Mr. COLLINS. I do not see how, because the basis on which these jobs are let are on a competitive basis, and it is going to depend on who the contractor is as to what form of payment they are taking.

Mr. ROOSEVELT. Would the gentleman yield?

Mr. GRIFFIN. Yes.

Mr. ROOSEVELT. If the fringe benefit agreement has been entered into as a result of the decision of the employees who negotiated to reach this agreement with the contractor, nothing is being imposed on the employee. He has asked for this. He has received it. I cannot quite follow the argument that this is something that is being imposed on them.

Mr. GOODELL. I do not want to place any exceptional importance upon this thing, but just to pin it down, the situation would exist, it seems to me, if the fringe benefits amounted to a dollar an hour and the cash payment of wages was $3.50 an hour, the nonunion contractor who pays no fringe benefits would, under this amendment, apparently have to pay his workers $4.50 an hour, while the union contractor would pay them $3.50 an hour plus a dollar in fringe benefits. I am just pointing up that this apparently would happen. I would like your comment on the result in terms of the workers in industry.

Mr. COLLINS. In any event, the worker is being paid the same amount whether he gets it in fringes or in cash. The fact that he has elected through collective bargaining with the contractors and his own union to have certain amounts of that paid in as pension and various other things, such as apprentice training and vacation or whatever they are, there is a whole list of something, this is something which he has done voluntarily. So, in effect, the other man is not getting the benefit of pension plans which are financed over a longterm basis.

Mr. GOODELL. In other words, you see no problems?

Mr. COLLINS. I do not; no, sir.

Mr. ROOSEVELT. Mr. Collins, we want to thank both you and your associate for a very fine presentation. We appreciate your coming before the committee. If we have further questions, as I have indicated the committee may want to go into a more thorough review of the entire procedures under the Davis-Bacon Act, administration of the act, we would appreciate it if we had the privilege of contacting your organization again at such time.

Mr. COLLINS. Thank you very much, Mr. Chairman and gentlemen. Mr. ROOSEVELT. The committee now has the pleasure of asking for the testimony of Mr. Cornelius J. Haggerty, president of the Building & Construction Trades Department, AFL-CIO.

Mr. Haggerty, on behalf of the committee and myself, we want to welcome you here and to thank you for your presence. One of my colleagues mentioned yesterday that it was a coincidence perhaps that we were considering this legislation at the same time that you were having a legislative conference here. I can only say that I want to express my sorrow that it was the fact that we were having it that prevented me from being present at one of your meetings. I had to be here instead of there.

STATEMENT OF C. J. HAGGERTY, PRESIDENT OF THE BUILDING & CONSTRUCTION TRADES DEPARTMENT, AFL-CIO

Mr. HAGGERTY. Thank you for my invitation to come here. I regret you could not be at the meeting. We held the delegation, 3,500 people, as long as we could until we found you were not going to get away. They were disappointed, and so was I.

Mr. ROOSEVELT. I suggest you proceed in your own way.

Mr. HAGGERTY. My name is C. J. Haggerty. I am appearing before this subcommittee in behalf of the Building & Construction Trades Department of the AFL-CIO, which is composed of 18 affiliated national and international unions representing approximately 32 million building and construction trade workers who are located in almost all of the cities and other communities throughout the United States; with me is Mr. Robert Connerton, attorney, International Hod Carriers, Building & Common Laborers Únion.

The department wishes to express its deep appreciation for this opportunity to state its view on the legislation pending before the subcommittee. We are well aware of the limited time available for these proceedings and we, therefore, value highly the privilege which you have extended to us.

I shall discuss in particular the provisions of H.R. 9656, introduced by Congressman Roosevelt which is supported by the building and construction trades department. This bill would amend the DavisBacon Act to require the Department of Labor to predetermine not only the hourly prevailing wage rate, but also certain prevailing health, welfare, pension, and apprenticeship training wage factors.

Over three decades ago, the Congress established as its public policy in the expenditure of Federal funds for construction purposes, the sound principle that the vast purchasing power of the Federal Government would not be utilized to depress local prevailing wage standards.

Typical of the incidents which led up to the passage of the DavisBacon Act was that described by Congressman Robert Low Bacon, Republican, of New York, in 1927:

I want to cite the specific instance that brought this whole matter to my attention. The Government is engaged in building in my district a Veterans' Bureau hospital. Bids were asked for; several New York contractors bid, and in their bids, of course, they had to take into consideration the high labor standards prevailing in the State of New York. I think I can say that the labor standards in New York are very high. The wages were fair, and there has been no difficulty in the building trades between the employee and employer in New York for some time. And the situation existed therefore, and the New York contractors made their bids, having the labor conditions in mind.

The bid, however, was let to an out-of-State contractor and some thousand out-of-State laborers were brought to New York.

They were hired into this job, they were housed, and they were paid a very low wage, and the work proceeded. Of course, that meant that labor conditions in this part of New York State where the hospital was being built, were entirely upset. It meant that the neighboring community was very much upset.

The legislative history reveals that virtually every element in our society banded together to petition Congress to remedy this intolerable condition on Government construction.

To overcome this deplorable situation, the Congress adopted the prevailing wage principle as public policy for Federal construction. The Davis-Bacon Act was designed to provide equality of opportunity for contractors, to provide for the employment of local craftsmen, to protect prevailing living standards of the building tradesmen, and to prevent the disturbance of the local economy. It recognized the community of interest between the local community, contractors, and building tradesmen. The Davis-Bacon law, as originally enacted, required the payment of prevailing wages to laborers and mechanics. in the locality where construction, repair, or alteration of Federal buildings was to be performed. Under this equitable standard contractors were free to compete against each other in efficiency, knowhow, and skill rather than in terms of their ability to depress the prevailing wage structure in a locality. Since 1931, the Congress has on many occasions reaffirmed this bipartisan fundamental principle of public policy. When the Congress during the 1930's embarked on vast public work undertakings, it amended the DavisBacon Act, in 1935, to extend its coverage to Federal public works. Thereafter, Congress developed many new, indirect, grant-aid and insured programs to facilitate urgent State and community construction. The Davis-Bacon Act does not automatically apply to such programs. Time and time again in the past 25 years Congress applied the prevailing wage provisions to each of the newly developed federally assisted programs, including such matters as schools, hospitals, airports, housing, highways, water pollution, and so forth, in such laws as:

(1) The Federal Airport Act. (2) The School Survey and Construction Act of 1950. (3) Hospital Survey and Construction Act. (4) The Interstate Highway Act of 1956. (5) The Federal Civil Defense Act. (6) The Water Pollution Control Act. (7) The National Housing Act. (8) The Community Facilities Act. (9) The Area Redevelopment Act of 1961. (10) The Lease Purchase Act of 1954.

I suggest that the reason why the Davis-Bacon Act is so firmly embedded today in the law of the land is because it has withstood the acid test of time. It has worked and worked well.

But today this time-tested and proven statute sorely needs to be modernized if it is to continue to carry out the objectives of its original sponsors.

When the Davis-Bacon law was enacted in 1931, such matters as health, welfare, insurance, and pension plans were not in existence. A craftsman received the sum of his wages solely in his pay envelope. Since that time, construction and building trades unions have been in the vanguard in creating and developing these funds to protect millions of building tradesmen, who devote their lives to the industry, and their families. These funds provide such benefits as hospitalization, sickness, disability and accident insurance, life insurance, pensions, and maintain apprenticeship training programs. These humanitarian welfare programs have been developed by and within the industry itself. These programs were initiated during World War II when a freeze had been imposed on wages, and increases were permitted only on certain so-called fringe benefits, because they were noninflationary.

However, today, they are a part of virtually every collective bargaining negotiation in the construction industry. Today, in the construction industry alone, there are over 5,000 welfare and pension funds. Most of these funds are of the health and welfare type. They are financed primarily by employer contributions of so many cents per hour, for each hour worked by a covered employee. Well over 70 percent of the building tradesmen are covered by welfare and pension benefits alone. When these plans were first started, a 5- or 7-cent contribution per covered employee per hour was typical. Today, during the course of collective bargaining, building trades craftsmen increasingly elected to take proffered wage increases in the form of muchneeded welfare programs in order to provide some benefits for their families in an hour of need. It is manifestly unfair and unjust both to the building tradesmen and their enlightened employers that these welfare programs which have been bargained for, in lieu of wages, should not be included as wages, within the meaning of the act. At the present time in many areas, employers contribute 25 or 30 cents per hour to these health and welfare funds. A constantly increasing portion of the employer's labor costs is being devoted to health, walfare, pension, and apprenticeship training plans. Because these types of payments have increased tremendously in the past decade, they now represent a very significant portion of wages and an employer's labor costs. The Davis-Bacon Act requires the Secretary of Labor to predetermine

the minimum wages to be paid to the various classifications of mechanics and laborers which shall be based upon the wages *** prevailing for corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, village, or other civil subdivision of the State * in which the work is to be performed.

# *

As the Davis-Bacon Act has been interpreted, these benefit programs which in most situations constitute around one-tenth of a building tradesman's hourly earnings, are not taken into consideration, in determining the prevailing hourly wages for the various classes of mechanics and laborers.

This means that contractors who do not have such welfare programs for their employees can come into a local area, and, simply because their labor costs are lower, undercut already established fair employers who do contribute to these programs for their employees. When this happens it means that local building tradesmen who have elected to take wage increases in the form of benefit programs in order to provide for their families are depriving themselves of work which they could otherwise obtain. The fair employer is thereby placed in a steadily deteriorating competitive position. Today, the construction worker receives his real wages not only in the pay envelope after necessary deductions, but also in the form of these fringe benefits such as health, welfare, and retirement programs. These socially desirable private welfare programs promote the welfare of our society.

This gossly unfair competitive situation, of fair contractors, abiding by local prevailing standards, being placed at a disadvantage in bidding on Federal or federally assisted projects was the very reason the Davis-Bacon Act was enacted. H.R. 9656 would eliminate the unfair competitive advantage which unfair contractors currently enjoy. It would equalize competition between employers and thus protect and preserve established and prevailing local wage standards in the building and construction industry.

H.R. 9656 would require the Secretary of Labor to include in his wage predeterminations under the Davis-Bacon Act the prevailing rate of payments to benefit plans for the purpose of providing medical or hospital care, pensions or retirement, life insurance, sickness, accident, or disability insurance, and unemployment benefits or for defraying costs of apprenticeship or other training programs.

This bill would modernize the Davis-Bacon Act by eliminating the most glaring loophole that has developed in its structure. This bill would treat welfare program contributions as what they really are, an integral part of a building tradesman's wages. It thus recognizes and protects the true, established wage scale.

The need for amendment is urgent. We need not go beyond the District of Columbia to point out specific recent cases where an outside contractor was able to secure work on large federally assisted programs, solely because, in computing his bid, he was not required by the Davis-Bacon Act to take into consideration these prevailing welfare programs, in estimating his labor costs. I understand that witnesses are scheduled to appear to testify regarding this deplorable condition.

Provisions similar to those set forth in H.R. 9656 have been enacted by State legislatures in recent years. The States of New York, California, Connecticut, Massachusetts, Pennsylvania, Rhode Island, Washington, and Wisconsin already predetermine these prevailing welfare benefits by provisions in their State prevailing wage laws. This department feels that similar equal-handed protection should be provided by Congress for building tradesmen under the DavisBacon Act.

The Federal Government must once again reaffirm its time-honored and tested prevailing wage principle to insure that the purchasing power of the Federal Government will not be used either to press down the prevailing living standards of building tradesmen or to place fair contractors, sharing the burdens of social progress, in an unfair competitive position. H.R. 9656 merely reaffirms this fundamental principle. It is designed to remedy the present glaring deficiency. Its provisions are just, fair, and in the public interest. We urge that the legislative procedure be carried forth with all possible expedition so that the necessary changes can be made in this session of the Congress.

Mr. ROOSEVELT. Thank you very much, Mr. Haggerty.

Would you prefer to proceed with your comments on 9656 at this time?

Mr. HAGGERTY. As you wish, Mr. Chairman.

Mr. ROOSEVELT. I suggested you might complete the statement then on the two bills.

Mr. HAGGERTY. I can skip the first paragraph. You know who I am, I just told you.

I appear here today in support of the provisions of H.R. 9657 introduced by Congressman Roosevelt. A companion bill S. 1394 has been introduced in the Senate by Senators Humphrey and Kuchel. H.R. 9657 is designed to modernize and replace a series of intricate, overlapping laws, which originated in 1892, and which are commonly known as the 8-hour laws. The 8-hour laws currently require the payment of time and one-half to mechanics and laborers employed