THE EFFECT OF DAVIS-BACON HELPER RULES ON JOB OPPORTUNITIES IN CONSTRUCTION

HEARING

Serial No. 106-62

OPENING STATEMENT OF THE HONORABLE CHARLIE NORWOOD, PRESIDING, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

OPENING STATEMENT OF RANKING MEMBER TIM ROEMER, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

STATEMENT OF CHARLES H. NICHOLS, PRESIDENT, NICHOLS & ASSOCIATES, INC., MARIETTA, GA *

STATEMENT OF HARRY C. ALFORD, PRESIDENT AND CEO, NATIONAL BLACK CHAMBER OF COMMERCE, WASHINGTON, D.C. *

STATEMENT OF RONALD KINNING, PRESIDENT, RK MECHANICAL, INC., DENVER, CO *

STATEMENT OF MAURICE BASKIN, ESQ., PARTNER, VENABLE, BAETJER, HOWARD & CIVILETTI, LLP, WASHINGTON, D.C. ON BEHALF OF ASSOCIATED BUILDERS AND CONTRACTORS, INC., ROSSLYN, VA *

STATEMENT OF TERRY R. YELLIG, ESQ., PARTNER, SHERMAN, DUNN, COHEN, LEIFER & YELLIG, PC, WASHINGTON, D.C., ON BEHALF OF THE BUILDING AND CONSTRUCTION TRADES DEPARTMENT, AFL-CIO *

APPENDIX A - WRITTEN OPENING STATEMENT OF THE HONORABLE CHARLIE NORWOOD, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

APPENDIX B - WRITTEN OPENING STATEMENT OF RANKING MEMBER TIM ROEMER, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

APPENDIX C - WRITTEN STATEMENT OF CHARLES H. NICHOLS, PRESIDENT, NICHOLS & ASSOCIATES, INC. MARIETTA, GA *

APPENDIX D - WRITTEN STATEMENT OF HARRY C. ALFORD, PRESIDENT AND CEO, NATIONAL BLACK CHAMBER OF COMMERCE, WASHINGTON, D.C. *

APPENDIX E - WRITTEN STATEMENT OF RONALD KINNING, PRESIDENT, RK MECHANICAL, INC., DENVER, CO *

APPENDIX F - WRITTEN STATEMENT OF MAURICE BASKIN, ESQ., PARTNER, VENABLE, BAETJER, HOWARD & CIVILETTI, LLP, WASHINGTON, D.C., ON BEHALF OF ASSOCIATED BUILDERS AND CONTRACTORS, ROSSLYN, VA *

HEARING ON

THE EFFECT OF DAVIS-BACON HELPER RULES

ON JOB OPPORTUNITIES IN CONSTRUCTION

____________

Wednesday, July 21, 1999

U. S. House of Representatives

Committee on Education and the Workforce

Subcommittee on Oversight and Investigations

Washington, D.C.

The Subcommittee met pursuant to notice, at 2:33 p.m., in Room 2175, Rayburn House Office Building, Hon. Charlie Norwood presiding.

Present: Representatives Hoekstra, Norwood, Schaffer, Tancredo, Roemer, Scott, Kind and Owens.

Staff Present: Ashley Rehr, Professional Staff Member; Lauren Fuller, Professional Staff Member; Jason Ayeroff, Legislative Assistant; Robert Borden, Professional Staff Member; Deborah Samantar, Office Manager and Michael Reynard, Media Assistant.

Mr. Norwood. Presiding. A quorum being present, the Subcommittee on Oversight and Investigations will come to order.

According to Rule 12(b) of the Committee rules, any oral opening statements at the hearing are limited to the Chairman and the Ranking Minority Member. Therefore, if other Members have opening statements they will be included in the printed hearing record. This will allow us to hear from our witnesses sooner and to help Members keep to their schedules. Without objection, all Members' statements and witnesses' written testimony will be included in the hearing record.

Today, the Subcommittee on Oversight and Investigations will hear testimony on the effect that the Davis-Bacon Act helper regulations have on job opportunities in the construction industry. We will examine how the regulations of a class of workers known as ``helpers'' prevents many less-skilled or unemployed laborers from earning a good living by working on federal construction projects. The controversy over the use of helpers in the construction industry is not a new one. It has in fact been going on for about 20 years. I look forward to the testimony from our panel of witnesses, and I appreciate very, very much their willingness to testify before us today.

On April the 9th, the Department of Labor proposed new regulations regarding the use of helpers on federal construction projects governed by the Davis-Bacon Act. However, the proposed regulation appears to be designed not to facilitate the use of helpers, but rather to continue to prohibit their use. I believe that helper regulations should reflect current industry practices, be responsive to the needs of the construction industry and, most importantly, provide access to valuable entry-level jobs for low-skilled workers. However, these bureaucratic government regulations have created obstacles to job opportunity, rather than providing jobs for workers in need.

Without an accurate classification of helpers, all workers must be paid the high journey-level or apprentice wage on federal projects. This often precludes workers who are not already skilled in construction from being hired, even when they would be asked to perform only simple tasks such as carrying materials and cleaning up a work site.

Making helper jobs available to less-skilled workers will attract workers to the construction industry, which has a shortage of skilled workers. The construction industry estimates that allowing for the use of helpers would create 250,000 jobs annually. Rather than imposing barriers for new entrants into the industry, we should look for ways to maximize access to these valuable on-the-job training opportunities.

One of our witnesses today, Mr. Charles Nichols, a general contractor from my home state of Georgia, will explain the problems that he encountered when one of his subcontractors attempted to hire unemployed workers as helpers for a construction project. Unfortunately, these non-skilled workers were denied an opportunity to earn as much as $13 per hour because a helper job classification is not recognized. Mr. Nichols has learned firsthand how the Department of Labor's refusal to remove obstacles has denied job opportunities for helpers. The result has been that many welfare-to-work applicants have been prevented from working on federal construction projects and gaining both the good income and valuable job experience that such employment would provide.

I feel certain that the panel before us today will be able to offer some thoughtful insight into this situation. Again, I look forward to the testimony from all of our witnesses, and I appreciate very much your willingness to be here with us today.

I would now like to recognize Mr. Roemer for an opening statement.

WRITTEN OPENING STATEMENT OF THE HONORABLE CHARLIE NORWOOD, PRESIDING, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE - SEE APPENDIX A

Mr. Roemer. Thank you, Mr. Chairman. I too look forward to our expert witnesses today, and I do have an opening statement to make.

While I am looking forward to hearing the testimony of today's witnesses, I also have some reservations about the proposals under consideration. The Davis-Bacon Act has been helping maintain reasonable wages for American workers for over 65 years. It specifically ensures that the process by which the government awards construction contracts does not undermine the wages and benefits of construction workers.

In order to enforce prevailing wage requirements, the Department of Labor has had a longstanding practice of prohibiting an overlap of duties between job classifications. This is intended to ensure that a representative average wage for a given job classification can be successfully calculated.

However, in 1982 the Reagan Administration issued a ``helper'' regulation that included overlapping duties between helpers, journeymen, and laborers, and made it practically impossible to distinguish classifications of employees. Effectively, this regulation nullified the intent of the Davis-Bacon Act by encouraging employers to transfer duties normally performed by highly-skilled, more expensive workers to lower-paid and often less-skilled workers. However, both the federal courts and Congress, seeing serious problems with these changes, acted to suspend full implementation of the Reagan regulations. Now the current Administration is seeking to fulfill the government's obligation to make sure that its procurement process does not act to undermine the standard of living of our constituents.

The rule on the use of helpers currently being proposed would recognize helpers on Davis-Bacon projects only where, one, their duties are clearly defined and distinct from those of journeymen or laborers, two, where the use of such helpers is an established prevailing practice in the area and, three, the term ``helper'' is not synonymous with ``trainee.''

This proposed rule does nothing more than reflect what is the policy now, and what the policy has been since the 1982 rule was suspended, as well as what it was prior to the 1982 rule. Union and non-union contractors have been and still are effectively and profitably competing for Davis-Bacon work under the policy in this proposed rule.

Opponents of the proposed regulations who seek to retain the suspended regulations claim that the current proposed rule restricts the use of low-skilled workers. Unfortunately, they are supporting a policy that is very unclear on how to precisely identify a helper. These suspended Reagan-era regulations could allow unscrupulous contractors to take advantage of the uncertainties created by the definition, resulting in the intentional misclassification of large numbers of workers. In short, it represents a policy that drastically weakens, if not effectively repeals, prevailing wage standards for federal construction contracts.

Given the shortcomings of the Reagan-era rule, I must support the Department of Labor's current proposed helper rule. At a time when many families need two incomes just to keep households afloat, it ensures that the federal government will not act to undermine the living standards of workers. It also imposes no burdens or disadvantages on contractors, whether they are union or non-union. Finally, it does not undermine the kinds of apprenticeship programs that are essential if the new workers in the industry, including minorities and women, are to receive the quality training that is so important in today's job market.

In closing, Mr. Chairman, I must reiterate a point that has often been made here. Leading academic and economic experts have shown that the prevailing wage laws under Davis-Bacon do not increase construction costs. In fact, the skilled and efficient workers that come with many Davis-Bacon jobs provide better quality work, and often actually decrease labor costs. Mr. Chairman, I thank you for the time, and I look forward to an interesting discussion of this issue from our panelists.

WRITTEN OPENING STATEMENT OF RANKING MEMBER TIM ROEMER, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE - SEE APPENDIX B

Mr. Norwood. Thank you, Mr. Roemer. Now I will introduce our panel of witnesses. Our first witness today will be Charles Nichols, President of Nichols and Associates, Inc. in Marietta, Georgia. Our second witness will be Harry Alford, President of the National Black Chamber of Commerce. Welcome.

And now I would like to take a minute and recognize Congressman Tancredo, who will introduce our next witness.

Mr. Tancredo. Thank you, Mr. Chairman. I would like to take this opportunity to welcome Ronald Kinning from the state of Colorado to the Subcommittee on Oversight and Investigations, in order to testify on the effects of Davis-Bacon helper rules on job opportunities in the construction industry.

Mr. Kinning is President of RK Mechanical, Inc., which was established in 1963 as a plumbing and heating company. Since that time, RK Mechanical has evolved to perform complete mechanical services, including plumbing processes, plumbing process piping, hydronics, refrigeration, and mechanical services. RK Mechanical is the largest mechanical contractor in Colorado, and the company expects their sales to exceed over $70 million this year.

Mr. Kinning is a master plumber in 20 states, and is a previous Board Member of the Board of Directors for the Associated Builders and Contractors. In the early '80s RKMI started an apprenticeship training program, which has approximately 95 employees enrolled to date. RKMI has employed helpers and trainees since the start of the Company, and feels that this gives them a career path to follow and minimizes employee turnover.

And I want to say thank you very much for joining us today, Mr. Kinning.

Mr. Norwood. Thank you, Mr. Tancredo, and Mr. Kinning we do appreciate your presence.

Our fourth witness will be Maurice Baskin, a partner with Venable, Baetjer, Howard & Civiletti. We welcome you, sir.

And finally, we will hear from Mr. Terry, is it ``Yellig''?

Mr. Yellig. Yes, sir.

Mr. Norwood. Yellig, from Sherman, Dunn, Cohen, Leifer and Yellig, who will testify on behalf of the Building and Construction Trades Department, AFL-CIO.

Again, thank you all very much for being here. Before the witnesses begin, I would like to remind the Members that they will be allowed to ask questions of the witnesses after the entire panel has testified. In addition, Committee Rule two imposes a five-minute limit on all questions. However, the Chairman intends to be fairly lenient with that.

With that said, Mr. Nichols, we would love to hear your testimony.

Mr. Nichols. Thank you. Mr. Chairman and Committee Members, I appreciate your invitation to address the Committee regarding some of my Company's experiences concerning our involvement in Davis-Bacon wage requirements, and more specifically the establishment and use of a helper classification on our federally-funded contracts.

As an introduction, our firm, Nichols and Associates, is a small, general contracting firm located in Marietta, Georgia, of which I am the sole owner and President. A substantial portion of our annual revenues involves municipal construction projects for various local government agencies located within the metro-Atlanta area, some of which require compliance with Davis-Bacon wages.

Over the past six years, several of our projects have been contracted with the City of Atlanta, which also falls under this requirement. I would like to briefly describe one such incident regarding our most recently completed contract with them.

Last year, the electrical subcontractor on this project was unable to perform the contractual obligations in a timely manner, partly due to their inability to obtain and man this project with qualified electricians. In an effort to fulfill their contract to us, our electrical subcontractor hired unemployed, lesser-skilled workers from off the streets of Atlanta to serve as helpers to the electricians he already had on staff. The rates of pay being made to these helpers was as much as $13 per hour.

Unfortunately, the City of Atlanta's Office of Contract Compliance would not acknowledge a helper's classification, nor accept this pay scale. On behalf of the electrical subcontractor, we explained to the compliance officer these workers were in no way able to perform the duties of even an apprentice electrician, but were at least being taught a skill; otherwise, they would more than likely be either unemployed or working in a job making well below the wages they were being paid.

The City of Atlanta was unsympathetic to our position, and our company was deemed in default of our contract and was forced to make additional payment to these helpers in order to meet the city's rate for a qualified electrician of $25.30 per hour.

As a further result, the electrical subcontractor, who happened to be minority-owned, refused to make these additional payments, abandoned his contract with us, and our company was forced to complete his work at an expense above his original contract of over $75,000. In addition, we were forced by the City to pay back wages to these helpers. Sadly, and as we predicted, these helpers were immediately terminated.

Mr. Chairman, this is not an unusual situation with federally-funded projects, particularly on projects in conjunction with the City of Atlanta where the availability of skilled workers has been at a premium for the past several years.

As a merit shop contractor believing in a completely free enterprise system, I question the need of these mandatory and sometimes questionable wage rates to begin with. As an example, we are also currently constructing a Boys and Girls Club not within the City of Atlanta, but for a local county within only 30 miles of Atlanta which also requires Davis-Bacon compliance. The difference between the minimum rates required of some classifications are as much as 300 percent. I question how this disparity can be so great within the same geographical area.

Mr. Chairman, it is my opinion that the lack of and the refusal of the current Administration to implement a helper classification significantly impacts the financial success of smaller companies who are typically less capitalized. These size firms are usually less staffed, and are forced to pay their skilled workers a high wage rate to perform lesser or unskilled tasks. It is also my personal opinion that these regulations negatively impact minority contractors even to a higher degree.

Having been in the design, engineering, and construction industry for over 27 years, I am very concerned with the future of our industry. It is an industry where helpers under the direct supervision of a skilled journeyman can gain access to our industry and learn a very respectable trade. A significant portion of our population is unable to attend a college or university that typically helps them start their working career at higher-paying incomes initially. However, the construction industry also offers an excellent means for anyone with a good work ethic and a desire to learn to enter into a profession where financial rewards are also available even without a college degree.

It is my belief that being required to pay an unskilled worker a higher wage rate, even on a short-term basis, than he or she actually deserves is just as wrong as not paying them a fair income for the work they are able to perform. In the long run, it gives them a false sense of their actual earning potential, and to some degree lessens their ambition to excel further.

In closing, if Davis-Bacon wage rates are to be continued on federally-funded projects, I respectfully request the Administration reconsider their current position regarding the implementation of the helper classification.

Mr. Chairman, thank you again for this opportunity to address the Committee, and I will be glad to answer any questions you have.

WRITTEN STATEMENT OF CHARLES H. NICHOLS, PRESIDENT, NICHOLS & ASSOCIATES, INC. MARIETTA, GA - SEE APPENDIX C

Mr. Norwood. Thank you very much, Mr. Nichols. And just for the Committee's information, you and I are not in the same district.

Mr. Nichols. Yes, sir.

Mr. Norwood. I'm considerably south of there in a much more rural area where this impacts us a great deal, too, for different reasons than it might in Atlanta.

Mr. Alford, you may begin next.

Mr. Alford. Yes, sir.

Mr. Alford. Mr. Chairman, Mr. Vice-Chairman, and distinguished Members of the Subcommittee, thank you for allowing the National Black Chamber of Commerce to provide input on the very important topic of helper rules in regards to the Davis-Bacon Act.

The National Black Chamber of Commerce is the largest black trade association in the world. It has 181 affiliated chapters located in 35 states, and represents over 64,000 black-owned firms. We are currently collaborating with black-owned businesses in Ghana, Brazil, and the Bahamas, in the quest of business interaction and Chapter development. We were incorporated here in D.C. in the spring of 1993.

In early 1994, we formed a position on the Davis-Bacon Act. We advocate the repeal of Davis-Bacon. It is discriminatory by nature, and works to the detriment of small businesses, including black-owned businesses, and black families.

The Davis-Bacon Act has racist roots. It was enacted to prevent black-owned firms from the South to migrate to New York City and compete on construction contracts. These firms, employing descendants of skilled slave craftsmen, were soon blocked from the huge New York market, and were forced to return to the ``Jim Crow'' environment of the old South. The exclusivity effect of Davis-Bacon requirements encourages the construction trades to continue its activity of discrimination against African-American labor.

Locally, regionally, and nationally, construction trades under-represent the African-American population. Go to any city or look at any major project, and you will find a great disparity against African-American labor. Let us look at a few examples.

The City of Detroit has embarked on a major construction expansion, including a new football stadium and a new major league baseball park, across the street from each other. Even though the City of Detroit has a population that is 77 percent black, these two projects, which have been declared union only, will, at best, average no more than 15 percent African-American participation in the workforce. This is a disaster.

What is worse is that this paltry performance is going to exhaust the entire Detroit marketplace of black union craftsmen. The other union-only or Davis-Bacon projects concurrently taking place will be virtually void of black employment in the city that is 77 percent black. Why is there high crime and violence in Detroit? Why is there terribly high poverty, unemployment, and public housing? Let us start here in our search for the answer.

According to the Department of Labor's Office of Federal Contract Compliance Programs, the City of Gary should have 24 percent of its construction workforce consisting of ethnic minorities. The fact is that Gary, despite being over 85 percent black, can produce no more than 3 percent minority participation on any Davis-Bacon project. Gary is the ``Steel City''; a steel city with only two black ironworkers with journeyman status.

Travel to Indianapolis where still, as of two days ago, they have segregated union halls. Go to the black union hall for cement workers, on Martin Luther King Avenue. If you want white workers, go to the union hall on North Sherman Avenue. For carpenters, go to East 38th to find your black workers, or go to South Madison to find your white workers. This is 1999, and ``Jim Crow'' is alive and well in the construction trades.

The bitterness and disgust of capable and potential black workers and business owners is starting to boil. On July 15th of last week in St. Louis, a group of black contractors and workers effectively shut down Interstate I-70 in protest of the Federal Highway Administration's discriminatory practices via Davis-Bacon. Such civil disobedience actions are going to populate this nation. St. Louis is just the beginning, and other urban centers, even Washington, D.C., are going to explode. The time to integrate the construction trades is now.

We have had several generations of so-called apprenticeship programs by the construction trades, and still no adequate representation of blacks in the journeymen roles. What has happened to those apprentices? We can train them all we want, but until the doors of discrimination are forced open, we will continue to have the same disparities in the crafts.

By allowing helpers in federally-funded workplaces, we will improve the participation of minorities. This participation will certainly promote an environment that would look closer to America. It will also assist small businesses and, in fact, black-owned businesses to compete and win a greater share of federal contracts.

This would be good for all of America. If all Americans pay taxes and fund these federal jobs, a good diverse representation of these taxpayers should be required on the work site. Also, costs would certainly be reduced. Let us have a more efficient procurement program on federal construction projects, and a more diverse workforce, void of discrimination.

Finally, is there documentation on the actual contrasts between prevailing wages and union scale? Are there studies done on the demographic makeup of construction trade unions by ethnicity and in contrast with local markets? What is the relationship to ethnic disparity within unions and minority unemployment? While we include helpers in the workplace, let us also find the answers to these important questions. Thank you very much.

WRITTEN STATEMENT OF HARRY C. ALFORD, PRESIDENT AND CEO, NATIONAL BLACK CHAMBER OF COMMERCE, WASHINGTON, D.C. -

SEE APPENDIX D

Mr. Norwood. Thank you very much, Mr. Alford. We appreciate your testimony, and look forward to the question and answer period.

Mr. Kinning, you may begin now, sir.

Mr. Kinning. Thank you, Mr. Chairman and Members of the Subcommittee. I appreciate the opportunity to come before you and testify here today on the impact of the Davis-Bacon rules on helpers and job opportunities. My name is Ronald L. Kinning. I go by Ron Kinning. I am Chairman of the Board for RK Mechanical, a company that I founded myself in 1963. Our corporate headquarters is located at 9300 East Smith Road in Denver, Colorado. We also have a sister company, Performance Building Services, which does start-up work and also ongoing maintenance work on our projects.

My career began in 1957, when I graduated from high school in eastern Nebraska, in a family-owned business. We were located on the end of the Winnebago Indian Reservation, in a very poor community. I did not have the opportunity to go to college, and I worked in the family business, went to the Marine Corps, came back, moved to Colorado, and took the test after four years. Finally I started my own company back in Pender, Nebraska, on September 1, 1963.

During the first years, I was basically at work on school remodels, churches and that sort of thing, with some residential work, and I began to train my own crew. In the late '60s, we started into the government housing program and nursing homes and so forth. We started getting into Davis-Bacon work. At that time the wage rates were small, but we started building this crew out of helpers which we picked out of the rural communities.

And by the mid-'80s, we had grown up to a crew of approximately 400 people. Again, at that point in time I applied and got approved for the Bureau of Apprenticeship and Training, and started our apprenticeship program. We were the first in the Midwest to do this.

One of the problems we faced was the turnover of people not knowing their career path. So we hired these people as helpers from the rural community, worked them for a period of time, put them into school, and brought our apprentice retention from about 50 percent up to past 80. This past year, we had 98 people in our apprenticeship program. At graduation day, we had 82 people that completed it. We expect that to be approximately 150 this fall.

RKMI is the largest mechanical contractor in Colorado. We are an open-shop contractor. We project our sales to be at approximately $70 to $73 million dollars this year. We have 650 full-time employees. We also have 120 employees that are helpers, and we have about 102 apprentices at this time that are registered.

A little bit on the success of this in our industry. One of our success stories is our chief estimator, Jim Hoden. He's a Vice President in charge of our pre-construction, and he is the chief estimator. He began his career at age 13 as a helper carrying tools and learning inventory in a family business. He was learning the trade during the summer breaks from school, and continued working in the field. He went through college; got his degree in business administration. After college he decided he enjoyed the construction industry and saw an opportunity to advance as well as to increase his income. After college he got his journeyman's license. Fifteen years later, he is now Vice President of RK Mechanical.

Another employee that is very successful that we picked up is Mark Dalton. He began his career in the construction industry at age 30. He was working at a fish hatchery and it closed, so he found employment with another mechanical, and then switched over to us. Today, he is a Project Superintendent and a Purchasing Manager, and now he is a full-time estimator.

People who get an opportunity to get into our business at a young age can go ahead and develop into a career that pays very well. The helper classification is an absolute essential. As I mentioned earlier in my testimony, I was raised on the edge of an Indian reservation. Our President this last month was up at Pine Ridge. I have built projects on that Reservation, the Santee Sioux, the Rosebud, the Turtle Mountain in North Dakota, the Winnebago, and also the Omaha reservations. We have hired a lot of these people. They have come. And they would not stay with us because we could not train them the way the Davis-Bacon thing was done.

Another point I would like to make on this is that I started my career making $1.25 an hour. Today I run a $70 - $75 million dollar company that will be a $100 million dollar company. But I totally disagree with Mr. Roemer's comment about this being prevailing wage. This is not prevailing wage, this is a union wage. Eighty percent of the construction in Denver is done as non-union, open shop, or merit shop. Why 80 percent is governed by 20 percent is something that I really have a problem with.

Thank you for the opportunity to testify.

WRITTEN STATEMENT OF RONALD KINNING, PRESIDENT,

RK MECHANICAL, INC., DENVER, CO - SEE APPENDIX E

Mr. Norwood. Thank you very much, Mr. Kinning.

Our next witness is Mr. Baskin. And we would love to hear from you now, sir.

Mr. Baskin. Mr. Chairman and Members of the Subcommittee, my name is Maurice Baskin. I am appearing today on behalf of Associated Builders and Contractors, a national trade association of construction contractors and related firms many of whom perform work on projects covered by the Davis-Bacon and related acts. My extended remarks have been included in the record.

Many of ABC's members, who include both union and non-union companies, use semi-skilled workers, known as ``helpers,'' on their private construction projects. Current estimates of the Bureau of Labor Statistics are that there are as many as 500,000 helpers working in the construction industry today. The helper position is an important point of entry for minorities and women into the industry, who might otherwise be excluded due to lack of experience or skills.

Unfortunately, the Department of Labor has proposed a rule which would, for all practical purposes, deny recognition to helpers on work covered by the Davis-Bacon Act, even where it can be shown that the use of helpers is a prevailing practice in the local area. The proposed rule would achieve this result by returning to an unworkable definition of ``helpers'' which was found to be obsolete nearly 20 years ago, and which ignores the realities of the construction workplace today.

The Department is violating, we believe, the mandate of the Davis-Bacon Act. And it is also rejecting a number of alternatives which would achieve a result more consistent with the statutory mandate. It is also clear that the Department is operating in a vacuum, without enough hard data on the uses of helpers to justify issuance of the proposed final rule.

We therefore support H.R. 1012, and we call upon Congress to codify the 1992 suspended regulations. At the very least, we ask you to mandate that the Labor Department delay issuance of the new proposed rule on helpers until further study of this issue can be conducted.

By way of background, in the early 1980s the Department collected overwhelming evidence that the old definition of ``helpers'' failed to recognize large numbers of construction workers. In 1992, the Department implemented the new, more realistic definition of ``helpers,'' which was upheld by the courts, only to be suspended by the Clinton Administration. And by the way, I refer to it as the 1992 rule. Mr. Yellig calls it the '82 rule. It was not actually implemented until 1992, and then only for a brief 20-month period. But either way, I think we know what we are speaking of.

Whatever one thinks of that rule, it at least attempted to address the very real problem that a large category of workers were not being recognized on Davis-Bacon projects. Reading Mr. Yellig's written testimony, it is clear that the unions and the Clinton Labor Department simply wish that helpers would disappear or did not exist, but they are out there. They are working every day throughout the industry in significant numbers, and the Davis-Bacon Act mandates that they be recognized.

The Department's own statistics, which are probably understated, indicate that helpers number between 5 and 10 percent of the total industry workforce; more than most of the recognized union trades. In a recent survey of ABC's own members, we found that over 80 percent are using helpers on private construction projects. So why not on federal projects?

In any event, the Department has failed to justify the suspension and withdrawal of the 1992 rule. The claims of enforcement problems are greatly overstated. They ignore the fact that both union and non-union contractors have developed workable methods of recognizing the differences between journeymen and helpers.

The Department and the unions have also claimed that increased recognition of helpers will somehow interfere with apprenticeship and training programs. But helpers as a classification are distinct from apprentices. And as you have just heard, there is clearly a place for both categories in the industry. While many helpers receive some training, and may indeed go on to become apprentices or journeymen during the course of their careers, there are many helpers who do not want to be apprentices, or who are not suited to formal training programs.

The Department has rejected five alternatives to its proposed rule on helpers without subjecting any of those alternatives to careful study. Every one of those proposed alternatives is preferable to the reinstatement of the old unworkable helper definition in the form of the proposed rule. Although the best solution would be to codify the 1992 suspended rule.

It is also undisputed that the Department's proposed rule will cost the taxpayers money, in the range of hundreds of millions of dollars. The study that was previously referred to about how Davis-Bacon somehow can save money by increasing costs has been refuted, and it is a shame that it is still being cited today.

Particularly in light of recently announced changes in the Department's wage survey process, Congress should require the Department to conduct a fair and objective study of the helper issue so that a proper method can be devised for recognizing industry practices which continue to prevail in many areas of the country.

In conclusion, ABC respectfully requests that Congress codify the '92 suspended rule. More immediately, however, it is imperative that Congress withhold funds, or otherwise stop the issuance or enforcement of the Department's new proposed rule, until after the Department has given much more careful study to the proposed alternatives. In no event should the Department promulgate a rule which would codify an obsolete, unworkable definition of ``helpers,'' and would fail to recognize prevailing practices in the industry. Thank you.

WRITTEN STATEMENT OF MAURICE BASKIN, ESQ., PARTNER, VENABLE, BAETJER, HOWARD & CIVILETTI, LLP, WASHINGTON, D.C., ON BEHALF OF ASSOCIATED BUILDERS AND CONTRACTORS, ROSSLYN, VA

SEE APPENDIX F

Mr. Norwood. Thank you, Mr. Baskin. Mr. Yellig, would you go now, please?

Mr. Yellig. Thank you, sir. My name is Terry R. Yellig, and I am appearing today on behalf of the Building and Construction Trades Department of the AFL-CIO. I regularly represent the Building Trades Department before the courts and federal and state administrative agencies, as well as provide legal advice concerning legislation.

I understand that the subject of this hearing is the effect of Davis-Bacon helper rules on job opportunities in construction. When I considered this, in mulling it over, I resolved that it is difficult to address this subject until and unless we have identified which Davis-Bacon helper rules we are talking about. Are they those that were adopted by the Department of Labor in 1982 that were suspended by Secretary Reich in 1993, or the helper rules that Secretary Herman described in her April 8th, 1999 notice of proposed rulemaking?

In addition, it is also necessary, it seems to me, to identify the kind of job opportunities that we are talking about. By that I mean, are we talking about opportunities in the construction industry for employment performing semi-skilled work in support of journey-level craft workers, that is commonly performed by workers known as ``laborers,'' but at wage scales substantially less than those that are commonly paid to laborers?

Or are we talking about employment opportunities to perform some journey-level duties, but not the entire range of journey-level work, under the supervision of a skilled journey-level craft worker, again at wages substantially less than journey-level wages in the same locality, and without the benefit of any formal training or a defined ladder of progression to the status and pay of a journey-level craft worker?

Or are we talking about opportunities for jobs in the industry that require performance of a broad range of unskilled, semi-skilled, and skilled duties, commonly performed by journey-level laborers and mechanics as well as apprentices and trainees, but at wages substantially less than journey-level wages in the same locality?

These are the kinds of employment opportunities that Davis-Bacon helper rules should not promote, because it is bad for the workers and it is bad for the country. On the other hand, Davis-Bacon rules that permit construction employers to offer jobs on public works projects covered by Davis-Bacon requirements as helpers when the work they perform is not the same as that performed by laborers or other classifications already employed in the area, provided they are not used as informal apprentices or trainees, would ensure that job opportunities in construction will continue to offer fair wages and quality training.

Short of completely prohibiting the use of helpers on federal public works projects, the Building Trades Department believes that these kinds of Davis-Bacon helper rules are preferable, because they come closest to satisfying the goal of the Davis-Bacon Act to protect local wage standards of workers employed on federal construction projects, while also complying with the prevailing wage principle in the Act.

Davis-Bacon helper rules must also be consistent with the Department of Labor's longstanding policy of encouraging employers to establish and participate in formal apprenticeship and training programs. The National Apprenticeship Act, also known as the Fitzgerald Act, which was passed in 1937, provides, and I would like to quote this:

``The Secretary of Labor is authorized and directed to formulate and promote the furtherance of labor standards necessary to safeguard the welfare of apprentices, to extend the application of such standards by encouraging the inclusion thereof in contracts of apprenticeship, to bring together employers and labor for the formulation of programs of apprenticeship, and to cooperate with state agencies engaged in the formulation and promotion of standards of apprenticeship.'' Nonetheless, the Fitzgerald Act lacks any enforcement authority. Similarly, there are no penalties of sanctions provided for in the statute's implementing regulations.

The Secretary of Labor filled this void many years ago by promulgating regulations under the Davis-Bacon Act that currently provide that laborers and mechanics classified as apprentices or trainees can only be paid less than the prevailing wage rate on Davis-Bacon projects if he or she is enrolled in a bona fide apprenticeship or trainee program registered with the Department's Bureau of Apprenticeship and Training, the BAT, or a state apprenticeship agency recognized by the BAT.

This regulation creates a powerful incentive for contractors and subcontractors to participate and invest in formal apprenticeship and trainee programs in return for an exemption from the requirement to pay their apprentices and trainees the otherwise applicable Davis-Bacon prevailing wage.

Davis-Bacon helper rules that would permit government construction contractors unfettered use of low-paid helpers on projects covered by the Act without the quid pro quo of investing in apprenticeship training would surely undermine the purpose and intent of the Fitzgerald Act. This is because the contractors that participate in and provide financial support for formal apprenticeship and trainee programs would be placed at a competitive disadvantage that would discourage their continued participation in such programs.

Furthermore, any public policy, including Davis-Bacon helper rules, that undermines formal apprenticeship training could have other detrimental effects on the entire building and construction industry. The harmful impact on formal apprenticeship training programs of Davis-Bacon helper rules that permit wholesale employment of low-wage workers without offering formal training designed to enable them to achieve the skills and experience of journey-level craft workers would not only depress those workers' wages and benefits, but also discourage interest in employment opportunities in the industry at a time when a large influx of new entrants will be needed, not only to replace people of my age, an increasing number of older workers who will be leaving the industry shortly, but also to meet the needs created by the anticipated growth in the industry.

The long-term impact of Davis-Bacon helper rules that permit widespread employment of low-wage, semi-skilled helpers on Davis-Bacon projects would have a particularly adverse effect upon minority and women workers in the industry. There is simply no evidence that supports the hypothesis that employing women and minorities as low-paid helpers increases their share of employment opportunities in the industry. All that it would accomplish is spawning a permanent sub-class of low-wage, semi-skilled minority and women workers on federal construction projects, called ``helpers.''

Instead, Davis-Bacon rules should contribute to expanded opportunities for untrained and inexperienced women and minorities, not only to obtain employment in the construction industry as laborers, apprentices, and trainees, but also to help assure that they will receive the quality of training necessary to enable them to become journey-level laborers and mechanics. This benefits not only the individual workers, but also replenishes the supply of skilled, journey-level craft workers that will be needed in the 21st century.

For these reasons, the Building and Construction Trades Department supports Davis-Bacon helper rules that, frankly, limit the opportunity to employ helpers as a wholesale substitute for laborers and for apprentices and trainees. Thank you.

WRITTEN STATEMENT OF TERRY R. YELLIG, ESQ., PARTNER, SHERMAN, DUNN, COHEN, LEIFER & YELLIG, WASHINGTON, D.C. ON BEHALF OF THE BUILDING AND CONSTRUCTION TRADES DEPARTMENT, AFL-CIO

SEE APPENDIX G

Mr. Norwood. Mr. Yellig, I did not know what you were going to say, but I know why you are here. I cannot find much in what you said that I can agree with, or feel that you could prove. All I can tell you is that in my District 98 percent of the working men and women are not in a union. I can tell you that we have lost a lot of jobs to the textile industry and farming industry, and I can guarantee you firsthand that a lot of them would be delighted to get their foot in the door through the helpers.

Now, I do not know how you come down on all you said, but I am pretty sure that if we could give them the same opportunity as everybody else to begin that first work start somewhere, they would be much better off.

It seems to me that you are not sure what helpers are, and so what I need to do is go to the two men who work in the field every day and hire people and build things and are actually on the ground with it. What do you mean by ``helpers,'' Mr. Nichols and Mr. Kinning? What does that term mean to you?

Mr. Nichols. Well, to me, Mr. Norwood, a helper is basically someone that I would consider to have a desire to learn something other than sweeping floors. Because in the projects that we deal with, anything above a clean-up person is put in a different category. Unfortunately, in that category you are either low on the totem pole, or you are at the very top.

In addition, I look at a helper as someone who has a desire to learn, has the ability to learn, and also is trainable. I will use an example, if I can, in the electricians. I am a general contractor. We subcontract work out for all of the major trades. My definition in the electrical trade would be as follows. A Journeyman is someone that we could tell to wire a panel board up, come and tell me when it is finished, and then we will call the inspector to come in and inspect it. A Helper is someone that can put on a switch plate and/or someone that can help and learn how to connect junction boxes, conduits, those type things.

But in the projects that we have been involved with if a worker has anything more than a broom in his hand, they are trying to put it into another classification. That is what I would consider a helper. That is someone you can teach a particular part of the trade. You cannot teach the guy electrical work in a day; but you can probably over a series of several projects teach him how to do some of the more mundane, less complicated things from an electrical standpoint.

Mr. Norwood. Well, do helpers prevail in the industry today, in non-government jobs?

Mr. Nichols. Oh, sure. Sure.

Mr. Norwood. So helpers are out there?

Mr. Nichols. They are out there.

Mr. Norwood. Nobody really wants the job? You have to go out and work hard at finding people to take that job because they are so mistreated, you see, as helpers?

Mr. Nichols. Well in our area, we are just about trying to get anyone in the world that wants to get into this business. Not everyone wants to, or has the ability to move right into an apprentice or into a journeyman position. But yes, sir, they are out there.

Mr. Norwood. So helpers prevail in the industry today?

Mr. Nichols. Yes, absolutely. Yes, sir.

Mr. Norwood. Other than in Davis-Bacon.

Mr. Nichols. Correct.

Mr. Norwood. Mr. Kinning, what about your experience with helpers?

Mr. Kinning. Yes, sir, Mr. Norwood. I look at this thing completely different. Mr. Yellig here is talking about depressed wages, and mistreating these folks and all this. This is absolutely, blatantly not true.

We look at a helper between a laborer and an apprentice. For instance, if the journeyman is making $21 an hour, and we hire laborers at $9.50 an hour, we may hire a helper at somewhere between $11 and $12, and increase him depending on what his skills are. We are taking a person, putting tools in his hands, and we are teaching him a trade. That is the difference between a laborer and a helper.

Some people want to only be laborers. They sweep floors. They dig holes. They backfill trenches. They carry material. I can teach a man in an hour how to solder pipe. I can teach him in an hour how to cut soft pipe. I can teach him in another period of time to do a different part of the mechanical trades.

This is where we fit these people into our line, and we want these people. After they have done a little bit of what we call the work that means something, which is putting in pipe or whatever it might be, then they say, ``Yes, you know, we really would like to make this our career path. We want to learn.'' This is when we pick them up, put them into our personnel department, put them in as trainees or apprentices, and we register them. Then they can carry right on through and in three or four years, they will become a journeyman.

Mr. Norwood. My time is going to be up, so do you feel that in non-government jobs the term ``helper,'' or the classification of helper prevails today in America?

Mr. Kinning. I have 120-plus people on my payroll classified as helpers working today. I have got 650 employees total.

Mr. Norwood. Did I understand you to say that you did Davis-Bacon work on the different Indian reservations?

Mr. Kinning. Yes, I did. I have worked on several Indian reservations. We wanted to use the local people as part of the specs, normally. We need to help the people of the tribe get work, so that they can stay at home.

Mr. Norwood. Could you?

Mr. Kinning. We used them as laborers only, because we had to pay journeyman scale if we did not. So, it deprived those people of the opportunity to learn. I think I have got three or four Indian people that I have brought with me, brought them through, and they are licensed. One of them is a service technician. He is putting in air conditioning in my house today. These people have done very well. One of them is a project manager and one is a project superintendent.

I brought those people along because they would come with me. I would have had a lot more of them if I had had the opportunity to put tools in their hands and show them what they really were capable of.

Mr. Norwood. So in effect, the fact that we do not have a helpers classification for Davis-Bacon means that the very people who represent your District and who you want to help get jobs, members of the Indian tribe on the reservation, could not actually take advantage of you being there and building a government project, could they?

Mr. Kinning. That is absolutely right. Our President just went up to Pine Ridge

30 days or less ago, and sat down with those people and said, ``We are going to give you guys jobs.'' He did not tell you what he meant was, ``I am going to hand-tie anybody that wants to come up here and help you because they are going to comply with what the Department of Labor really wants you to do.''

Mr. Norwood. Mr. Roemer?

Mr. Roemer. Thank you, Mr. Chairman. You showed that five minutes goes by very quickly. I would like to start by asking a very simple question that could be answered with a ``Yes'' or ``No.''

Mr. Baskin, do you support repeal of Davis-Bacon? Yes, or no?

Mr. Baskin. Yes.

Mr. Roemer. Mr. Alford?

Mr. Alford. Yes, sir.

Mr. Roemer. Mr. Yellig?

Mr. Yellig. No.

Mr. Roemer. Mr. Kinning?

Mr. Kinning. Yes, sir.

Mr. Roemer. Mr. Nichols?

Mr. Nichols. Yes, sir.

Mr. Roemer. So is this Hearing...

Mr. Norwood. Amen, that is it.

[Laughter.]

Mr. Norwood. ...the democratic way?

Mr. Roemer. I suspected that. I mean, I am not sure if this hearing is all about trying to find out what helpers do, and whether or not we can define it so it can be enforced, or whether we are in fact loading up the witness list just to get rid of Davis-Bacon.

Mr. Alford. May I amplify on my ``Yes'' answer?

Mr. Roemer. Well, I have only got five minutes. I would like to move around and ask some more questions. But, you know, if we are doing a hearing under the auspices of getting rid of Davis-Bacon, let us be clear about it; let us just ask you guys to come up and testify about getting rid of Davis-Bacon. Then we can have an interesting debate.

But if we are going to camouflage it and say, you know, ``Let us try to look at, you know, the minutiae and the detail and the history of helpers and how we define a helper,'' and then put a witness list together; when in fact you are all not really interested in that, and you just want to get rid of Davis-Bacon, I am not sure that we are having a very helpful hearing here.

Mr. Yellig, I have a question for you. Does the term ``helper'' have multiple and very different uses in the construction industry?

Mr. Yellig. Frankly, that is what I was alluding to.

Mr. Roemer. Tell me about that. How do you find that across the country?

Mr. Yellig. How do I find it? I think it varies from locality to locality. Frankly, listening to the other gentlemen describe how they use their helpers, what was going through my mind was, well, that person is a laborer, and the other people should be apprentices. That is all we are talking about here.

This is a semantics exercise, the purpose of which is simply to enable contractors to employ low-wage, unskilled or semi-skilled people, at less than the prevailing wage. Because everything that I have heard today either falls into the generally accepted definition of a ``laborer,'' which is much more than sweeping floors throughout the country, as far as I know. They tend, many of the trades they tend. You know what I mean by that.

And when you are talking about using the tools, what are apprentices and trainees but people who are working with the tools, under the supervision of a journey-level craft worker, learning their craft so some day they will be journey-level workers themselves. But there is a career path there, if you will. I hate to use that white-collar term, but that is what it amounts to. They know that if they put their time in, they do what they are supposed to do, they will progress to the level where they can be certified as a journey-level craft person.

Mr. Roemer. So do you think that the suspended helper regulation could ever effectively be enforced by the Department of Labor?

Mr. Yellig. No, because it is open to a lot of shenanigans. It is very simple to lump together your informal trainees, your laborers, whatever you want to call them. You can lump them all together and say, ``Here they are, and we are going to call them 'helpers','' for example.

The point that I was trying to make, and that I really feel strongly about, is that the apprenticeship system is primarily the BAT apprenticeship system. Most of the apprenticeship programs that are administered or approved by BAT are in the construction industry.

There is a reason for that. It is absolutely to a contractor's benefit to be participating and contributing to a bona fide apprenticeship program if they are going to do public works projects covered by a Davis-Bacon requirement, because they get the financial benefit of an exemption, as I said, an exemption from paying the prevailing rate. They simply are required to pay what that apprenticeship program provides as the rate for that level of apprentice. That is it. They do not have to comply with the Davis-Bacon prevailing wage. What we are really talking about here is getting that same benefit without the investment. That is what I meant by ``quid pro quo,'' what I call it. It is a deal.

Mr. Roemer. So part of your testimony is, you said that helpers are not used in any uniform way by contractors?

Mr. Yellig. No, I think some people understand them to be unskilled workers, trying to give them an opportunity to break into the industry. Other people say, ``Well, they are people that work with some of the tools under the supervision of a journeyman.'' That is an apprentice. Others would define them as being able to perform all kinds of unskilled, semi-skilled, and skilled tasks, but simply under the supervision of a ``journey-level craft worker.''

So it means a lot of things to different people. And when you lump them all together, there may be a lot of people out there doing that kind of work; but they are really laborers, or they should be apprentices or trainees.

Mr. Roemer. Well, Mr. Chairman, I know we have a couple of votes. I am finished with my questions. I would just say that the vote by these panelists, four-to-one, to ameliorate Davis-Bacon certainly does not reflect the votes that we have had on the House floor where about 30 or 35 Republicans have joined with the Democrats to support Davis-Bacon. And I am sure we would have that vote once again on the House floor.

Mr. Norwood. And I would mention to the Ranking Member that they are all from New England.

[Laughter.]

Mr. Roemer. They all have a lot of good sense.

Mr. Kind. Mr. Chairman, we will take them. We will take them.

Mr. Norwood. Let us take a recess here, and go get both of these votes done. And if you all would stay close, we will get back just as fast as we can.

[Recess.]

Mr. Norwood. The hearing will come to order. Thank you, gentlemen, for waiting on us. Mr. Hoekstra, I think it is your turn.

Mr. Hoekstra. I thank the Chair for yielding. Mr. Nichols, Mr. Kinning, Mr. Alford, from your background on Davis-Bacon, do you use all the same definitions for your workers from one company to the next company, from one region of the country to the next region of the country? Do you use all the same titles?

Mr. Nichols. What do you mean, the same titles?

Mr. Hoekstra. Well I am looking at Davis-Bacon job descriptions. You know, there are all kinds of designations. I think that in Washington, D.C., there are 143 different construction trade occupations. I worked for a Fortune 500 company. We had a certain set of job descriptions and job titles for people that worked in our company. Other people in the same industry with similar jobs would have had different titles. What do you find?

Mr. Nichols. As far as our company being rather small, yes, we typically would use the same ones. All of our work is typically in the same general metro Atlanta area.

Mr. Hoekstra. No, I mean would you use the same job descriptions or the same job titles that are identified in Davis-Bacon?

Mr. Nichols. Oh, absolutely. Yes, sir.

Mr. Hoekstra. Would another company of similar size, in the same business use the same job titles?

Mr. Nichols. Should be using the same, sure.

Mr. Kinning. Mine differs from him a little bit, because I am a mechanical contractor. We do plumbing, we do sheet metal, process piping, welding, and each one of these classifications. Most of the time, when we take a Davis-Bacon job we will have to send in and get a new classification. For instance, a welder. If we were doing some stainless steel piping, they would not have that classified. But people that would bid against me would end up using the very same classifications.

Mr. Hoekstra. Mr. Alford?

Mr. Alford. I would think that there might be some slight difference in nomenclature, or descriptions of the classifications based on the region in the country. But not much.

Mr. Hoekstra. Mr. Baskin?

Mr. Baskin. Well, in fact, there seem to be hundreds of job titles that are found to be existing out there on prevailing wage. But only because of Davis-Bacon is there an attempt to pigeon-hole contractors into certain specific titles, when in fact there is variation within the industry. Only with helpers is the Department of Labor apparently concerned about this business of overlap.

When one looks at the hundreds of job titles in the wage determinations, there is considerable overlap among them, and considerable variation. They will go to great lengths to allow a job title to be designated with only a few workers in that area. Yet, they say to us now that we cannot have helpers, even though they are 5 to 10 percent of the industry.

Mr. Hoekstra. Mr. Yellig?

Mr. Yellig. I think that it is fair to say that the duties or tasks that are performed by a particular craft classification in one area may vary. It will vary from one area to the other. I think that is fair to say.

For example, I just read a case from the Ninth Circuit, San Francisco, about the installation of process piping at a waste water treatment plant. And there was a question as to whether the people that did that work were properly classified by the contractor as laborers; whereas, there was a claim that those people should have been paid as plumbers/pipe fitters. And there is a difference in the wage rates. Perhaps in other parts of the country there is no issue about that.

But I think the important thing, as far as Davis-Bacon is concerned, and I would disagree with my friend Mr. Baskin, is that the Department of Labor, under the Davis-Bacon Act, does endeavor to determine which one of those classifications is the proper classification to assign to people that perform certain work.

You do not have an overlap. The Department of Labor strives to not have overlap. So it is consistent with the concept that you do not want to recognize helper classifications that perform duties that overlap with other classifications.

Mr. Hoekstra. Thank you. Mr. Nichols, when you are bidding on a project or when you are actually going to do the work, I am assuming that you would prefer to do it in private sector and government sector exactly the same way. Is that true?

Mr. Nichols. Absolutely. Because a lot of times we try to use similar subcontractors,

and if they have to do it differently then they have to gear up differently, and so forth. But as far as bidding projects, in my particular instance we have to bid these type projects completely differently.

Mr. Hoekstra. Because you have got different pay scales?

Mr. Nichols. Well number one is, I know this is a completely different issue, because with the City of Atlanta we deal with a very stringent affirmative action program as far as dealing with projects with the City of Atlanta. We have to deal with smaller subcontractors for the most part, and a lot of these subcontractors may have three or four employees. These are small folks and they are really not geared for a large work staff. Most of the time, the owner of the company is out there actually doing the work himself.

So, to answer, do we bid them the same? These are somewhat different. We bid them mainly because of other issues, not just this.

Mr. Hoekstra. But in normal projects, if you are using helpers you figure those under your bid. When you go into a federal government construction project, you have got to recognize that you have different pay scales, and different job categories. And how you use your workers and your workforce may be different than what you would on a normal construction project.

Mr. Nichols. Exactly. You have to figure that into your bid, which we do from our standpoint as do our subcontractors that quote us on bid day, as well.

Mr. Hoekstra. I would assume that probably affects your cost, but probably not your quality.

Mr. Nichols. I can tell you the cost is higher. As far as the quality of work, the quality of work is maintained. We have a set of specifications we meet, and we accept nothing less regardless of how that project is done. Number one is, I am putting my name on it. When I put my name on it, I want to make sure the quality is the very best that we can do.

Mr. Hoekstra. Thank you.

Mr. Norwood. Thank you, Mr. Chairman. I am sorry Mr. Roemer is not back, because I wanted to take just a minute and announce what this hearing is all about. This is a hearing on the effect of Davis-Bacon helper rules on job opportunities in construction. Did you get all that? I want to make sure we got that right.

This is not to repeal Davis-Bacon. Anybody on this panel up here knows me well enough to know I will be glad to do that, and I will not mind telling you I am trying to do that, but that is not what this is. This is about the Davis-Bacon helper rules, and how it affects jobs in the Tenth District of Georgia, in Michigan, in Colorado and everywhere around the country.

Mr. Kind, do you have questions?

Mr. Kind. Yes, thank you, Mr. Chairman. We are very clear on your position on Davis-Bacon. You have reiterated it many, many times.

But I want to just thank the witnesses for your testimony here today. It has been quite interesting. It was interesting sitting here and listening to Mr. Roemer's first question with regard to the repeal of Davis-Bacon, because I have talked to contractors back home in my district in western Wisconsin quite a few times, as far as their take on Davis-Bacon. And they tell me the last thing they want to see is for Davis-Bacon to be repealed, because it is the great leveler in the competitive bidding process for federal contracting jobs: knowing what the prevailing wage is, that there isn't this great race to the bottom when it comes to job bids and the labor scale in a particular area.

And they feel very comfortable adhering to Davis-Bacon rules and regulations and the prevailing wage. And I thought that was a very interesting perspective from their point of view, those who are in the business in Wisconsin and making bids on jobs, and their comfort with the prevailing wage issue.

But let us focus for a second on what is coming out of DOL, the proposed rule on that. Mr. Yellig, maybe you can help me out in clarifying a few questions that I have in regards to the proposed rule. Do you believe that DOL's proposed rule would effectively discourage any type of contractor misclassification when it comes to the definition of ``helpers''?

Mr. Yellig. Well, yes sir.

Mr. Kind. I guess another way of saying it is, is a duties-based classification a more objective standard by which to enforce the rule?

Mr. Yellig. You took the words right out of my mouth. That is exactly right. The proposed helper rule, as I understand it, does not prohibit the recognition of the helper classification. It does not say, ``There shall be no helper classification.''

What it says is that in order to recognize a helper classification, that the people classified as such must perform a separate, identifiable set of duties or tasks, and represent a prevailing area practice. So that, therefore, in the local labor market, if it is the prevailing area practice to carve out a certain group of tasks and call the people that perform those tasks ``helpers,'' then so be it. That is what will be recognized.

The concern is that in fact if you have a non-duties based definition, such as was in the 1982 regulation, you basically would lump together people that I regard as doing laborers' work, people that are performing as informal apprentices or trainees, lump them together with people that perhaps are truly helpers, and call them all ``helpers,'' and say, ``Well, that is prevailing.'' And you have got a hodge-podge there. That is what I was trying to allude to in my statement.

Mr. Kind. Well, in your opinion, then, the proposed rules, as far as how it might relate to apprenticeship programs, will this tend to support or encourage the use of apprenticeship programs, as they are currently drafted, or discourage the use of apprenticeship programs?

Mr. Yellig. Well, I think what happens, and what would happen, is that because you are making it more restrictive or tougher to get a helper classification approved or recognized, as I indicated in my statement, many contractors will say, ``Well, you know, maybe my best way of getting the kind of workers to do the kind of work that I have in mind, which would be working with the tools, assisting or working and learning from a journeyman craft-level worker. The best thing for me, in order to get a price break on wages is to participate and invest in an apprenticeship training program.''

And as I call it, it is a quid pro quo, it is a trade-off: We the taxpayers relieve you from paying prevailing wages to those people; and in exchange, you invest in formal training so that they are not being ripped off in fact, not being given false hopes of becoming journeyman when they probably would not unless they received that kind of formal training.

Mr. Kind. Well, we all know that there is a terrible labor shortage in virtually every sector of our economy here today, no less so in the construction and trades industry. But let us take a look at it from the other end. And Mr. Nichols just alluded to it in regards to quality of work issues.

Mr. Yellig, is there any concern at all that a looser definition of a ``helper,'' and therefore a greater influx of helper workers, might have an overall impact on quality of work in the long run?

Mr. Yellig. Well, you know, I did a little research on the Apprenticeship Act. That is why I mentioned it in my testimony. What we are looking at, perhaps for different reasons, but are seeing the same phenomenon today as was occurring in 1937. The skilled people were getting out, or had gotten out of the trades, and there was no new generation coming along to replace them with the skills necessary to perform in the construction industry.

That is what is happening here. And instead of offering fair wages that would entice people to consider construction as a career, which is what it should be. I know many people that have made careers in the construction industry. I am from Pittsburgh, and they are still mostly union there. And they have made careers out of it, educated their children.

You cannot hope to do that if the word is that construction is equivalent to working at McDonald's, and you are not going to get a living wage, and by the way, we are not even going to offer you training to achieve the skills to not make a living wage. That is the phenomenon.

And as I said, what I have seen is that people in my - I am going to be 53. In the construction industry, people my age are starting to think about retirement, because of the nature of the industry. And there is not a heck of a lot of people in the 18-to-25 bracket that will seriously consider construction, if you do not offer decent wages and fair training opportunities.

Mr. Kind. So the bottom line is, you are feeling comfortable with what is being proposed, coming out of DOL today?

Mr. Yellig. Yes. There are some trades that do not want to recognize helpers at all: the more skilled crafts that require certification. You know, I would be less than candid if I did not acknowledge that there are some trades that have taken that position. But the consensus among the building trades unions is that this is the most preferable rule.

Mr. Kind. Thank you, Mr. Chairman. Thank you.

Mr. Norwood. You bet. Mr. Kinning, do you offer training in your company?

Mr. Kinning. Yes, I do.

Mr. Norwood. Mr. Yellig, is it your position that the only one that counts is union-organized training?

Mr. Yellig. Oh, no, not at all.

Mr. Norwood. There is some implication in your remarks that that is the case. You do not mind if Mr. Kinning is not union and uses helpers and offers training?

Mr. Yellig. Well, you have sort of mixed two concepts together. You know, I think the building trade's position is that every construction contractor in the United States, at least that wants to perform public works subject to Davis-Bacon, should be required to participate in an approved, bona fide apprenticeship training program. So to that extent, you know, we have no problem with that.

Then you mixed in helpers. Our position is that a helper, if you look at the definition, at least in part, from the 1982 regs, is really describing what amounts to a trainee or an apprentice without the formal training aspect of it. Because apprentices and trainees on a job are paid less than journeyman. They work with the tools of the trade under the supervision of an experienced craftsman. That is exactly what they do. And they are a source of, let us say, cheap labor for at least, you know, three, four, five years. But at the end of that time, if they have done their job, they achieve the status of a journeyman craft worker who can command that full wage. That is what I was talking about, a quid pro quo. That is a trade-off.

And the Davis-Bacon regulation that I referred to encourages that. That is the only formal encouragement there is for contractors, at least from the government, to participate in that.

Mr. Norwood. There is good informal encouragement to keep your business working, and to have trained people on the job so you can compete. That is the real incentive to have training. I know people in Washington could not possibly accept that unless we had a mandate from Washington to train, but the real reason to do it is to make your business work.

Mr. Baskin, would you care to comment on any of those remarks?

Mr. Baskin. Well, I think the problem with Davis-Bacon as it is being interpreted with this new rule is, instead of the great leveler, it has become the great distorter of prevailing practices. Instead of recognizing what is going on out there, which is a lot of different types of helpers doing a lot of different types of things, not just pigeon-holed into this apprenticeship program or pigeon-holed into the specific job duty of a journeyman. If they are not being recognized, because that is the way the private sector does it, the public taxpayers are not getting the benefit of that, thanks to the way Davis-Bacon is being interpreted.

And so I think that is the difficulty that we are facing here. It is why some people are driven to support repeal, because certainly the two are not mutually exclusive. If the Act was properly interpreted and properly implemented, people would not feel they had to go that way. It has obviously lost its way over the last 60 years, and the way it is being interpreted now with an obsolete rule as is being foisted on us now with helpers, it is a sad commentary on the way the Act is being implemented today.

Mr. Norwood. Mr. Kinning, would you care to respond to that?

Mr. Kinning. Yes. Mr. Chairman, I would like to ask Mr. Yellig if he is in the position in his firm where he makes payroll?

Mr. Yellig. Yes.

Mr. Kinning. Okay. I have got a $550,000 payroll every week that I make. And these people are like part of my family and I have got to make payroll. Each one of them has got to be better every year. This past year, I paid $928,000 in bonuses. I have got this apprenticeship that I have paid over $100,000 into, our safety program is the best in the country, bar none, and all this costs money. In this training program, you sit here and put these government regulations on us as contractors, and all it does is try to make life tougher for us.

Mr. Kind is talking about the great leveling effect. Well, in Denver, CO when we bid a job against all union contractors, the union steps up and puts industry funds in to recapture the market. So they do not have to pay Davis-Bacon, which I have to in order compete against them.

Every time we bid a job, they come in and they audit our books to see that we have paid it right. I mean, we are all on this thing together. We have got to provide some good employment and train a lot of people. I really think we get hampered by the organized labor group.

Mr. Norwood. Do you have a situation back in Colorado where the union hall there typically and often tries to hire your people that you have trained?

Mr. Kinning. Absolutely. They used to come and get our guys. We went to the local college and had Red Rocks train them. They would wait until our guys got out, take them down and buy them beer that night and try to caress them. They also are calling our people at night, trying to get them away from us. They have tried on well over 100 this year. They have gotten about 25 people from me. They work them for about three months, and then they put them back on the bench.

Mr. Norwood. Why do your people not go running?

Mr. Kinning. Well, because they get bonuses, and we treat them properly. We pay their 401(k), we pay their health and welfare, and we take care of our people. They do not get laid off; our people work 12 months a year. More than 10 percent of their salary is in overtime.

Mr. Norwood. Do the union construction workers in your area work 12 months a year?

Mr. Kinning. Absolutely not. I have a brother-in-law who has 28 years as a pipe fitter, and he is laid off three months out of every year.

Mr. Norwood. Mr. Schaffer, it is your turn, sir.

Mr. Roemer. Mr. Chairman?

Mr. Norwood. Yes.

Mr. Roemer. Mr. Chairman, are we still practicing the alternating back and forth? Well, we just had Mr. Kind for five minutes, and then we just had your turn for five minutes.

Mr. Norwood. It was the Chairman. I think in most of the Committees I am on, the Chairman gets to do what he wants to do.

[Laughter.]

Mr. Roemer. Well, certainly you have got the gavel, Mr. Chairman. That is certainly in your prerogative. But generally, we do not have five minutes...

Mr. Norwood. ...and Mr. Owens is going to get...

Mr. Roemer. We do not have a Republican go, and then a Democrat go, and then the Chairman go, and then a Republican go, and then the Democrat go, and then the Chairman, and then a Republican...

Mr. Kind. Mr. Chairman, I think we need a prevailing time rule.

Mr. Norwood. Well you know, I am just learning this. I have been watching a lot of Chairmen. This is the way it works pretty well, and the Chairman gets to intercede between every remark. I have not seen anybody mess with it. Mr. Schaffer?

Mr. Schaffer. Mr. Chairman, I could actually use another five minutes in preparing questions.

Mr. Norwood. See how easy we are?

Mr. Roemer. You are all right. You are all right.

[Laughter.]

Mr. Norwood. Mr. Owens?

Mr. Owens. Thank you, Mr. Chairman, for recognizing me. As the Ranking Member of the Subcommittee on Workforce Protections, let me just note that this matter has been under the jurisdiction of our Subcommittee for a long time, and we have had a lot of experience with it. I was surprised to see it moved to this Subcommittee. I do not exactly know why. But I appreciate the opportunity to participate here.

Mr. Norwood. Would the gentleman yield just a second?

Mr. Owens. I would be happy to yield, sir.

Mr. Norwood. I have a question.

Mr. Owens. Yes.

Mr. Norwood. You said you did not know why it came to this Subcommittee?

Mr. Owens. Yes, I did not.

Mr. Norwood. The reason it has is because I am trying to get jobs for people in my District. That is why it came to this Subcommittee. We are trying to figure out how to help them get these jobs.

Mr. Owens. Mr. Chairman, okay, you have shown us how, you know, the rules are made up as you go. I suppose the Dental Association has always operated that way, and they do pretty well.

One important fact is the Department of Labor's Bureau of Apprenticeship training data answers some of the questions that you were asking before. The data shows that 85 percent of all apprenticeship and training for construction workers comes out of jointly sponsored apprenticeship programs which are allowed to flourish under the Davis-Bacon groups.

The minority participation in these apprenticeship programs is now their primary route, the primary route of minorities to attaining a standard of living on which families can be raised and achieving benefits such as health care for those families.

Because the suspended regulations will allow construction contractors to employ unlimited numbers of helpers on federal construction projects without registering them in approved apprenticeship programs, on what basis can you argue that it would not result in a decline in training resources for construction workers, particularly for minority workers? And that is a subject I am particularly interested in and wanted to ask a few questions about. Mr. Alford had said that there is widespread discrimination in the construction industry.

Mr. Alford. Yes, sir.

Mr. Owens. And I suppose the gentlemen on this panel can answer why that continues. But I agree with Mr. Alford that there is widespread discrimination. But the evidence that we have, the data that we have, shows that in the Davis-Bacon contractors and the union contractors who adhere to Davis-Bacon, there is far less discrimination.

Mr. Alford, you have said that you are building a baseball stadium and a football stadium in Detroit, and there is massive discrimination there. Are there federal funds involved in building the football stadium and the baseball stadium?

Mr. Alford. They have a project labor agreement sir, that would restrict...

Mr. Owens. Are there federal funds involved in building the football stadium? Have we got some federal funds?

Mr. Alford. It will be built through tax money, yes, sir. It will be a Title VI project.

Mr. Owens. I am asking you about federal funds. Davis-Bacon. Does Davis-Bacon apply in the building of the football stadium or the baseball stadium?

Mr. Alford. Davis-Bacon is applying to the building of the Detroit football stadium, the Detroit baseball stadium...

Mr. Owens. There are no federal funds involved in this...

Mr. Alford. Still, sir, under the project labor agreement, it becomes a union-only project. Every football stadium and every baseball stadium, every basketball stadium in this country is a union project.

Mr. Owens. That is something that is custom and tradition, but it is not Davis-Bacon.

Mr. Alford. No, it is through the players' unions and the agreements of major league baseball, the NFL, and such.

Mr. Owens. The discrimination there is not caused by Davis-Bacon.

Mr. Alford. The discrimination case in point. If you want to talk about Detroit, I will be glad to walk you through that and let you see where I arrived at my findings.

Mr. Owens. I want to make the distinction between Davis-Bacon discrimination, and widespread discrimination in the industry that these gentlemen represent.

Mr. Alford. My discrimination is with the construction trades. The discrimination I talk about is with the construction trades, not necessarily Davis-Bacon.

Mr. Owens. Well, maybe Mr. Nichols and Mr. Kinning can address that issue. Is there widespread discrimination in your area, Mr. Nichols? You have said there is a great shortage. Can you find many African-American laborers in Georgia that might take care of your shortage of fine workers?

Mr. Nichols. The last project we did requiring minority participation roughly 70 percent of our contract was African-American subcontracted and purchased out.

Mr. Owens. It was required, you say? By whom?

Mr. Nichols. By the City of Atlanta.

Mr. Owens. By the City of Atlanta?

Mr. Nichols. Yes.

Mr. Owens. So there was no discrimination, because the City had its own set of requirements that you have minority participation? Is that what you are saying?

Mr. Nichols. I am saying that the City of Atlanta did not require that amount. That was my own volition. But the City of Atlanta has their own percentages that they require.

Mr. Owens. Now, as I have listened, you talk about shortages. Is there a shortage of journeymen? Is there a shortage of apprentices?

Mr. Nichols. In the Atlanta area, I would say that there is a shortage of skilled minority workers. That is the reason the vast majority that we see on our Davis-Bacon projects are pretty much in a helper classification.

Mr. Owens. Well, can you tell me, I have been trying to figure out why we cannot solve this problem, why have you not put the helpers into apprenticeship programs where they get formal training? What keeps you from moving those helpers into apprenticeship programs?

Mr. Nichols. Well, let me clarify one thing. As a general contractor, the majority of our employees, my direct employees, are typically superintendents and management staff. We subcontract the trades. We are a true general contractor, which means we do not self-perform the work. And the in my case I think I am here kind of representing the smaller...

Mr. Owens. You are here to represent not yourself, but the subcontractors who you deem to have a problem with Davis-Bacon.

Mr. Nichols. I am saying, from a smaller perspective, the subcontractors that we associate with on our federally-funded projects are three to four employee companies. They are not geared up for apprenticeship type programs. As I said earlier, a lot of times the owner of the company is out there physically doing the work him or herself.

Mr. Owens. You do not handle many government-sponsored jobs, then? It is only occasionally? You do not have many jobs that Davis-Bacon would apply to? You are just here...

Mr. Nichols. No, I do have several. As a matter of fact, over the last five years, the majority of our projects did have Davis-Bacon requirements on them.

Mr. Owens. Did you have shortages of qualified craftsmen, journeymen, on those jobs, also?

Mr. Nichols. From the subcontractor stage, I would say, yes.

Mr. Owens. You have only a vague knowledge of the problems faced by these subcontractors, because you are the general contractor, right?

Mr. Nichols. I don't have a vague knowledge, I have direct knowledge of it because they are working on my projects. And, no, there is a shortage that I can see.

Mr. Owens. Do you have the same shortage, Mr. Kinning?

Mr. Kinning. We graduated 82 people in May out of our apprenticeship program. Forty-two of them were minority people. And in my office, my front desk secretary is minority. We have got people throughout our entire company.

Mr. Owens. Any problem with a steady stream of people, helpers becoming apprentices?

Mr. Kinning. We bring the helpers into the company, and then we bring them into apprenticeship. We do that for the reason I stated earlier.

Mr. Owens. Why do we need the category of ``helper,'' then?

Mr. Kinning. So that we can maintain them and keep them.

Mr. Owens. Well, they can become apprentices, can't they?

Mr. Kinning. They what?

Mr. Owens. They could become apprentices without being helpers.

Mr. Kinning. Yes, but I will lose over half of them. It costs me a lot of money to run that school. I want them to stay.

Mr. Owens. You will lose them if a helper, given an opportunity to become an apprentice? You will lose them?

Mr. Kinning. No, from a helper to an apprentice I have doubled my retention rate, because the people know this is a career they want to take. If I just take them off the street and put them in an apprenticeship program, I am losing about 60 to 80 percent. Sixty to 80 percent of my people are gone. They will not stay and it costs me too much money to set up.

Mr. Owens. Oh, so becoming an apprentice is not an incentive to stay?

Mr. Kinning. I want them to be helpers. Then after they have been in there a period of time and they show they want to become plumbers or tinners, then I move them into the apprenticeship program. Then they will stay with me.

Mr. Owens. Well, what is wrong with them being laborers while you find out if they have good qualities, come to work on time, are serious, and might be good in an apprenticeship program? Why can they not just be laborers?

Mr. Kinning. You know, I am in the business to run a business, and not to babysit. And I am trying to make this thing as methodical as I possibly can. I pick up the best people I can get. I go into the inner city. I have done more for the minority community than anybody in Denver. Mayor Webb is my personal friend, and he has asked me to do it, and I do it. I do it because I want to. It is not because the federal government tells me. I do it because I want to and it is the right thing to do.

Mr. Norwood. Thank you, Mr. Owens. I think, Mr. Nichols, that Mr. Owens would be interested to hear you comment on the fact that the last subcontractor that got hurt very badly on one of your jobs was a minority contractor, and was hurt by Davis-Bacon, the proposal, the lack of classification in helpers. I think he would be real interested in that at some point in time.

I would like to recognize Mr. Schaffer now.

Mr. Schaffer. Thank you, Mr. Chairman. Mr. Alford, I saw you lunging for the microphone, trying to get in a comment on the last line of questions.

Mr. Alford. Yes.

Mr. Schaffer. I yield to you to make your response.

Mr. Alford. This apprenticeship program with construction trades, from an African-American, from an Hispanic, from an Asian point of view is a joke. They do not put minorities through the apprenticeship program. They talk about, ``We are going to do an apprenticeship program.'' They have been doing a good start on an apprenticeship program in the construction trades for the last 50 years.

The problem is, 50 years later we have no minorities, very few, in the journeymen ranks. And it is easy, what this game is about. And as I listen to these two men here talk about their businesses in Atlanta, which is probably the mecca for black labor in this country, Davis-Bacon is not solving the problem. Construction trades, unions are not solving the problem.

I did a study in Indianapolis on a pre-apprenticeship program, which is now adopted by Detroit and now adopted by Louisville. And I asked the organizers of this pre-apprenticeship program, which was to incubate inner-city youth into the apprenticeship program, I said, ``I want to know the names and the people who did this five years ago, three years ago. Let us go back ten years. Tell me where they are.'' And none were to be found. None made it through. They get on that bench at the union hall, and sit and sit and sit, and they are never called. Then they are frustrated. Then they go and join the Army, or they go and work for Ford or Chrysler or someone who will give them a fair shake.

So there is a big hustle out there. I think it is really a shame that 50 years ago the descendants of slave craftsmen who did all of the brickwork, who did the carpentry, who did the roofing, who did the highway work are disappearing because of an organized, national, discriminatory process that for some reason people cannot wake up and see.

Look at Detroit, and at Louisville. UPS came to the National Black Chamber of Commerce: ``We have to do this union job. We need black workers.'' We go to the laborers' union hall in Louisville. There are 2,900 laborers; twelve are black. We have got a problem. We went out and found those people, but there are no blacks working on any major Davis-Bacon project anywhere in Louisville, a city that is 35 percent black. That is an outrage.

Mr. Schaffer. Can you just continue on, and spell this out for the Committee? How does the facilitation of helpers assist in the problem you just described?

Mr. Alford. It provides an opportunity for a person who wants to work to get into the construction business, driving nails and working a shovel. I mean, we are not telling them to pass an SAT; we are not telling them to take a bar exam. We are telling them to do some basic skill work and have an opportunity by doing it. So the helpers, through people who use helpers, are provided an opportunity to get a chance to understand this industry, and to understand the possibilities of careers. And then would it not be beautiful at that point in time that they could get into an apprenticeship program?

I think the Department of Labor certainly can investigate. We can come up with some data that I think would show this Subcommittee an outrage at discrimination. I want to see the correlation in urban communities, in Chicago or Detroit or San Francisco where you can directly correlate unemployment of minorities to discrimination in the construction trades.

You know, we have gotten 600 people hired in San Francisco public house, six hundred. The union fought tooth and nail. Finally, Mayor Brown had to buy initiation fees for these 600 people just to do construction on HUD-funded projects.

But then, what we have to do is develop their working skills so that they can transfer out of construction, just as United Airlines hired 150 of them on their new terminal and placed them outside of construction, because they will not have a future in the union. They will not be allowed to stay there. It is documented.

Mr. Schaffer. Mr. Yellig, in your opening comments you disputed the testimony entered by Mr. Alford in his opening comments to the Committee about the prevalence of the racial inequality in the construction trades, and the relevance of the concern to the debate today over helpers. I mean, frankly, when we are spending hundreds of millions if not billions of federal funds on construction projects, I would prefer to see those dollars spent in a way that more approximate Mr. Alford's vision that he just stated, rather than the one that we have today.

I would like you to elaborate further on the credibility of Mr. Alford's argument.

Mr. Yellig. Well, I did not dispute anything he said and I am not casting any aspersions on his credibility. I do not think that is fair to characterize my testimony in that way. I do not think there is anything like that.

However, I would be happy to address the issue. It seems to me that what we are talking about are two different issues. One is, should there be equal employment opportunity on federally-funded construction projects? And the answer is, yes, obviously.

Now, you can accomplish that by enforcing equal employment opportunity requirements. That is not the Davis-Bacon Act. There are many other requirements that are intended to accomplish that purpose.

Now, assuming that you aggressively enforce those requirements, there are then two options that seem to me to be offered here. One is that the beneficiaries of those equal opportunity enforcement actions will be paid a living wage, a decent fair wage like everybody else; or they will be paid some low wage because they are minorities or women. I think I opt for the former, not the latter.

I think that is the issue, if you want to put it in terms of equal employment opportunity. I do not think there is anything in the Davis-Bacon Act. We can talk about what somebody said in a congressional debate in 1931, and say, ``You see, there is the genesis of Davis-Bacon.'' I have read that stuff and, believe me, I can make a case, a very good case, that that is not true. But putting that aside, we are in 1999, and we have to deal with the situation as it is.

Nobody is going to sit here and say there is under-representation of minorities and women in the construction industry [sic]. Anybody that did that would be a fool or a liar. But the answer is not to say, ``Oh, well, let us reduce the wages in the construction industry so more under-privileged people can work, but albeit at reduced wages.'' I think that is hypocritical, frankly, from my point of view.

Mr. Schaffer. Well, I know I am not done, but I see that red light going off there. I just want to comply with the rules, Mr. Chairman.

Mr. Norwood. Bobbie thanks you. Mr. Scott, you are now recognized.

Mr. Scott. Thank you, Mr. Chairman. And I do not think I will take much longer than my 15 minutes.

[Laughter.]

Mr. Scott. Mr. Yellig, are helpers the prevailing practice in all areas?

Mr. Yellig. I am sorry?

Mr. Scott. Is the use of helpers a prevailing practice in all areas?

Mr. Yellig. Oh, no, I do not,...No.

Mr. Scott. Is it a prevailing practice in some areas?

Mr. Yellig. It is a prevailing practice in some areas with regard to certain activities, yes. I would not say, "You know, let us say in St. Louis, it is a prevailing area practice to employ helpers." I do not think you can make that kind of statement. It may be a prevailing area practice somewhere to employ people that perform a certain group of tasks and are called ``helpers,'' and if that is a prevailing area practice, it is the prevailing area practice.

Mr. Scott. Now, when you have helpers, is there any kind of uniform, recognized category? I mean, we kind of know what a carpenter is and electrician. Do we know what a helper is?

Mr. Yellig. No. That was one of the points I was trying to make in my statement.

Mr. Scott. And what is the problem if people are misclassified?

Mr. Yellig. Well, it seems to me it is very easy to. For example, if the market is such you can hire a person who has the skills to qualify as a journeyman, but because of the market pressures perhaps in the area you could offer them a job as a helper to do the same work as a journeyman and pay them lower wages. That is one thing.

Another possibility is that you need a person to perform, let us call it semi-skilled tending duties, tending to a journey-level craft worker. That is a laborer, but many times people refer to that kind of a job as a helper.

Then you have a situation where employees are actually working with the tools, but they are being supervised by a ``journey-level craft worker,'' and sometimes the employers will call them ``helpers,'' when in reality they are really informal apprentices or trainees.

So that is why I said there is like a lot of different things that can lump together as helpers.

Mr. Scott. Well, Mr. Nichols, I am a little confused as to the difference between a laborer, a helper, and a trainee. Is a helper a higher-paid person than a laborer?

Mr. Nichols. Yes.

Mr. Scott. Is that your experience? Is that everybody's experience, that a helper is higher paid than a laborer?

Mr. Nichols. Yes. Absolutely.

Mr. Scott. Yes?

Mr. Nichols. Yes.

Mr. Scott. Helpers are higher-paid than laborers? Mr. Yellig?

Mr. Yellig We observed in the litigation that the Building Trades Department pursued against the Department of Labor from '82 to '92, in the evolution of the whole concept of helpers was that in fact we were talking about people that were going to be substituted in most instances for laborers, but at a lower wage rate.

It started out as being something different. We thought that we were talking about informal apprentices, primarily informal apprentices and trainees. But we found out through the process of rulemaking and litigation that in fact we were really talking about people that were going to be substituted for laborers, but at a lower wage.

Mr. Scott. Mr. Alford, in follow-up to some of the questions that have been asked, you have alleged that there is discrimination in the construction industry.

Mr. Alford. There is no doubt in my mind, sir.

Mr. Scott. Not much question in my mind, either. The question that Mr. Schaffer was getting at and some others were getting at, and Mr. Yellig alluded to, is, how does Davis-Bacon facilitate the discrimination or facilitate the cure for the discrimination? Does Davis-Bacon help cause the discrimination?

Mr. Alford. Davis-Bacon creates a working environment that is more conducive to union participation. The discrimination comes from the unions. Davis-Bacon by itself in theory the Chamber would probably not have a problem with it.

Mr. Scott. Well, if you have a non-union business, how are you at a disadvantage?

Mr. Alford. With non-union businesses that are allowed to compete, we are at an advantage in terms of the incidence of black participation on those job sites. Davis-Bacon, or the reality of Davis-Bacon is it probably competitively stacks the deck towards a union corporation, and those costs are built into their system. Whereas a non-union business is going to have to stretch its cost in kind of a false world of doing business with inflated costs.

So it becomes a disadvantage for a non-union business to all of a sudden jack up their payroll for no reason other than government intervention.

Mr. Scott. Well, on the bid you are not competing with undercutting wages. You have to compete on everything but wages. Davis-Bacon requires you to pay the prevailing wage.

Mr. Alford. Wages is a very big part of the cost of any project, sir. It is a breaker.

Mr. Scott. So if everybody is paying the same wage, why are you at a disadvantage?

Mr. Alford. As I said before, a non-union business can go in and actually compete on margins that they feel that they can get by with competitively. They have a work crew that is settled and built into that business at those wages and levels. But to inflate those wages and levels to where they are now kind of a communistic approach that they all have to have, then everybody gets paid the same at these same levels. You take away that capitalistic approach and it is not business.

Mr. Scott. So you are not able to under-bid, by virtue of the fact that you have a lower wage base, and that puts you at a competitive disadvantage? Is that what you are saying?

Mr. Alford. I have seen non-union, small businesses compete on a $2 million job against a, for lack of another name, Huber Hunt Nichols, or a Bovis McGovern. These are humongous corporations who have volume discounts in their purchases and supplies and who can buy goods much cheaper than a local business in Indianapolis that does two million a year. Their advantage is that they have their family out there working and they have their neighbors working who have been with them and are committed in a part of the business. You are telling them to jack up those wages to where it matches a Lehrer McGovern Bovis or a Huber Hunt Nichols; you know, a $500 million company. It is a disadvantage.

Mr. Scott. Well, let me see if I understand this, then. The bigger firms have a competitive advantage because they can reduce some costs, and you cannot compete with that by reducing your labor costs?

Mr. Alford. A lot of the costs on a major project involve mobilization, which is a major factor. Okay? Lehrer McGovern Bovis are now in New York City, and mobilization is almost at a zero. They are there in New York City. They have got their cranes a corner away from the project site. So you have got mobilization costs and volume discounts. Bovis can buy things significantly lower than a locally-based, smaller construction company coming out of the Bronx or Harlem.

Yet you are telling this company out of Harlem or the Bronx, with their local community workers, that they now have to price their salaries the same as Bovis. There is no way in the world they can compete. There is no way in the world they can stay in business. The more that you have these Davis-Bacon projects, the less chance of their survival. I hope I answered the question.

Mr. Norwood. Thank you, Mr. Scott.

Mr. Roemer. Mr. Chairman, I do not have any further questions. I think that we have probably asked a number of important questions to the panelists. I just end on two notes.

One is that, as I opened up the hearing on our side with my questions, I asked a simple question: Are we here to try to find out what a fair definition of ``helper'' is, and how we find ways to train our workers and move them into wages where they can sustain their families and improve their skills and live their lives with dignity and move up the ladder? Or are we here in fact to repeal Davis-Bacon? And I found with honest answers from the panelists that really they are for repealing Davis-Bacon. We are not really here to find ways to improve how Davis-Bacon works.

I would also say, on a second note, that on Monday I toured the high-tech industry here in Virginia, far away from my home state of Indiana, but to learn more about the high-tech industry. And they said the same thing that people back home in my state are saying, ``We are having trouble finding workers.'' That is the hardest thing right now with this economy. We have about a 3-percent unemployment rate back home in Indiana. Every human resources director and CEO in the business community says, ``We cannot find enough workers.'' And I think Mr. Nichols and Mr. Kinning have said the same thing.

The high-tech community, however, says that there are 19,000 jobs they need to fill here in this area. And their answer is not to try to find ways to bring people in and save money, and create categories where they can put people for a while before they train them or invest in them. It is exactly the opposite. It is to compete with the other businesses with better health care benefits, a raise, in-house educational benefits and training benefits, improvement of their skills by going back to a community college or back for higher education. And they asked us how can we help at the federal level to get them credits for investing back in their workforce and improving their productivity.

It seems to me that the right approach is to find ways in this growing economy to work in a partnership to invest in this workforce, and to make sure that the highly skilled people that we need are given a decent wage with decent benefits so that they can contribute in this growing economy.

And I hope that that is what we will do on this committee, is look for answers in that area, and not look for ways to try to make a helper a substitute classification for possibly a lower wage. So with that, Mr. Chairman, I yield back my time.

Mr. Norwood. Thank you very much.

Mr. Roemer. And Mr. Chairman, I have one formal request here: To ask unanimous consent for 14 days for all members to revise and extend their remarks and to receive supporting material for the record, including, but not limited to, a statement from the Sheet Metal and Air Conditioning Contractors and the Department of Labor letter to Chairman Hoekstra dated July 21st.

Mr. Norwood. So ordered.

SUBMITTED FOR THE RECORD, WRITTEN STATEMENT, THE MECHANICAL ELECTRICAL SHEET METAL ALIANCE, COALITION OF MECHANICAL CONTRACTORS ASSOCIATION OF AMERICA, THE NATIONAL ELECTRICAL CONTRACTORS ASSOCIATION AND SHEET METAL AND AIR CONDITIONING CONTRACTORS NATIONAL ASSOCIATION, JUNE 8, 1999 - SEE APPENDIX H

SUBMITTED FOR THE RECORD, LETTER FROM BERNARD E. ANDERSON, ASSISTANT SECRETARY OF EMPLOYMENT STANDARDS, U.S. DEPARTMENT OF LABOR, WASHINGTON, D.C. TO PETE HOEKSTRA, CHAIRMAN, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE, JULY 21, 1999 - SEE APPENDIX I

Mr. Roemer. Thank you, sir.

Mr. Norwood. Thank you, Mr. Roemer. Let me ask just a couple of questions, as we conclude. Mr. Kind asked the question earlier of Mr. Yellig. Would DOL classification of helpers discourage use of helpers? Did I phrase that right? Your answer to that was, Mr. Yellig?

Mr. Yellig. I do not think you asked me that particular question.

Mr. Norwood. I did not. Mr. Kind did, earlier in his remarks.

Mr. Kind. No.

Mr. Norwood. Well, yes, you did. I wrote it down exactly as you said it. Would DOL classification of helpers discourage use of helpers? And if he did not, I am asking you.

Mr. Yellig. Would it discourage the use helpers?

Mr. Norwood. Yes.

Mr. Yellig. I think it makes it more difficult for the Department. It would make it more difficult for the Department of Labor to recognize a helper classification. There is no question about that.

Mr. Norwood. Using the present language that they are going to use to classify helpers?

Mr. Yellig. Yes. Oh, there is no question about that. Because you are going to have to segregate and identify the tasks or duties that will be performed by that helper classification, and it has got to be found to be...

Mr. Norwood. Well, I guess we all would agree with you on that.

Mr. Yellig. Yes. I hope so.

Mr. Norwood. We are all in agreement that the present wordage of the Department of Labor makes it very difficult to use helpers.

Mr. Kind. Mr. Chairman, looking back in my notes, I think I asked...

Mr. Norwood. Regular order, Mr. Kind. Easy. Easy.

Mr. Kind. Well, will the Chairman yield?

Mr. Norwood. Yes.

Mr. Kind. Okay. I believe that, given my notes, my question was, would the DOL definition of ``helpers'' under the proposed rule discourage misclassification of helpers. That is what I asked, ``misclassification of helpers.'' I just wanted to clarify the record.

Mr. Norwood. Thank you. And your answer to that is?

Mr. Yellig. My answer to his question, the gentleman's question, is, yes, that also. Which I think is different from what you asked me.

Mr. Norwood. Mr. Scott asked you the question, or made the statement, or actually asked you the question. Are helpers the prevailing practice in all areas? And your answer to that was ``No''?

Mr. Yellig. No.

Mr. Norwood. Were you referring to helpers on union jobs?

Mr. Yellig. No.

Mr. Norwood. Or to the country in general?

Mr. Yellig. To the country in general.

Mr. Norwood. How do you know that?

Mr. Yellig. Well, I just happen to have read, for example, the Secretary of Labor's Notice of Proposed Rulemaking before I came over here, because I thought maybe somebody would ask me something about that. And there is a reference to their findings in the period of time when the 1982 helper regulation was in effect. And the DOL said that there was, I forget the percentage, a small percentage of those classifications that they issued.

Mr. Norwood. The Secretary was referring to union as well as non-union; Davis-Bacon as well as non-Davis-Bacon?

Mr. Yellig. Absolutely. Absolutely.

Mr. Norwood. Well, the difference then is how does she know that and is she right? Is there anybody on the panel that would agree with that?

Mr. Nichols. No.

Mr. Norwood. Mr. Kinning?

Mr. Kinning. Mr. Chairman, I would like to speak to that. I have worked in 32 states, and I have built nearly a billion dollars worth of mechanical work. In my career, I am telling you, helpers have always been a prevalent part of this thing. I have the experience. I have made the payrolls.

Mr. Norwood. Does everybody else agree with that? I do not know what is right or wrong here, but common sense would dictate that you certainly would want to have helpers on the job. I will bet that it is very prevalent all over the country. That is just a gut feeling. It is probably as good as the Secretary's gut feeling.

Mr. Yellig. Well, I think it was more than a gut feeling. It was based on a factual...

Mr. Norwood. I have not been here long, but I catch on. You can make facts do anything you want to up here, and you can hire a study to say anything you want to say, but it does not make it factual.

Very quickly, ``Yes'' or ``No'' answers, if I could. I want to ask each one of you to answer this. Again, would you say that the use of helpers prevails in the industry today on private construction projects? Yes, or no? Mr. Nichols?

Mr. Nichols. Yes, sir. On private job, yes.

Mr. Norwood. Mr. Kinning?

Mr. Kinning. Yes, sir. Yes, sir.

Mr. Norwood. Yes or no?

Mr. Yellig. I do not know.

Mr. Baskin. Absolutely, yes.

Mr. Alford. Yes.

Mr. Norwood. So if the 60-year-old Davis-Bacon mandate is to recognize prevailing practices in the industry on government projects, then would you agree that helpers should be recognized by the Department of Labor, according to the Davis-Bacon Act? Mr. Nichols?

Mr. Nichols. Yes, sir, we do.

Mr. Norwood. Mr. Kinning?

Mr. Kinning. Yes, sir.

Mr. Norwood. Mr. Yellig?

Mr. Yellig. ``Yes'' or ``No''?

Mr. Norwood. Please.

Mr. Yellig. ``Yes'' or ``No,'' I think the question is unfair, frankly, so I decline to answer that. I think it is a stacked question.

Mr. Norwood. Well, I think it is pretty clear.

Mr. Yellig. I think your Honor, if I had the right to object, the objection would be based on ``It's a leading question.''

Mr. Norwood. Yes, it is leading for you to answer it ``Yes'' or ``No.'' Would you agree if I am right about it being a prevailing practice across the country, that helpers should be recognized according to the Davis-Bacon Act?

Mr. Yellig. Oh, if it is?

Mr. Norwood. Yes.

Mr. Yellig. Sure.

Mr. Norwood. If the mandate of Davis-Bacon is to recognize prevailing practices, and if this is a prevailing practice, should helpers be recognized? Your answer then was ``Yes''?

Mr. Yellig. To that question, yes.

Mr. Norwood. Mr. Alford?

Mr. Alford. Yes.

Mr. Norwood. You sound like a lawyer, too. Mr. Alford?

Mr. Alford. Yes, sir.

Mr. Norwood. Mr. Baskin?

Mr. Baskin. Yes. That is what this Hearing should be all about.

Mr. Norwood. That really is what this Hearing is all about. Do contractors commonly employ helpers in addition to apprentices, and does it make sense to only allow apprentices on government projects and not helpers? Do contractors commonly employ helpers in addition to apprentices and does it make any sense to only allow apprentices on government projects and not helpers? Mr. Nichols?

Mr. Nichols. Yes. The experience I have had is they do carry both.

Mr. Kinning. Mr. Chairman, I have done it for 37 years.

Mr. Yellig. I do not believe it is a common practice. And whether it makes sense or not, I think it is bad public policy as I said in my statement.

Mr. Norwood. Mr. Alford?

Mr. Alford. Yes, sir.

Mr. Norwood. And, Mr. Baskin?

Mr. Baskin. Yes.

Mr. Norwood. I have eight minutes to get to this vote, and I know you all have to go. I hate to go, this is more important, but I am going to have to make the vote. I just have one last comment, in particular to Mr. Alford.

I do not know what they do in the large cities. I do not come from a large citiy. I come from a rural District, and I come from a city of 250,000.

Mr. Alford. Yes, sir.

Mr. Norwood. Discrimination no doubt is going on. I want to tell you something that makes my day, and I hope it will yours, too. We have some outstanding black entrepreneurs who are not being discriminated against, but opening their own businesses in the construction trade. I am damn proud of it.

Mr. Alford. That is the key, sir.

Mr. Norwood. That is the key.

Mr. Alford. That is the key.

Mr. Norwood. I agree with you.

Ladies and gentlemen, thank you for your kindness. We may write you a letter and ask you to answer one or two more other things. This Committee Hearing is now adjourned.

Whereupon, at 4:53 p.m., the Subcommittee was adjourned.