates in the past 15 years has been a major inflationary factor. The upward trend in wages for major categories of employment is summarized below (from table B-26, Economic Report of the President, January 1962): During this same period, output per man-hour in nonagricultural industries has increased only 37.6 percent. (Table B-31, Economic Report of the President, January 1962.) The impact of such wage increases on costs and prices is inflationary. During each of the past consecutive 77 months (since August 1955) the Consumer Price Index has increased above the index for the same month in the preceding year. The Consumer Price Index is forging into new higher ground with each passing month. Secretary Goldberg said recently, "Every economist believes that economic goals for both labor and management must be earned by increases in productivity. This means that these gains should be shared by the workers, the owners, and the public. Further, we must keep competitive in world markets and keep our money sound. ***"' Needless to say, these objectives have not been accomplished in recent years. Labor has not only taken all the gains of increased productivity, but has taken more than the gains of increased productivity, with debilitating effect on our currency and balance-of-payments situation. 2. The influence of Government on wage rates has been inflationary This point need not be labored. Each action of Government, whether an amendment to the Fair Labor Standards Act, or a Department of Labor ruling under the Davis-Bacon or Walsh-Healey Act, has operated to require the payment of wages higher than would otherwise be required. Government participation in wage fixing has been and will continue to be a significant influence contributing to inflationary wage, cost, and price trends. 3. Inflation and inflationary wage increases reduce economic growth and employment The exact significance of inflation to economic growth is an issue economists debate at length. But few, if any, would disagree that inflation can seriously impair economic growth and that in fact in many countries inflation appears to be the crucial impediment to economic growth. We believe that the apparent inability of our political system to effectively prevent inflation is a substantial impediment to economic growth in the United States. Inflation means that accumulated capital, most of which revolves in depreciation accounts, is unable to buy as much new and replacement facilities as would otherwise be purchased and is not, therefore, able to provide as many jobs as would otherwise be provided. The serious decline in investment in the United States in recent years is gradually being recognized as a crucial limitation on economic growth and job creation. The percentage of corporate profits to gross national production declining. The ratio of investment to gross national product is declining. This is in sharp contrast to other industrial economies-Japan, Germany, Austria, Italy, Netherlands, France, Switzerland, and Belgium-where the ratio of investment to gross national production is increasing and unemployment has become virtually unknown. 4. The inclusion of fringe benefits in Government-assisted construction would add inflationary impact to wage trends Fringe benefits are part of wage costs in their impact on employers' costs and prices. There is every reason to suppose that Government action to determine prevailing fringe benefits would be at least as inflationary as Government action to determine prevailing wages. The enactment of H.R. 9656, providing Government determination of prevailing fringe benefits which would then be incorporated in contracts for highway, hospital, airport, housing and other projects financed in part by Federal funds, plus the precedent involved with respect to the Walsh-Healey Act, would constitute a substantial inflationary factor. This would not have been an important inflationary factor in the days when Government contracts were a relatively small proportion of gross national product. But with Government budget expenditures now approaching $100 billion and Government contracts covered by Davis-Bacon and Walsh-Healey requirements probably exceeding $50 billion annually, the inclusion of fringe benefits in such contracts would have a major inflationary result. 5. Conclusion For these reasons we submit that the enactment of H.R. 9656 would have adverse consequences to the capacity of the economy to grow and create jobs, to the public generally, and specifically to the people the bill is intended to help. We respectfully recommend the bill not be reported. Mr. ROOSEVELT. The committee will now adjourn until 9:30 on Monday morning at which time the witness will be the Honorable Charles Donahue, Solicitor of the U.S. Department of Labor, followed at 11 o'clock by Andrew J. Biemiller, director of the legislative department, AFL-CIO, and after lunch, if permission is secured from the House, the committee will hear from Dr. Harry R. Hallorn, chairman of the labor committee, Contractors Association of Philadelphia and Eastern Pennsylvania; Mr. Robert L. Higgins, assistant executive vice president of the National Electrical Contractors; and Leonard H. Hudson, executive vice president and general manager of the Baltimore Contractors, Inc. (Whereupon, at 4 p.m., the subcommittee recessed to reconvene at 9:30 a.m., Monday, March 12, 1962.) |