[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
PROMOTING THE ACCURACY AND
ACCOUNTABILITY OF THE DAVIS-BACON ACT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, JUNE 18, 2013
__________
Serial No. 113-23
__________
Printed for the use of the Committee on Education and the Workforce
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Robert E. Andrews, New Jersey
Joe Wilson, South Carolina Robert C. ``Bobby'' Scott,
Virginia Foxx, North Carolina Virginia
Tom Price, Georgia Ruben Hinojosa, Texas
Kenny Marchant, Texas Carolyn McCarthy, New York
Duncan Hunter, California John F. Tierney, Massachusetts
David P. Roe, Tennessee Rush Holt, New Jersey
Glenn Thompson, Pennsylvania Susan A. Davis, California
Tim Walberg, Michigan Raul M. Grijalva, Arizona
Matt Salmon, Arizona Timothy H. Bishop, New York
Brett Guthrie, Kentucky David Loebsack, Iowa
Scott DesJarlais, Tennessee Joe Courtney, Connecticut
Todd Rokita, Indiana Marcia L. Fudge, Ohio
Larry Bucshon, Indiana Jared Polis, Colorado
Trey Gowdy, South Carolina Gregorio Kilili Camacho Sablan,
Lou Barletta, Pennsylvania Northern Mariana Islands
Martha Roby, Alabama John A. Yarmuth, Kentucky
Joseph J. Heck, Nevada Frederica S. Wilson, Florida
Susan W. Brooks, Indiana Suzanne Bonamici, Oregon
Richard Hudson, North Carolina
Luke Messer, Indiana
Juliane Sullivan, Staff Director
Jody Calemine, Minority Staff Director
------
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
TIM WALBERG, Michigan, Chairman
John Kline, Minnesota Joe Courtney, Connecticut,
Tom Price, Georgia Ranking Member
Duncan Hunter, California Robert E. Andrews, New Jersey
Scott DesJarlais, Tennessee Timothy H. Bishop, New York
Todd Rokita, Indiana Marcia L. Fudge, Ohio
Larry Bucshon, Indiana Gregorio Kilili Camacho Sablan,
Richard Hudson, North Carolina Northern Mariana Islands
C O N T E N T S
----------
Page
Hearing held on June 18, 2013.................................... 1
Statement of Members:
Courtney, Hon. Joe, ranking member, Subcommittee on Workforce
Protections................................................ 4
Prepared statement of.................................... 6
Walberg, Hon. Tim, Chairman, Subcommittee on Workforce
Protections................................................ 1
Prepared statement of.................................... 3
Statement of Witnesses:
Baskin, Maurice, Esq., shareholder, Littler Mendelson P.C.... 21
Prepared statement of.................................... 23
Eisenbrey, Ross, vice president, Economic Policy Institute... 17
Prepared statement of.................................... 18
Groshen, Hon. Erica L., Commissioner, Bureau of Labor
Statistics, U.S. Department of Labor....................... 7
Prepared statement of.................................... 9
Sumner, Curtis W., LS, executive director, National Society
of Professional Surveyors.................................. 13
Prepared statement of.................................... 15
Additional Submissions:
Ms. Groshen's response to questions submitted for the record. 53
Rokita, Hon. Todd, a Representative in Congress from the
State of Indiana, questions submitted for the record....... 53
Mr. Sumner:
Indiana Department of Transportation memorandum, dated
Jan. 24, 2007.......................................... 46
Memorandum of decision, dated Oct. 29, 2010, re: James
Fazzino v. State of Connecticut Department of Labor.... 50
Chairman Walberg:
Letter, dated June 18, 2013, from Associated General
Contractors of America (AGC)........................... 42
Letter, dated June 18, 2013, from Management Association
of Private Photogrammetric Surveyors (MAPPS)........... 43
Letter, dated June 12, 2013, from the Stop Davis-Bacon
Act Expansion Coalition to the U.S. Department of Labor 44
Kolbe, Stanley E., Jr., director, governmental affairs,
the Sheet Metal and Air Conditioning Contractors'
National Association (SMACNA), prepared statement of... 54
PROMOTING THE ACCURACY AND ACCOUNTABILITY OF THE DAVIS-BACON ACT
----------
Tuesday, June 18, 2013
U.S. House of Representatives
Subcommittee on Workforce Protections
Committee on Education and the Workforce
Washington, DC
----------
The subcommittee met, pursuant to call, at 10:04 a.m., in
room 2175, Rayburn House Office Building, Hon. Tim Walberg
[chairman of the subcommittee] presiding.
Present: Representatives Walberg, Kline, Rokita, Hudson,
Courtney, Andrews, Bishop, Fudge, and Bonamici.
Staff present: Katherine Bathgate, Deputy Press Secretary;
Casey Buboltz, Coalitions and Member Services Coordinator; Owen
Caine, Legislative Assistant; Molly Conway, Professional Staff
Member; Ed Gilroy, Director of Workforce Policy; Benjamin Hoog,
Legislative Assistant; Marvin Kaplan, Workforce Policy Counsel;
Brian Newell, Deputy Communications Director; Molly McLaughlin
Salmi, Deputy Director of Workforce Policy; Alissa Strawcutter,
Deputy Clerk; Loren Sweatt, Senior Policy Advisor; Aaron
Albright, Minority Communications Director for Labor; Tylease
Alli, Minority Clerk/Intern and Fellow Coordinator; Jody
Calemine, Minority Staff Director; John D'Elia, Minority Labor
Policy Associate; Eunice Ikene, Minority Staff Assistant;
Michele Varnhagen, Minority Chief Policy Advisor/Labor Policy
Director; Michael Zola, Minority Deputy Staff Director; and
Mark Zuckerman, Minority Senior Economic Advisor.
Chairman Walberg. A quorum being present, the subcommittee
will come to order.
Enacted in 1931, the Davis-Bacon Act requires the payment
of local prevailing wages to workers on federal construction
projects. Determining local prevailing wage rates is a
complicated process to say the least--one that involves the
Department of Labor's Wage and Hour Division conducting surveys
to collect wage and benefit information for various job
classifications in a given geographic location.
Unfortunately, independent reports reveal significant
challenges surrounding implementation of the Davis-Bacon Act.
Most recently, a 2011 Government Accountability Office report
requested by Chairman Kline revealed widespread problems with
the accuracy, quality, bias, and timeliness of the surveys used
to determine wage rates.
For example, of the surveys reviewed by GAO, roughly 25
percent of the final rates were based on the wages of fewer
than seven workers. Forty-six percent of the prevailing wages
for nonunion workers were based on wages reported more than a
decade ago.
As the GAO concluded, and I quote--``If the resultant
prevailing wage rates are too high they potentially cost the
federal government and taxpayers more for publicly-funded
construction projects or, if too low, they cost workers in
compensation.
Studies from years past have all echoed similar concerns.
Each day problems plaguing administration of the law go
unresolved is another day workers are shortchanged and
taxpayers are overcharged.
Despite these challenges, the current administration has
done nothing to improve implementation of the Davis-Bacon Act.
It appears they have accepted a broken and costly enforcement
regime as the price taxpayers, contractors, and workers must
pay for federal construction projects. Rather than make even
modest improvements, the Obama administration has actually
exacerbated the problem by expanding the scope of the law
beyond the original intent.
It began in the early days of the administration with
enactment of the failed stimulus law. According to GAO, the
President's 2009 stimulus plan applied Davis-Bacon to 40 new
programs. As a result, projects were delayed as states grappled
with the law's time-consuming administrative burdens.
This was not the first time the department expanded the
scope of the law. More recently, the Department of Labor
upended decades of policy to impose Davis-Bacon requirements on
a new group of workers. Since the Kennedy administration, land
surveyors have been exempt from the law because their work is,
and I quote--``preconstruction'' activity. But last March the
department reversed this policy by reclassifying surveyors as
laborers and mechanics.
This dramatic shift in policy came without notice or an
opportunity for public comment. To make matters worse, the
department has failed to make a wage rate available to survey
crews. The confusion and uncertainty borne by this bureaucratic
overreach will affect workers and construction projects across
the country.
Finally, in 2011 the Wage and Hour Division determined the
Davis-Bacon Act applies to the CityCenter construction project
underway in our nation's capital--right here. While the law
does apply to construction contracts inside Washington, D.C.,
the CityCenter project is being built with private dollars on
land leased to a private consortium for the next 99 years.
If allowed to stand, this radical decision will have a
profound effect on countless construction projects. As the Wall
Street Journal recently editorialized, the department's actions
would make, and I quote--``every private development--a public
work'' subject to the Davis-Bacon Act.
At a time when millions are struggling to find work,
federal debt is reaching historic levels, and economic growth
remains slow. The American people deserve more than a flawed
law that intrudes further and further into workplaces. Ideas to
enhance the accuracy and accountability of the Davis-Bacon Act
have been put forward. Proposals to derive prevailing wage
rates using Bureau of Labor Statistics data and increasing the
monetary threshold on federal contracts are both intended to
enhance the accuracy and timeliness of the law's administration
and enforcement.
I look forward to hearing from our witnesses today about
ways we can help ensure appropriate implementation of the law
while also serving the best interests of workers, employers,
and taxpayers.
I would now like to yield to the distinguished ranking
member of our subcommittee, Mr. Courtney, for his opening
remarks.
[The statement of Chairman Walberg follows:]
Prepared Statement of Hon. Tim Walberg, Chairman,
Subcommittee on Workforce Protections
Enacted in 1931, the Davis-Bacon Act requires the payment of local
prevailing wages to workers on federal construction projects.
Determining local prevailing wage rates is a complicated process, one
that involves the Department of Labor's Wage and Hour Division
conducting surveys to collect wage and benefit information for various
job classifications in a given geographic location.
Unfortunately, independent reports reveal significant challenges
surrounding implementation of the Davis-Bacon Act. Most recently, a
2011 Government Accountability Office report requested by Chairman
Kline revealed widespread problems with the accuracy, quality, bias,
and timeliness of the surveys used to determine wage rates.
For example, of the surveys reviewed by GAO, roughly 25 percent of
the final rates were based on the wages of fewer than seven workers.
Forty-six percent of the prevailing wages for non-union workers were
based on wages reported more than a decade ago. As the GAO concluded,
``If the resultant prevailing wage rates are too high, they potentially
cost the federal government and taxpayers more for publicly funded
construction projects or, if too low, they cost workers in
compensation.''
Studies from years past have all echoed similar concerns. Each day
problems plaguing administration of the law go unresolved is another
day workers are short-changed and taxpayers are overcharged.
Despite these challenges, the current administration has done
nothing to improve implementation of the Davis-Bacon Act. It appears
they've accepted a broken and costly enforcement regime as the price
taxpayers, contractors, and workers must pay for federal construction
projects. Rather than make even modest improvements, the Obama
administration has actually exacerbated the problem by expanding the
scope of the law beyond its original intent.
It began in the early days of the administration with enactment of
the failed stimulus law. According to GAO, the president's 2009
stimulus plan applied Davis-Bacon to 40 new programs. As a result,
projects were delayed as states grappled with the law's time consuming
administrative burdens.
This was not the first time the department expanded the scope of
the law. More recently, the Department of Labor upended decades of
policy to impose Davis-Bacon requirements on a new group of workers.
Since the Kennedy administration, land surveyors have been exempt from
the law because their work is a ``pre-construction'' activity. But last
March, the department reversed this policy by reclassifying surveyors
as laborers and mechanics.
This dramatic shift in policy came without notice or an opportunity
for public comment. To make matters worse, the department has failed to
make a wage rate available to survey crews. The confusion and
uncertainty borne by this bureaucratic overreach will affect workers
and construction projects across the country.
Finally, in 2011 the Wage and Hour Division determined the Davis-
Bacon Act applies to the CityCenter construction project underway in
our nation's capital. While the law does apply to construction
contracts inside Washington D.C., the CityCenter project is being built
with private dollars on land leased to a private consortium for the
next 99 years. If allowed to stand, this radical decision will have a
profound effect on countless construction projects. As the Wall Street
Journal recently editorialized, the department's action would make
``every private development * * * a public work'' subject to the Davis-
Bacon Act.
At a time when millions are struggling to find work, federal debt
is reaching historic levels, and economic growth remains slow, the
American people deserve more than a flawed law that intrudes further
and further into workplaces.
Ideas to enhance the accuracy and accountability of the Davis-Bacon
Act have been put forward. Proposals to derive prevailing wage rates
using Bureau of Labor Statistics data and increasing the monetary
threshold on federal contracts are both intended to enhance the
accuracy and timeliness of the law's administration and enforcement.
I look forward to hearing from our witnesses today about ways we
can help ensure appropriate implementation of the law while also
serving the best interests of workers, employers, and taxpayers. I'd
now like to yield to the ranking member, Mr. Courtney, for his opening
remarks.
______
Mr. Courtney. Thank you, Mr. Chairman.
And thank you to the witnesses for being here this morning.
For the last eight decades the Davis-Bacon Act has provided
millions of hardworking Americans fair wages for their hard
work. During all these years, Davis-Bacon Act has done exactly
what it was intended to do: to prevent federal projects from
driving down local wage rates.
And I actually just want to parenthetically add that just a
few days ago the Amtrak bridge in Niantic, Connecticut, the
largest stimulus project Amtrak undertook--over $100 million--
is now allowing trains to move at high speeds through that
coastal stretch between Washington and Boston. Before that
bridge was repaired through the stimulus act, trains actually
had to slow their speeds down to 40 miles per hour because it
was a 100-year-old bridge. It was also a bridge which impeded
boat traffic coming into the Niantic River from the Long Island
Sound, damaging the maritime economy.
This is a stimulus project which, for the record--and there
are, frankly, many, many more which I know some of the members
could attest to--actually did work, in terms of upgrading long
overdue infrastructure needs, employing over a 3-year period
almost 400 construction workers, all within the ages of the
Davis-Bacon. By the way, it was a nonunion project, so Davis-
Bacon was there to make sure that those workers who, again,
were getting a federally-funded job were getting adequate wages
and benefits, which is exactly what the law was intended to do
when it was passed many decades ago.
At its core, the Davis-Bacon Act enabled local contractors
to compete for local projects without being underbid and
undercut by contractors who import workforces from outside the
local community. The Davis-Bacon Act is about local jobs and
fair wages, and that is why the Davis-Bacon Act continues to
enjoy strong bipartisan support.
Look at the chart to my right. It shows that time and time
again in the last couple of years efforts to repeal the Davis-
Bacon Act have met with crushing defeat. That is why it is
surprising that we are even having this hearing today rather
than focusing on the many serious economic challenges that
workers are facing today.
And again, almost every one of those votes has occurred
with a Republican majority in the House. Again, a bipartisan,
strong majority has rejected efforts to weaken and repeal the
Davis-Bacon Act time and time again even just over the last
couple of years.
Millions of workers receive wages today that are just flat
out insufficient to support a family. The minimum wage has been
frozen at $7.25 per hour for 4 years. Low-wage workers and
families are falling further behind.
You would think that there would be bipartisan interest in
rewarding hard work. Wage disparity, low wages for hardworking
Americans is a real problem with far-reaching consequences for
our economy.
However, the committee's majority refuses to take up H.R.
1010, the Fair Minimum Wage Act of 2013, which allows workers
to earn a fair wage and contribute more to the economy.
In addition, women continue to fight for wage equality,
making only 77 cents for every dollar paid to men for the same
work. That is a real problem that we should be trying to solve
together.
Wage disparity is demeaning to women and needs urgent
attention by this committee. We have pressed for passage of
H.R. 377, the Paycheck Fairness Act, but the subcommittee
refuses to take it up or even give the issue a respectful
public hearing.
Also today four in 10 workers don't have access to any paid
leave on their job. Democrats have introduced H.R. 1286, the
Healthy Families Act, which would provide a minimum number of
sick days for workers to recover and seek medical attention for
illnesses. That is a real and urgent problem for millions of
families every day but this committee apparently is not
interested.
Finally, as we all know, millions of Americans are out of
work and too many have been unemployed for long stretches of
time. That is a real problem that we should be tackling
together with key investments in our nation's infrastructure,
education, and job training. Instead, billions of dollars in
education and training cuts supported by the majority threaten
to move us backwards in our efforts to stay economically
competitive and expand economic opportunities.
On the issue before us today, Davis-Bacon wages, my
colleagues on the other side of the aisle propose to shift
responsibility for collecting Davis-Bacon wage data from the
Department of Labor's Wage and Hours Division to the Bureau of
Labor Statistics. That would represent a step backward for the
program as the data collected by these two divisions is
completely different. I look forward to the witnesses'
testimony today, which, I think, will underscore that fact.
For example, BLS doesn't collect fringe benefits as part of
its wage survey, which is required to set Davis-Bacon rates. It
doesn't collect wage data by county, but instead, by larger
metropolitan areas, undermining the concept of local wage
rates.
BLS focuses on work for certain, quote--``establishments,''
which may or may not be headquartered in the county where the
work is actually being performed. Wage and Hour wages are based
on work performed at projects in the local area. BLS has one
category of wages for the entire construction industry, while
the Wage and Hour survey recognizes the different skill craft
of various workers in the industry.
This proposal is simply a strategy to scramble and disrupt
Davis-Bacon wages and protections, not a sensible or serious
reform. I hope today that we will have the opportunity to talk
to the commissioner and other witnesses about real problems
facing today's workforce and to acknowledge that Davis-Bacon is
actually helping our nation and workforce to remain strong.
And with that I yield back, Mr. Chairman.
[The statement of Mr. Courtney follows:]
Prepared Statement of Hon. Joe Courtney, Ranking Member, Subcommittee
on Workforce Protections
I want to thank all of our witnesses for testifying today.
For the last eight decades, the Davis-Bacon Act has provided
millions of hard working Americans fair wages for the their hard work.
During all these years, the Davis-Bacon Act has done exactly what it
was intended to do--prevent federal projects from driving down local
wage rates.
At its core, the Davis-Bacon Act enables local contractors to
compete for local projects without being underbid and undercut by
contractors who import workforces from outside the local community. The
Davis-Bacon Act is about local jobs and fair wages--and this is why the
Davis-Bacon Act continues to enjoy strong bipartisan support.
Look at the chart to my right. It shows that time and time again in
the last couple of years, efforts to repeal the Davis-Bacon Act have
met with crushing defeat. That is why it is surprising that we are even
having this hearing today, rather than focusing on the many serious
economic challenges workers are facing today.
Millions of workers receive wages today that are just flat out
insufficient to support a family. The minimum wage has been frozen at
$7.25 per hour for four years. Low wage workers and families are
falling further behind. You would think there would be bipartisan
interest in rewarding hard work. Wage disparity, low wages for hard
working Americans is real problem with far- reaching consequences for
our economy. However, the committee's majority refuses to take up H.R.
1010, The Fair Minimum Wage Act of 2013, which allows workers to earn a
fair wage and contribute more to the economy.
In addition, women continue to fight for wage equality, making only
77 cents for every dollar paid to men for the same work. That's a real
problem we should be trying to solve together. Wage disparity is
demeaning to women, and needs urgent attention by this Committee. We
have pressed for passage of H.R 377, the Paycheck Fairness Act, but
this Subcommittee refuses to take it up or even give the issue a
respectful public hearing.
Also, today, 4 in 10 workers don't have access to any paid leave on
their job. Democrats have introduced H.R. 1286, the Healthy Families
Act, which would provide a minimum number of sick days for workers to
recover and seek medical attention for illnesses. That's a real and
urgent problem for millions of families every day, but this Committee
is not interested.
Finally, as we all know, millions of Americans are out of work, and
too many have been unemployed for long stretches of time. That's real
problem that we could be tackling together with key investments in our
nation's infrastructure, education and job training. Instead, billions
of dollars in education and training cuts supported by the Majority
threaten to move us backwards in our efforts to stay economically
competitive and expand economic opportunities.
On the issue before us today--Davis-Bacon wages--my colleagues on
the other side of the aisle propose to shift responsibility for
collecting Davis-Bacon wage data from the Department of Labor's Wage
and Hour Division to the Bureau of Labor Statistics. That would
represent a step backward for the program as the data collected by
these two divisions is completely different.
For example, BLS doesn't collect fringe benefits as part of its
wage survey--which is required to set Davis-Bacon rates. It doesn't
collect wage data by county, but instead by larger metropolitan areas,
undermining the concept of local wage rates. BLS focuses on work for
certain ``establishments'' which may or not be headquartered in the
county where the work is actually being performed. Wage and Hour wages
are based on work performed at projects in the local area. BLS has one
category of wages for the entire construction industry, where the Wage
and Hour survey recognizes the different skill craft of various workers
in the industry.
This proposal is simply is a strategy to scramble and disrupt
Davis-Bacon wages and protections, not a sensible or serious reform.
I hope today we have the opportunity to talk to the Commissioner
and other witnesses about real problems facing today's workforce, and
to acknowledge that Davis-Bacon is helping keep our nation and
workforce strong.
______
Chairman Walberg. I thank the gentleman.
And we look forward to improving on the record of dealing
with Davis-Bacon. I think education opportunities, including
hearings like this, will expand a greater understanding, and I
think the ranking member and I would both agree that we want
more people working, want more success in the workplace, more
remuneration for solid work given, and a growing economy. It is
just how we get there that we have some differences, but I
think we are moving with the same objective.
Pursuant to committee rule 7(c), all members will be
permitted to submit written statements to be included in the
permanent hearing record. And without objection, the hearing
record will remain open for 14 days to allow statements,
questions for the record, and other extraneous materials
referenced during the hearing to be submitted in the official
record.
It is now my pleasure to introduce our distinguished
witnesses.
We certainly appreciate you being here and taking your time
and adding your expertise and experience to our deliberations.
First, we have the Honorable Erica Groshen, who is the
commissioner of the Bureau of Labor Statistics here in
Washington, D.C.
Welcome.
Mr. Curtis Sumner is the executive director at the national
Society of Professional Surveyors in Frederick, Maryland.
Thanks for being here.
Mr. Ross Eisenbrey, very familiar to this committee and
this subcommittee, is the vice president at Economic Policy
Institute in Washington, D.C., and, I must add, a distinguished
graduate of University of Michigan.
Mr. Maury Baskin, also familiar to this committee, is a
shareholder at Littler Mendelson law firm in Washington, D.C.
Thank you for being here with us.
Before I recognize each of you to provide your testimony I
just would do my due diligence in indicating the lights are
there. You understand the process of the green light to go,
yellow light to start drawing to conclusion, and red light wrap
up as quickly as you possibly can. The same will be true for
our committee members as we ask our 5 minutes of questions.
And so let me recognize the Honorable Erica Groshen for
your opening statement.
STATEMENT OF HON. ERICA GROSHEN, COMMISSIONER, BUREAU OF LABOR
STATISTICS
Ms. Groshen. Thank you for this opportunity to describe the
occupational wage data available in the Bureau of Labor
Statistics Occupational Employment Statistics program.
Let me begin by describing the role of the BLS. Like all
federal statistical agencies, we execute our statistical
mission with independence, serving our users by providing
products and services that are accurate, objective, relevant,
timely, and accessible. We strive to adhere to the principles
and the practices for federal statistical agencies published by
the National Research Council, including: to protect our
impartiality and independence we take no role in regulation,
law enforcement, and rulemaking, and we do not conduct policy
analysis ourselves.
Regarding today's topics, then, we have no role in setting
prevailing wages nor in determining what data are appropriate
for that purpose. Also, in keeping with principles and
practices for federal statistical agencies, we are happy to
share information about our data so that you and others can
make appropriate decisions.
Because the BLS data are used for so many purposes, we
generally don't design them for particular applications, such
as the Davis-Bacon wage determinations. Of course, agencies
charged with carrying out policy and regulatory functions
sometimes need particular representations of our data, and in
such cases, resources permitting, we may prepare special
tabulations for an agency.
So, that aside, now what about the OES? What is it?
The OES publishes data for 820 occupations and by industry
for the nation and also for 642 areas that span the entire
country, including each state, D.C., Guam, Puerto Rico, the
Virgin Islands, metropolitan areas, and non-metro areas. So for
each area and occupation, for workers in both the public and
the private sectors, OES provides employment and wage
estimates, including hourly and annual mean and median wages.
By industry, we publish employment and wages by occupation
on a national basis only, both for broad industry sectors and
for more detailed industries. So, for example, we have data for
the job ``carpenters'' in the construction sector as a whole
and for the detailed construction industry, ``residential
building construction,'' to give you an idea of the
specificity. We also provide state and local area estimates by
industry to the states so that they can release them at their
discretion.
So let me turn to data uses. Like all BLS products, OES
data are used in many ways. Within the BLS, OES data are inputs
to our occupational employment projections, which are used by
millions to make their career decisions and are part of the
information given to the President's pay agent for setting
locality pay for federal workers.
We provide special tabulations of these data to the
Department of Labor's Employment and Training Administration
for its Occupational Information, the O*NET Network program,
and other federal agencies, including the National Science
Foundation and the Bureau of Economic Analysis.
Now, you may be interested in how we actually conduct the
survey. We collect data from 1.2 million establishments that
together employ nearly 60 percent of all U.S. wage and salary
workers. We select the employers from a business list derived
from unemployment insurance records and participation in the
survey is voluntary.
Establishments are surveyed once every 3 years with a
response rate of about 75 percent. Using statistical
procedures, then, we make estimates for a single year and we
publish those about 10 months after the reference date.
So, like all statistical products, the OES has certain
limitations that users need to understand, and let me list a
few. While we do provide estimates for some very small
occupations at detailed levels of geography, others must be
suppressed because of large sampling errors. We don't gather
information on all possible attributes of interest--no data on
skill requirements or licenses, we don't produce data for all
possible geographic breakdowns including counties.
We collect our data by establishments, not by worksites. We
don't measure total compensation--no overtime pay or benefits.
And we don't have information on part-time versus full-time
jobs.
So to sum up, the OES program produces wage and employment
data at great occupational and geographic detail and by
industry. These are used for many purposes, some of which are
based on special tabulations.
However, the BLS has no role in setting prevailing wages
nor in determining what data are--should be used for that
purpose.
So I thank you for the opportunity to testify and I am
happy to answer any questions you have.
[The statement of Ms. Groshen follows:]
Prepared Statement of Hon. Erica L. Groshen, Commissioner,
Bureau of Labor Statistics, U.S. Department of Labor
Thank you for the opportunity to provide this overview of the
occupational wage data available from the Bureau of Labor Statistics'
Occupational Employment Statistics or OES survey.
Role of the Bureau of Labor Statistics
Let me first discuss the role of the Bureau of Labor Statistics.
Like all Federal statistical agencies, BLS executes its mission with
independence, serving its diverse user communities by providing
products and services that are accurate, objective, relevant, timely,
and accessible. We adhere to the principles and practices for federal
statistical agencies published by the Committee on National Statistics
of the National Research Council. To protect our impartiality and
independence, we take no role in regulation, law enforcement, and
policy making and do not conduct policy analysis ourselves.\1\
Regarding today's topic, BLS has no role in establishing prevailing
wages or determining what data are appropriate for that purpose.
---------------------------------------------------------------------------
\1\ National Research Council. (2013). Principles and Practices for
a Federal Statistical Agency, Fifth Edition. Committee on National
Statistics. Constance F. Citro and Miron L. Straf, Editors. Division of
Behavioral and Social Sciences and Education. Washington, DC: The
National Academies Press. (p. 14)
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Also consistent with the principles and practices for statistical
agencies, we are very happy to share with you information about our
data so that you and other policymakers can make appropriate decisions.
BLS data are used for a wide range of purposes; they generally are not
designed for any one particular program application such as Davis-Bacon
wage determinations. Of course, agencies charged with carrying out
policy and regulatory functions sometimes request special presentations
of our data. In these instances, resources permitting, we may prepare
special data tabulations based on specifications provided by the
requesting agency.
What is collected in the Occupational Employment Statistics (OES)
survey?
Let me turn now to describing the OES, which is the only federal
statistical survey designed with the goal of providing detailed wage
and employment data for every occupation for a set of geographic areas
that span the entire country. I will cover what we collect and then how
the data are used, how we conduct the survey, and the limitations of
the data.
In all of our programs, we use occupational, industry and
geographic definitions that allow our users to compare and combine data
from different sources. To ensure such comparability for the OES, we
adhere to the following standard classifications established by the
Office of Management and Budget:
the Standard Occupational Classification System (SOC),
which defines occupations, the job that someone holds
the North American Industry Classification System (NAICS),
which defines industries, the type of business someone works for
Metropolitan Statistical Areas (MSAs) and metropolitan
divisions, which define labor market areas
I will reference these throughout my remarks as occupations,
industries, and metropolitan areas.
The OES program publishes data for 820 occupations for the nation
and for areas that cover the entire geography of the country. Data are
available for 642 areas, including each state, the District of
Columbia, Guam, Puerto Rico, the Virgin Islands, 414 metropolitan
areas, and 174 non-metropolitan areas.
For each area and occupation, OES provides employment and several
wage estimates, including hourly and annual mean and median wages.
These estimates include workers in both the private and public sectors.
BLS publishes nationwide OES employment and wage estimates by
occupation within industries. Data are available for broad industry
sectors, as well as for more detailed industries. For example, data are
available for the occupation ``carpenters'' in the construction sector
as a whole as well as for the more detailed construction industry,
``residential building construction.''
BLS also produces estimates for states and local areas by industry.
We do not regularly publish these data; however, we do provide these
estimates to states, which release them at their discretion. And, just
this year, BLS released the statewide industry estimates as a research
dataset.
To illustrate the OES data available locally, let me use the
example of the metropolitan area of Minneapolis--St. Paul--Bloomington,
which includes 11 counties in Minnesota--including, Mr. Chairman,
Dakota, Scott, and Washington Counties in your district--and 2 counties
in Wisconsin.\2\ For this metropolitan area, we recently published May
2012 wage data for 39 construction occupations. Among these
construction occupations, the four largest occupations (in terms of
employment) are carpenters; electricians; plumbers, pipefitters, and
steamfitters; and construction laborers. Hourly mean wages for these
four occupations in the Minneapolis--St. Paul--Bloomington area ranged
from $32.08 for plumbers, pipefitters, and steamfitters to $22.99 for
construction laborers.\3\
---------------------------------------------------------------------------
\2\ The counties included in the Minnesota portion of the
Minneapolis--St Paul--Bloomington metropolitan area are Anoka, Carver,
Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne,
Washington, and Wright counties; in Wisconsin, the counties include
Pierce and St. Croix counties.
\3\ May 2013 wages for the other occupations noted are $ 25.60 for
carpenters and $31.64 for electricians.
---------------------------------------------------------------------------
Data uses
Like all BLS products, OES data are used in many ways, but let me
summarize a few of its uses. Within BLS, OES employment estimates are a
key input to occupational employment projections, which are used by
millions of individuals making decisions about their careers. OES data
also are used by BLS to produce the Employment Cost Index, occupational
injuries and illness rates, and data provided to the President's Pay
Agent for setting locality pay for Federal workers.
The Department of Labor's Employment and Training Administration's
(ETA's) Foreign Labor Certification (FLC) program uses OES data in its
nonimmigrant and immigrant visa certification programs. BLS provides
special tabulations of OES wage data to ETA for this purpose, following
specifications provided by ETA.
BLS also produces special tabulations for other federal agencies,
including the National Science Foundation, the Bureau of Economic
Analysis, and the Employment and Training Administration's Occupational
Information Network or O*NET program.
State and local government agencies use the OES employment and wage
data in counseling students and jobseekers, and making training and
workforce investment decisions, directing resources toward occupations
that are present in the local economy and perhaps to those that have
wages above some criterion. OES data also are used by the State
Workforce Agencies in preparing state and area occupational
projections.
Survey methods
Now, how do we conduct the survey? The OES program collects
employment and wage data from a sample of 1.2 million business
establishments that employ nearly 60 percent of wage and salary workers
in the country. These establishments are selected from a business list
derived from unemployment insurance records. Participation in the OES
survey is voluntary. Because the business list from which the sample is
selected includes only wage and salary workers covered by unemployment
insurance, self-employed workers are not in the OES data.
Collection of this large sample requires 3 years, with data
solicited from a new set of 200,000 establishments every 6 months.
Establishments are surveyed just once in the 3-year cycle.
Although the data are collected over a 3-year period, BLS uses
well-established statistical procedures to make estimates for a single
year and publishes those estimates about 10 months after the reference
date. For example, our most recent estimates are for May 2012 and were
published in March 2013.
The OES survey is a federal-state cooperative effort. Under
agreements with BLS, most of the data are collected by the State
Workforce Agencies. BLS and the states collect OES data primarily
through a mail survey, although employers may respond by many other
means, including telephone, fax, or email. Overall the survey has a
response rate of about 75 percent.
Data limitations
As with all statistical products, the OES data have certain
limitations that users need to understand.
The OES design allows us to provide estimates for some very small
occupations at detailed levels of geography. However, some of these
estimates are based on responses from only a handful of employers,
which may result in large sampling error or require suppression of the
data to protect the confidentiality of individual respondents.
The OES program does not gather information on all the attributes
that might be of interest when examining occupational wages. For
example, the OES does not have data on license requirements, skill
level, or years of experience. Although the OES estimates are available
for areas that cover the entire geography of the country, the estimates
are not available for every geographic breakdown that users might want.
For example, we cannot produce estimates by county. And, the OES
collects data from business establishments, not by worksites or
construction project sites. A construction business may have multiple
projects in the same area or in different areas. Also, OES does not
measure total compensation, and therefore does not include overtime pay
or benefits. Nor does the OES collect information on hours or provide
wages by part-time versus full-time jobs.
Finally, let me also note that in addition to occupational wage
data from the OES program, the BLS National Compensation Survey
provides information on employer costs for wages and benefits, as well
as information on the percentage of workers covered by various employee
benefits. This survey also produces occupational wage data for union
and nonunion workers, part-time and full-time workers, and supervisors,
but not by detailed industry, and only for 15 large areas.
Conclusion
To sum up, the Bureau of Labor Statistics Occupational Employment
Statistics survey produces employment and wage data at great
occupational and geographic detail, and by industry. These data are
used for a variety of purposes, some of which are based on special
tabulations produced by the BLS on request. However, BLS has no role in
establishing prevailing wages or determining what data are appropriate
for the purpose of prevailing wage determinations.
I have attached to my written testimony information on the specific
construction industries and construction occupations for which OES
provides data. To illustrate the level of geographic detail, a list of
the areas in Minnesota for which data are provided is also attached.
Thank you for the opportunity to testify before this committee. I
am happy to answer any questions you may have.
oes data are available for the following construction industries
Sector 23--Construction
236000--Construction of Buildings
236100--Residential Building Construction 236200--Nonresidential
Building Construction
237000--Heavy and Civil Engineering Construction
237100--Utility System Construction
237130--Power and Communication Line and Related Structures
Construction 237200--Land Subdivision
237300--Highway, Street, and Bridge Construction 237900--Other Heavy
and Civil Engineering Construction
238000--Specialty Trade Contractors
238100--Foundation, Structure, and Building Exterior Contractors
238110--Poured Concrete Foundation and Structure Contractors
238140--Masonry Contractors
238160--Roofing Contractors 238200--Building Equipment Contractors
238210--Electrical Contractors and Other Wiring Installation
Contractors 238220--Plumbing, Heating, and Air-Conditioning
Contractors
238290--Other Building Equipment Contractors 238300--Building Finishing
Contractors
238310--Drywall and Insulation Contractors 238320--Painting and Wall
Covering Contractors
238900--Other Specialty Trade Contractors
Construction trades occupations in the Standard Occupational
Classification
47-2000 Construction Trades Workers
47-2010 Boilermakers
47-2020 Brickmasons, Blockmasons, and Stonemasons 47-2021 Brickmasons
and Blockmasons
47-2022 Stonemasons
47-2030 Carpenters
47-2040 Carpet, Floor, and Tile Installers and Finishers 47-2041 Carpet
Installers
47-2042 Floor Layers, Except Carpet, Wood, and Hard Tiles 47-2043 Floor
Sanders and Finishers
47-2044 Tile and Marble Setters
47-2050 Cement Masons, Concrete Finishers, and Terrazzo Workers 47-2051
Cement Masons and Concrete Finishers
47-2053 Terrazzo Workers and Finishers 47-2060 Construction Laborers
47-2070 Construction Equipment Operators
47-2071 Paving, Surfacing, and Tamping Equipment Operators 47-2072
Pile-Driver Operators
47-2073 Operating Engineers and Other Construction Equipment Operators
47-2080 Drywall Installers, Ceiling Tile Installers, and Tapers
47-2081 Drywall and Ceiling Tile Installers 47-2082 Tapers
47-2110 Electricians
47-2120 Glaziers
47-2130 Insulation Workers
47-2131 Insulation Workers, Floor, Ceiling, and Wall 47-2132 Insulation
Workers, Mechanical
47-2140 Painters and Paperhangers
47-2141 Painters, Construction and Maintenance 47-2142 Paperhangers
47-2150 Pipelayers, Plumbers, Pipefitters, and Steamfitters 47-2151
Pipelayers
47-2152 Plumbers, Pipefitters, and Steamfitters 47-2160 Plasterers and
Stucco Masons
47-2170 Reinforcing Iron and Rebar Workers 47-2180 Roofers
47-2210 Sheet Metal Workers
47-2220 Structural Iron and Steel Workers 47-2230 Solar Photovoltaic
Installers
47-3000 Helpers, Construction Trades
47-3010 Helpers, Construction Trades
47-3011 Helpers--Brickmasons, Blockmasons, Stonemasons, and Tile and
Marble Setters 47-3012 Helpers--Carpenters
47-3013 Helpers--Electricians
47-3014 Helpers--Painters, Paperhangers, Plasterers, and Stucco Masons
47-3015 Helpers--Pipelayers, Plumbers, Pipefitters, and
Steamfitters
47-3016 Helpers--Roofers
47-3019 Helpers, Construction Trades, All Other
47-4000 Other Construction and Related Workers
47-4010 Construction and Building Inspectors 47-4020 Elevator
Installers and Repairers
47-4030 Fence Erectors
47-4040 Hazardous Materials Removal Workers 47-4050 Highway Maintenance
Workers
47-4060 Rail-Track Laying and Maintenance Equipment Operators 47-4070
Septic Tank Servicers and Sewer Pipe Cleaners
47-4090 Miscellaneous Construction and Related Workers 47-4091
Segmental Pavers
47-4099 Construction and Related Workers, All Other
oes data are available for these areas in minnesota
Minnesota
Metropolitan areas
Duluth, MN-WI Fargo, ND-MN Grand Forks, ND-MN La Crosse, WI-MN
Mankato-North Mankato, MN
Minneapolis-St. Paul-Bloomington, MN-WI Rochester, MN
St. Cloud, MN
Nonmetropolitan areas
Northwest Minnesota nonmetropolitan area (includes Becker, Beltrami,
Cass, Clearwater, Crow Wing, Douglas, Grant, Hubbard, Kittson,
Lake of the Woods, Mahnomen, Marshall, Morrison, Norman, Otter
Tail, Pennington, Pope, Red Lake, Roseau, Stevens, Todd,
Traverse, Wadena, and Wilkin counties)
Northeast Minnesota nonmetropolitan area (includes Aitkin, Cook,
Itasca, Kanabec, Koochiching, Lake, Mille Lacs, Pine counties)
Southwest Minnesota nonmetropolitan area (includes Big Stone, Chippewa,
Cottonwood, Jackson, Kandiyohi, Lac Qui Parle, Lincoln, Lyon,
McLeod, Meeker, Murray, Nobles, Pipestone, Redwood, Renville,
Rock, Swift, and Yellow Medicine counties)
Southeast Minnesota nonmetropolitan area (includes Brown, Faribault,
Fillmore, Freeborn, Goodhue, Le Sueur, Martin, Mower, Rice,
Sibley, Steele, Waseca, Watonwan, and Winona counties)
______
Chairman Walberg. Thank you.
Ms. Groshen. You are welcome.
Chairman Walberg. Now I recognize Mr. Sumner for his 5
minutes of testimony?
STATEMENT OF CURTIS SUMNER, EXECUTIVE DIRECTOR,
NATIONAL SOCIETY OF PROFESSIONAL SURVEYORS
Mr. Sumner. Thank you, Mr. Chairman and members of the
subcommittee.
I am Curt Sumner. I am a licensed professional land
surveyor as well as the executive director of the National
Society of Professional Surveyors, a professional society with
affiliates in all 50 states.
I am pleased to be here today to discuss with you our
experience with the Department of Labor and the Davis-Bacon
Act. The Davis-Bacon Act, as you know, applies to laborers and
mechanics but does not define what that term is; that is left
up to the Department of Labor under the guidelines provided in
the Federal Acquisition Regulation.
For more than 50 years the Labor Department has considered
survey crews not to be laborers and mechanics and, therefore,
exempt from the provisions of the Davis-Bacon Act. We have
documentation from then Secretary Arthur Goldberg in the
Kennedy administration stating that members of survey crews are
exempt from the act except to the extent to which they, quote--
``perform manual work, such as clearing brush and sharpening
stakes,'' which Secretary Goldberg observed--correctly, I might
add--``are not commonplace.''
As a result, since at least the 1960s federal agencies and
the private sector alike have operated with the understanding
that survey crews are exempt. That was until a few weeks ago,
when an NSPS member received notification pursuant to a federal
contract that the Labor Department had issued a new order,
reversing more than 50 years of policy, and determined that
members of land surveying crews on federal construction
projects are now laborers and mechanics subject to the act.
Before I discuss the practical and policy implications and
problems with this ruling, permit me to address the process.
The Operating Engineers Union wrote a letter to the Department
of Labor in August of 2011 asking for this change. While the
Labor Department deliberated for 18 months on a reversal of
this 50-plus-year policy, neither NSPS nor, to our knowledge,
any other management organization related to the survey
community was notified or consulted.
The decision was made on March 23rd this year. Again, no
notice to the affected parties was provided except to the
Operating Engineers and a notice sent to all federal
contracting agencies. In the meantime, between August 2011 and
the March 2013 decision, there was no public notice that the
Labor Department was considering a change in its regulation; no
request for public input or comments; no notifications seeking
advice, comment, or input from the surveying profession,
employers, or management; and in fact, no public announcement
of the new policy.
We believe the manner in which the Department of Labor
acted is in violation of the spirit if not the letter of the
Administrative Procedures Act, the Regulatory Flexibility Act,
and the Paperwork Reduction Act.
There are a number of reasons this ruling is detrimental to
the surveying profession. First, the classification of members
of survey crews as laborers and mechanics is contrary to
virtually every other classification, including those of the
Labor Department itself and the Office of Personnel Management
for surveying technicians employed by the federal government.
NSPS administers a Certified Survey Technician program used
by both government agencies and private companies. The
classification of members of survey crews as laborers and
mechanics----
[Audio gap.]
Chairman Walberg. Mr. Sumner, check your mic and see if it
went off for some reason.
Mr. Sumner. I was off and I am sorry. Should I start over
or are we good? I apologize.
Thirdly, there is no evidence that members of survey crews
are paid substandard wages and no demonstrated need for
including such workers in the prevailing wage law based on
Bureau of Labor Statistics.
Finally, this ruling will be an administrative nightmare
for surveying firms, contracting agencies, and the Labor
Department itself. This will result in confusion and costly
compliant issues.
Survey crews are not like construction workers. Survey crew
members may be on a construction site a few hours per day, one
day a week, or otherwise on an intermittent basis, but rarely
on an entire 40-hour work week.
Some work may be preliminary to construction, some to post-
construction, or not related to construction at all.
Documenting what every surveying technician is doing every hour
of the work day, determining whether an activity is covered or
not covered, construction-related or not, is an expensive,
time-consuming, and counter-productive burden.
The payroll the administration required for compliance for
a surveying profession dominated by very small businesses is
extraordinary. Moreover, with today's computerized data
collectors, survey crews can commonly consist of one person.
That skilled individual is certainly exercising judgment and
working in a supervisory capacity.
Today's technicians are performing services that are mental
in nature, requiring certain expertise, and are not
apprentices, trainees, or helpers. Therefore, they do not meet
the criteria for a laborer or mechanic.
We urge the Labor Department to rescind its policy and
request the assistance of Congress in that matter. We deeply
appreciate your attention, your time, and your assistance, and
we look forward to working with you to rectify this
inappropriate, unnecessary, and unfair process and policy
employed by the Department of Labor.
Thank you.
[The statement of Mr. Sumner follows:]
Prepared Statement of Curtis W. Sumner, LS, Executive Director,
National Society of Professional Surveyors
Mr. Chairman, members of the Subcommittee. I am Curt Sumner, a
licensed professional land surveyor and Executive Director of the
National Society of Professional Surveyors (NSPS), a non-profit
professional society with affiliates in all 50 states whose goal is to
advance the sciences of surveying and mapping and related fields, in
furtherance of the welfare of those who use and make surveys, maps and
other geographic information. The NSPS membership, which includes
surveyors in private practice, government service, industry, and
academic instruction, strives to establish and further common
interests, objectives, and policy efforts to advance the surveying
profession in its service to the people of the United States. NSPS is
the successor of the American Congress on Surveying and Mapping (ACSM),
founded in 1941 as the voice of the surveying profession.
I am pleased to be here today to share with you the NSPS experience
with the Department of Labor and the Davis-Bacon Act.
As you know, Mr. Chairman, the Davis-Bacon Act is a controversial
law that requires the payment of the ``prevailing wage'' to ``laborers
and mechanics'' on federally funded construction projects. It applies
to direct federal contracts (prime contractors and subcontractors), as
well as to state and local governments expending federal (grant or
loan) funds. The prevailing wages required by the law are above and
beyond the ``minimum wage'' provided in the Fair Labor Standards Act.
The Government Accountability Office has long recommended that
Davis-Bacon be repealed, noting in 1979 it inflates the cost of
federally funded construction projects by ``several hundred million of
dollars annually''.
The Davis-Bacon Act itself applies to ``laborers and mechanics'',
but does not define that term. That is left up to the Department of
Labor, under the guidelines provided in the Federal Acquisition
Regulation, 48 CFR 22.401.
For more than 50 years, the Labor Department has considered survey
crews exempt from the provisions of the Davis-Bacon Act. We have
documentation from then-Secretary Arthur Goldberg in the Kennedy
Administration stating that members of survey crews are exempt from the
Act except to the extent to which they ``perform manual work, such as
clearing brush and sharpening stakes'' which Secretary Goldberg
observed, correctly I might add, ``are not commonplace''. (That letter
is attached.)
So since at least the 1960s, both federal agencies, and the private
sector have operated with the understanding that survey crews are
exempt. There was never any controversy, question or ambiguity.
That was until a few weeks ago when an NSPS member, a small
business, received notification pursuant to a federal contract on which
he is a subcontractor that the Labor Department has issued a new order,
AAM212, reversing more than 50 years of policy and determined that
members of land surveying crews working on Federal construction
projects are ``laborers and mechanics'' as that term is used in the
Davis Bacon Act, making those workers subject to the Act. (SEE: http://
www.dol.gov/whd/programs/dbra/Survey/AAM212.pdf)
This ruling came at the urging of the International Union of
Operating Engineers. (See attached letter).
Before I discuss the practical and policy implications and problems
with this ruling, permit me to address the process.
The Operating Engineers wrote the Labor Department in August of
2011 asking for this change. While the Labor Department deliberated for
18 months on a reversal of 50+ year policy, NSPS, nor to the best of
our knowledge any other business, management, or professional
organization related to the surveying community, was notified or
consulted. During that 50 year period, NSPS and its predecessor, ACSM
had been engaged with the Department, so it knew who we were and that
we had an interest in this issue.
A decision was made on March 23 of this year. Again, no notice to
affected parties was provided, except to the Operating Engineers and a
notice sent to all federal contracting agencies. In the time between
the August 2011 letter from the Operating Engineers and the March 2013
decision, there was no public notice that the Labor Department was
considering a change in its regulations; no request for public input or
comments; no notification, seeking of advice, comment or input from the
surveying profession and employers/management; and in fact no public
announcement of the new policy.
We believe the manner in which the Department of Labor considered
and promulgated this drastic and significant change in policy and
government contracting procedure is a violation of the spirit if not
the letter of the Administrative Procedures Act (5 U.S.C. Sec. 551-59,
701-06, 1305, 3105, 3344, 5372, 7521), the Regulatory Flexibility Act
(5 U.S.C. Sec. 601--612), and the Paperwork Reduction Act (44 U.S.C.
Sec. 3501-3521).
There are a number of reasons this ruling is ill-conceived,
unnecessary, and detrimental to the surveying profession.
First, the classification of members of survey crews as ``laborers
and mechanics'' is inconsistent with and contrary to virtually every
other classification, including those of the Labor Department itself.
This ruling is in direct contrast with the classification of such
workers promulgated elsewhere in the Department of Labor and other
federal agencies, including the Occupational Employment Statistics (17-
3031 Surveying and Mapping Technicians), the Occupational Outlook
Handbook (Surveying and Mapping Technicians), the Occupational
Information Network, successor to the Dictionary of Occupational
Titles, (Code 22521A Surveying Technicians), and the Office of
Personnel Management (OPM) General Schedule Qualification Standard (GS
817 Survey Technical Series) for surveying technicians employed by the
federal government. None of these federal classifications categorize
members of survey crews as ``laborers and mechanics''.
NSPS administers a ``Certified Survey Technician'' (CST) program
for employees of surveying firms and government agencies, including
those who perform field survey functions. The classification of members
of survey crews as ``laborers and mechanics'' is inconsistent with the
CST program and the standard in the surveying community. A number of
public and private organizations recognize the CST program and its
standards. For example, the Metropolitan Washington Area Transit
Authority (WMATA), has utilized the CST standard for its employees and
contractors since the 1990s.
Second, there has been no legislation, court ruling, Comptroller
General or other governmental action that changed Secretary Goldberg's
interpretation. In fact, as recently as 2010 a Connecticut Superior
Court ruled against Davis-Bacon application to surveying, citing the
longstanding federal policy as justification. (SEE: James Fazzino v.
State of Connecticut Department of Labor, CV094021804S, October 29,
2010, http://caselaw.findlaw.com/ct-superior-court/1545698.html). The
Indiana Department of Transportation issued an opinion on January 24,
2007, consistent with that of Secretary Goldberg (http://www.in.gov/
dot/div/contracts/conmemo/07-02.pdf).
Third, there is no evidence that members of survey crews are paid
substandard wages and no demonstrated need for including such workers
in a ``prevailing wage' law. According to the Bureau of Labor
Statistics (BLS), the mean annual wage for a surveying technician is
$42,680. To put that in perspective, the BLS national employment and
wage data from the Occupational Employment Statistics, shows the mean
annual wage for all occupations, is $45,790. (http://www.bls.gov/
news.release/ocwage.htm)
Finally, this ruling will be an administrative nightmare for
surveying firms, contracting agencies, and the Labor Department. AAM
212 itself is vague with regard to which members of survey crews, and
which activities, and at what phase in a project the surveying service
is being provided. This will result in confusion and costly compliance
issues. The letter the Labor Department sent to the Operating Engineers
Union is more specific, but since it is in a letter and not a
government policy document, confusion will reign. It suggests the
Davis-Bacon Act applies to ``work immediately prior to or during
construction which involves laying off distances and angles to locate
construction lines and other layout measurements. This includes the
setting of stakes, the determination of grades and levels and other
work which is performed as an aid to the crafts which are engaged in
the actual physical construction of projects * * * the chainmen and
rodmen whose work is largely of a physical nature such as clearing
brush, sharpening and setting stakes, handling the rod and tape and
other comparable activities are laborers and mechanics * * *''
The Act triggers application to a ``laborer and mechanic'' when
more than 20 percent of the workweek is in the performance of such
services on a covered site.
Survey crews are not like construction workers. A survey crew
member may be on a construction site a few hours a day, one day a week,
and otherwise on a sporadic and intermittent basis, but rarely an
entire 40 hour work week. Some work may be preliminary to construction,
post-construction, or not related to construction at all.
Documenting what every survey crew member is doing every hour of
the work day, determining whether an activity is covered or not
covered, construction related or not, is an expensive, time consuming
and counter-productive burden. The payroll administration required for
compliance for a surveying profession dominated by very small
businesses is extraordinary.
Moreover, the described activities are outdated and irrelevant to
today's surveying. The Labor Department attempts to distinguish between
licensed professional surveyors, party chiefs, and technicians, such as
rodmen and chainmen. However, with today's computerized data
collectors, survey crews can commonly consist of one person. That
individual is certainly exercising judgment and working in a
supervisory capacity. Today's surveying technicians are performing
services that are mental and managerial in nature, and are not
``apprentices, trainees, helpers, and, in the case of contracts subject
to the Contract Work Hours and Safety Standards Act''. Therefore, they
do not meet the criteria for a laborer or mechanic under FAR 22.401.
We believe the Department of Labor has made an arbitrary and
capricious decision that is not supported by the facts.
We urge the Labor Department to rescind AAM 212.
Mr. Chairman, we deeply appreciate the time, attention and
assistance you and your capable staff have provided and we look forward
to working with you to rectify this inappropriate, unnecessary and
unfair process and policy employed by the Department of Labor.
______
Chairman Walberg. I thank you.
Mr. Eisenbrey, recognize you for 5 minutes of testimony?
STATEMENT OF ROSS EISENBREY, VICE PRESIDENT,
ECONOMIC POLICY INSTITUTE
Mr. Eisenbrey. Thank you, Mr. Chairman.
I think it is important to start by reminding everybody
what the purposes of the Davis-Bacon Act are, and I think that
they were well summarized by Alice Rivlin in a CBO report back
in 1983: ``The Davis-Bacon Act's benefits include protecting
both the living standards of construction workers and the
competitiveness of local construction firms bidding against
transient contractors who might win federal contracts on the
basis of lower-than-prevailing local wages. Government
contracts are especially vulnerable to such practices because
they must be awarded to the lowest qualified bidder.
``Further, by excluding bids from contractors who would use
lower-wage, less-skilled workers, Davis-Bacon may aid federal
agencies in choosing contractors who will do high quality work.
Finally, by helping to stabilize wage rates in the inherently
volatile construction labor market, Davis-Bacon may aid the
industry in recruiting and training workers, thereby helping to
maintain the long-term supply of skilled labor.''
We at EPI reviewed all of the economic literature back in
2008, and if you--I would be happy to submit that report for
the record, but what we found was that Davis-Bacon--the
research overall shows that Davis-Bacon achieves all of those
goals that I just mentioned without raising the federal
government's cost of construction. By protecting the wages of
higher-skilled workers, Davis-Bacon raises employee
productivity and offsets the pay the cost of higher hourly
rates.
The increased productivity offsets the higher cost because
there is no question the whole point of the act is to keep
firms from being underbid by using lower wages, but the effect
of that is offset by higher productivity of the better-skilled
workers. Better-managed firms and more-skilled employees also
tend to work more safely, reducing the number of accidents,
lowering workers compensation costs, and preventing damage to
materials and equipment.
So on the question of whether BLS can substitute, Mr.
Courtney went through the list of all the problems--the
obstacles to having BLS do this, and I think he hit the nail on
the head. It is important to remember that first off, the OES
does not collect fringe benefits, as Commissioner Groshen said.
And back in 1997 when I was at the Labor Department and
Congress asked us to look at this, BLS actually, with the Wage
Hour Division, ran an experiment to see how much it would cost
to do this on a local, project-by-project basis, collect the
fringe benefit information. They did three tests and the
estimates for the cost of doing this on just these three
projects was about $3 million, and you can--I would be happy to
submit for the record a statement of that from the Wage and
Hour Division.
But you can see that this is--Mr. Baskin says, well, there
is no obstacle--no statutory reason they can't do it, but there
is a tremendous cost reason. It is true, you could have BLS
substitute for Wage Hour and do the exact same survey that the
Wage Hour Division is doing, but you can't use BLS surveys, as
currently constituted, to substitute for the requirements of
the act.
I would like to just go through a few problems that I saw
in Mr. Baskin's testimony that--he claims that the Davis-Bacon
Act hinders economic growth. He presents no evidence to that
effect. And when you think about it, the Davis-Bacon Act was in
an even stronger form from 1940 to 1980, during the period of
the greatest growth--economic growth in American history. At
that point the prevailing wage was set as the wage that was
paid to 30 percent or more of the workers instead of 50 percent
or more. So it was a stronger, more protective statute then and
we had the greatest economic growth that--you know, the
Eisenhower National Defense Highway Act built the interstate
highway system under Davis-Bacon wages.
There are a couple of studies that I think are important to
look at--one from Colorado and one from California--that look
at the effect on bidders. You know, Mr. Baskin suggests that it
prevents nonunion firms from bidding.
Both of those studies show that the prevailing wage laws do
not prevent nonunion firms from bidding. It doesn't prevent
them from winning contracts, as Mr. Courtney suggested. And
there is no evidence from those studies that it raises the
ultimate cost of construction at all.
I have a list of other issues and I hope someone will ask
me to go through Mr. Baskin's testimony because there are a lot
of things that are just wrong.
Thank you----
[The statement of Mr. Eisenbrey follows:]
Prepared Statement of Ross Eisenbrey, Vice President,
Economic Policy Institute
Mr. Chairman and members of the subcommittee, thank you for
inviting me to testify today. I'd like to begin by reminding the
subcommittee of the important purposes the Davis-Bacon Act has served
for over 80 years. The Congressional Budget Office summarized them
succinctly in a 1983 report signed by Alice Rivlin:
The Davis-Bacon Act's benefits include protecting both the
living standards of construction workers and the
competitiveness of local construction firms bidding against
transient contractors who might win federal contracts on the
basis of lower-than-prevailing local wages. Government
contracts are especially vulnerable to such practices, because
they must be awarded to the lowest qualified bidder. Further,
by excluding bids from contractors who would use lower-wage,
less-skilled workers, Davis-Bacon may aid federal agencies in
choosing contractors who will do high quality work. Finally, by
helping to stabilize wage rates in the inherently volatile
construction labor market, Davis-Bacon may aid the industry in
recruiting and training workers, thereby helping to maintain
the long-term supply of skilled labor.
Careful academic research has shown again and again\1\ that the
Davis-Bacon Act achieves these goals without significantly raising the
federal government's cost of construction. By protecting the wages of
higher-skilled workers from low-wage, less-skilled competition, Davis-
Bacon raises employee productivity and offsets the cost of paying
higher hourly rates. Better-managed firms and more skilled employees
also tend to work more safely, reducing the number of accidents,
lowering workers compensation costs, and preventing damage to materials
and equipment.
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\1\ http://constructionacademy.org/wp-content/uploads/downloads/
2012/09/2012-10-Industrial-Relations-Philips-et-al-Effect-of-
Prevailing-Wage-Regulations-on-Contractor-Bid-Participation-and-
Behavior-Palo-Alto-Etc.pdf; http://constructionacademy.org/wp-content/
uploads/downloads/2012/09/Davis-Bacon--CO-highway-june11.pdf
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How the U.S. Department of Labor implements the Davis-Bacon Act and
makes wage determinations has been the subject of many congressional
hearings and GAO reports over the years, going back as far as 1932,
when Congress first passed amendments to the Act, only to have
President Hoover veto the bill. The idea embodied in Rep. Gosar's H.R.
448 is not new, either: Hearings were held in this committee 16 years
ago to explore the merits of substituting the Bureau of Labor
Statistics for the Wage and Hour Division as the responsible agency.
The idea was rejected in 1997 and must be rejected now, for the
simple reason that BLS surveys are incapable of accomplishing Davis-
Bacon's statutory mandate. H.R. 448 does not prescribe how BLS should
meet the Davis-Bacon Act's statutory requirements while using
``scientific methods,'' but it is clear that the suggestion offered by
the Heritage Foundation and others--that the Occupational Employment
Statistics (OES) data be substituted for the current system--is
unacceptable. First, OES data do not include fringe benefits, which the
Act has required since 1964. Any determination that ignores 20% or more
of the typical construction worker's compensation would obviously not
protect the locally prevailing compensation, would undermine the local
labor market, and would make it easier for migrant contractors to
underbid local firms.
The OES does not capture and report exact wage rates and is
incapable of determining a single rate paid to a majority of workers in
a given classification and locality. Unlike the Wage and Hour Division
survey, the OES measures 12 wage intervals or ranges for wages, not the
actual rate. For example, wages falling in Range D in the May 2012
survey could vary by as much as $3.74 an hour, from $14.50 to $18.24,
or $30,160 to $37,959 on an annual basis. From the OES it is virtually
impossible to know whether a single rate is being paid to a majority of
workers in any classification in a local area.
Terry Yellig, a Washington, D.C., lawyer representing the AFL-CIO
Building and Construction Trades Department, gave very thorough
testimony in 1997 about the many other ways that BLS surveys are
designed for purposes that make them unsuitable as a substitute for
DOL's current survey process.
First, the Davis-Bacon Act specifies that wage determinations on
federal construction projects should be based on locally prevailing
wages paid ``on projects of a character similar to the contract work.''
This poses several hurdles for BLS, whose data collection does not
distinguish between different locations and types of projects. As Mr.
Yellig testified,
This legislative requirement will not be met by the proposed use of
BLS-developed wage information. BLS surveys gather information from
establishments, not projects. An ``establishment'' is defined in
Chapter 3 of the BLS Handbook of Methods as ``an economic unit which
processes goods or provides services, such as a factory, mine, or
store.'' The 1992 Census of Construction explains how the establishment
concept is applied to the construction industry as follows:
A ``construction establishment'' is defined as a relatively
permanent office or other place of business where the usual business
activities related to construction are conducted. With some exceptions,
a relatively permanent office is one which has been established for the
management of more than one project or job and which is expected to be
maintained on a continuing basis. Such ``establishment'' activities
include, but are not limited to estimating, bidding, purchasing,
supervising, and operation of the actual construction work being
conducted at one or more construction sites. (1992 Census of
Construction at V-VI.)
Unlike most other industries, in the building and construction
industry, where the work is actually performed does not correspond with
the BLS concept of an ``establishment,'' which is primarily a location
for managerial activity. Thus, for example, the operations headquarters
of a construction contractor may very well be in one county, but the
contractor may not have performed any construction work in that
locality during a survey period, yet performed a substantial amount of
work on projects in other localities. Consequently, the laborers and
mechanics reported in a survey of construction ``establishments'' by
that contractor might not be counted as employed in the localities
where they were actually employed, as required by the Davis-Bacon Act.
More important, perhaps, collecting compensation data segregated
according to projects of a similar character precludes the kind of
general collection BLS does for the OES and other surveys. BLS does not
collect data separately for residential, heavy, highway, and building
construction, even though the skills and pay rates for any craft can
vary dramatically depending on the type of project involved. But as Mr.
Yellig explained, to carry out the Act's requirements, ``if laborers
and mechanics working on highway projects are paid different rates than
are laborers and mechanics working on building projects in the same
locality, then the Secretary of Labor's wage determinations must also
differentiate between laborers and mechanics working on highway
projects and building projects.''
As currently administered, Davis-Bacon wage determinations reflect
these distinctions. In order to accurately carry out the Secretary of
Labor's mandate under the Davis-Bacon Act, DOL's Wage and Hour Division
uses four basic categories to classify construction work of a
``character similar.'' The categories are (1) building construction
(exclusive of single-family homes and garden-style apartments up to and
including four stories); (2) residential construction (including
single-family homes and garden-style apartments up to and including
four stories); (3) heavy, water, sewer, and utility construction; and
(4) highway construction.
But, as Yellig noted:
On the other hand, the BLS uses Standard Occupational
Classifications (``SOC'') to define ``classes'' of workers. Use
of standard occupational classifications assumes that the
occupational structure of the construction industry is
nationally homogeneous. This is not consistent with the
requirements of the Davis-Bacon Act because the variety of
classifications of laborers and mechanics in the local building
and construction industry will vary depending on the nature of
work in the area and the predominance, or lack thereof, of
collectively-bargained practices.
For example, BLS's large national surveys cannot distinguish
between an urban area with a lot of high-rise construction that might
have three ironworker classifications, each with a corresponding skill
and wage level, and a rural area that has only one classification.
The Davis-Bacon Act also instructs the Secretary of Labor to set
project wages based on the wages prevailing in ``the city, town,
village, or other civil subdivision of the State in which the work is
to be performed.'' The Wage and Hour Division generally meets this
requirement by collecting data on a county-by-county basis. BLS,
however, does not collect its data according to civil subdivisions.
Once again quoting Terry Yellig's 1997 testimony:
BLS surveys Metropolitan Statistical Areas (``MSA'') and the
balance-of-state. Construction markets are organized around
types of work, volumes of work, prevalence of differing models
of employer organization, and the nature and availability of
labor supply. A BLS survey would not capture these wage
variations because it assumes that construction markets are
homogeneous within MSA's and within vast rural areas. On the
other hand, the current Wage and Hour Davis-Bacon wage survey
system can and does recognize this variation.
The biggest problems with the current survey process--the low
response rates when contractors are solicited to voluntarily submit
wage information during a prevailing wage survey and the inaccuracy of
the wage information the contractors actually provide--will not be
solved by a switch to the OES. It, too, is a voluntary survey, and I
see no reason a contractor that refuses to respond to the Wage and Hour
Division would be more enthusiastic about responding to BLS, given that
the purpose of the former agency's request and that of the latter are
identical.
The need to keep the federal government from depressing
construction industry wages, the need to support the development of the
next generation of skilled workers in the construction trades, and the
need to ensure the highest quality work on federal construction
projects are just as great today as they were 30 years ago or even 80
years ago. The Davis-Bacon Act has served the public well, and nothing
should be done that might undermine the effectiveness of the Act in
achieving these important purposes. Therefore, I recommend against
shifting the responsibility for gathering wage information supporting
Davis-Bacon prevailing wage determinations from the Wage and Hour
Division to the BLS. Instead, I recommend increased support for the
Wage and Hour Division's efforts to improve and streamline the current
Davis-Bacon wage determination process.
______
Chairman Walberg. Thank you, Mr. Eisenbrey. And I am sure
that our next witness is looking forward to addressing your
concerns.
And so, Mr. Baskin, I recognize you for 5 minutes?
STATEMENT OF MAURY BASKIN, SHAREHOLDER,
LITTLER MENDELSON P.C.
Mr. Baskin. Thank you, Mr. Chairman.
My name is Maury Baskin. I am a shareholder with the law
firm Littler Mendelson. I serve as general counsel to
Associated Builders and Contractors, on whom behalf I am
appearing before you today.
ABC is a national trade association of both union and
nonunion firms who share a commitment to the merit shop
philosophy. It's based on the principles of nondiscrimination
and fairness in the award of construction contracts through
competitive bidding regardless of labor affiliation.
Now, the focus of my testimony today is the department's
dysfunctional wage survey process, which is where the problems
all start. And as an aside, I testified before this committee
on Davis-Bacon in 1997, the hearing that has been referred to.
We had Mr. Yelig here with us then saying many of the same
thing that Mr. Eisenbrey is saying.
And we also had Dr. Thieblot with us, but he is--Dr.
Thieblot is with us in spirit because he has written the latest
summary of all the literature. It is objectively titled, ``The
Case Against the Davis-Bacon Act: 54 Reasons for Repeal.'' It
reviews all the studies that have been just referred to; it
rebuts them and refutes them completely, including the
statements in Mr. Eisenbrey's testimony, and in Mr. Gijo's
testimony in 1997 and in the hearing of 2011.
In particular, studies by GAO and the Department of Labor's
own inspector general have confirmed that DOL's wage
determinations are grossly inaccurate and are simply not
credible. Frankly, almost anything would be better than the
situation we are in now. And yet, we are told, ``Well, we can't
switch to the BLS even though it might be better because there
is this or that problem,'' instead of working on some minor
tweaks that would take care of those circumstances.
And that is our complaint about this whole process and the
failure--if anything, a bipartisan failure--to make the changes
that are needed to make this act work the way it was supposed
to work all those years ago.
The evidence of the failed survey methodology of DOL is
best illustrated by comparing two key numbers. These are not my
numbers; these are from the Government Accountability Office:
13 percent of construction workers in the United States are
covered by union agreement, yet according to the latest GAO
report, 63 percent of all DOL wage determinations report wages
set by union agreements to be somehow prevailing.
As Professor Thieblot says in his most recent study, this
outcome is statistically impossible for DOL to have achieved by
any fair survey method. There are many reasons for this that
have been reviewed in past hearings but it just hasn't changed.
The department relies on wage surveys containing
ridiculously low response rates instead of using sound
statistical samples, which is what the BLS does. And even when
the adequate responses are received, the department's survey
rules are biased in favor of uniformity and this notion of to-
the-penny the single rate that is adopted. Of course, that can
only be found in collective bargaining agreements because
nonunion contractors are more flexible in their rates and in
their job duties and so it is never going to match up with the
way they pay their workers.
The department has also in recent years violated its own
rules by importing wage rates from labor markets hundreds of
miles apart, and I was interested to hear the concern expressed
that BLS does--only measures in SMSAs, but in fact, the Labor
Department--if that is the standard the Labor Department has
been violating it. The GAO reported 40 percent of their wage
surveys now are done on a statewide basis, and we have got a
challenge going right now where they are importing data from
Northern Virginia and applying it to Southern Virginia,
hundreds of miles away. That should not be allowed but it would
not have to be allowed if they had adequate responses or if
they did proper statistical sampling, which is what the Bureau
of Labor Statistics does.
I have challenged a number of wage surveys on behalf of ABC
chapters and various other coalitions of frustrated contractors
and developers. The deck is stacked in the department's favor.
They seem to be totally impervious to the most common sense
reforms, and that is why we welcome this hearing as long as it
takes to get the job done.
It is why ABC has come out saying repeal is the only
answer, because the Labor Department simply refuses to make the
most common sense changes. Something I think everyone in this
room would agree to is that the prevailing wage, if that is the
standard, should be arrived at by the fairest and most accurate
method possible. The Labor Department has refused to do what
needs to be done.
We believe the BLS system would be better. It is not
perfect, but certainly things could be done to make it work
better than the current system.
I think that concludes my formal remarks, and I am happy to
answer any questions.
[The statement of Mr. Baskin follows:]
Prepared Statement of Maurice Baskin, Esq., Shareholder,
Littler Mendelson P.C.
Chairman Walberg, Ranking Member Courtney and members of the
Subcommittee on Workforce Protections: Good morning and thank you for
the opportunity to testify before you today on ``Promoting the Accuracy
and Accountability of the Davis-Bacon Act.''
My name is Maurice Baskin. I am a shareholder with the law firm
Littler Mendelson, P.C. and serve as general counsel to Associated
Builders and Contractors (ABC), on whose behalf I am appearing before
you today. ABC is a national trade association with 72 chapters
representing nearly 22,000 members from more than 19,000 construction
and industry-related firms in the commercial and industrial sectors of
the industry. ABC's membership is bound by a shared commitment to the
merit shop philosophy, based on the principles of nondiscrimination due
to labor affiliation and the awarding of construction contracts through
competitive bidding. ABC helps its members win work and deliver it
safely, ethically and profitably for the betterment of the communities
in which they do business.
The Davis-Bacon Act
The Davis-Bacon Act is an 80-year-old wage subsidy law administered
by the U.S. Department of Labor (DOL). The law mandates so-called
``prevailing'' wages for employees of contractors and subcontractors
performing work on federally financed construction projects. ABC has
long advocated for Davis-Bacon reforms that, if adopted in years past,
could have mitigated some of its damage to our economy. But because all
attempts at meaningful reform have failed over the years--despite
repeated criticisms from the Government Accountability Office (GAO),\1\
DOL's own Office of Inspector General (OIG) \2\ and numerous
congressional hearings\3\--ABC supports the repeal of the Davis-Bacon
Act.
As administered by DOL, Davis-Bacon unnecessarily hinders economic
growth, increases the federal deficit, and imposes an enormous
paperwork burden on both contractors and the federal government. It
stifles contractor productivity by raising costs, ignores skill
differences for different jobs, and imposes rigid craft work rules. In
addition, complexities in Davis-Bacon's implementation make it nearly
impossible for many small, qualified merit shop firms to compete on
publicly funded projects. At the same time, other laws like the Fair
Labor Standards Act, Occupational Safety and Health Act and National
Labor Relations Act have superseded the original stated purpose of the
Davis-Bacon Act: protecting local workers from unscrupulous
``itinerant'' contractors. In addition, an elaborate government
procurement system already ensures government work is awarded only to
responsible bidders.
From a fiscal standpoint, the Congressional Budget Office has
estimated that the Davis-Bacon Act raises federal construction costs by
$15.7 billion over ten years, which ABC believes to be a conservative
estimate.\4\ Numerous studies have shown that repealing Davis-Bacon
would create real and substantial savings to the government without
affecting workplace productivity, safety or market wages.\5\ The
contrary view expressed by the minority witness on today's panel has
been refuted by numerous studies and Congressional witnesses.\6\
By any objective measure, DOL's wage determinations are vastly
inflated above the market rates for private sector construction
projects. Evidence of DOL's failed wage survey method is best
illustrated by comparing two key numbers. According to the Bureau of
Labor Statistics (BLS), only 13.2 percent of construction workers in
the United States are covered by any union agreement; \7\ yet,
according to the latest GAO report, 63 percent of all DOL wage
determinations report that wages set by union agreements are
``prevailing.'' \8\ In Dr. Thieblot's words, such a result is a
``statistical impossibility'' for DOL to have achieved by any fair
survey method.\9\ Despite these facts and findings, Davis-Bacon remains
in effect and continues to inflate the cost of federal construction by
more than 20 percent.\10\
In the remainder of my testimony, I would like to highlight some of
the specific ways in which DOL has failed to properly carry out its
statutory mandate to determine truly ``prevailing'' wages, with
particular emphasis on the deeply flawed wage survey process.
Wage Rates and Surveys
The methodology by which DOL determines Davis-Bacon Act wage rates
has repeatedly been shown to be inaccurate and unscientific. Yet, the
agency continues to rely on voluntary wage surveys with ridiculously
low response rates instead of using sound statistical samples already
made available through other government data collections.
The resulting wage determinations bear little relation to actual
local wages in the areas surveyed. The problems associated with Davis-
Bacon wage calculations have been well documented in previous
congressional testimony from ABC and, more importantly, reports by GAO
and DOL's OIG.\11\ In addition, due to the systematic delays associated
with the final publication of many Davis-Bacon rates, wage surveys
conducted during the economic ``boom'' in construction during the
previous decade are now being applied to a ``bust'' economy.
The last GAO report concluded that efforts to improve the Davis-
Bacon wage survey process--both with respect to data collection and
internal processing--have not addressed key issues with wage rate
accuracy, timeliness and overall quality.\12\ The report also found
that DOL ``cannot determine whether its wage determinations accurately
reflect prevailing wages,'' and ``does not currently have a program to
systematically follow up with or analyze all non-respondents.''
The 2004 OIG report revealed that nearly 100 percent of the wage
determinations that were analyzed contained errors. In 2011, GAO found
that ``most survey forms verified against payroll data had errors.'' In
addition, the report stated that more than ``one-quarter of the final
wage rates for key job classifications were based on wages reported for
six or fewer workers.''
Reaffirming yet another longtime ABC concern, GAO found that
``contractors have little or no incentive to participate in the Davis-
Bacon wage survey'' as it is currently administered. Contractors that
are struggling to stay in business have no time or resources to fill
out reports to the government. Furthermore, they don't trust the
government to keep this sensitive wage data confidential, and are
justifiably worried about being targeted for DOL audits and
inspections.
GAO also recommended that DOL get ``technical guidance from
experts'' on statistical sampling techniques; to ABC's knowledge, DOL
has done nothing to implement this recommendation.
I have personal knowledge of the dysfunctional DOL wage survey
process, having challenged a number of wage surveys on behalf of ABC
chapters and various coalitions of frustrated contractors and
developers in recent years.\13\ In case after case, DOL has relied upon
completely inadequate survey response numbers (a small handful of
unrepresentative wage reports setting the wage rates for thousands of
workers). In addition, the agency has violated its own rules for
calculating which rates should prevail in a region. DOL has improperly
counted union workers who were paid different wage rates, as if they
were all paid the same wages, and has improperly imported flawed data
from state government wage surveys. Most recently, the agency has
expanded its reliance on statewide wage surveys in which data collected
in large urban areas is applied to smaller labor markets hundreds of
miles away.
Challenging these improper wage determinations takes years and the
deck is stacked in DOL's favor at every turn. When we do ``win'' one of
these cases--and we have actually won some of them--DOL simply conducts
the survey again and usually reaches similarly wrong results by other
means.
Job Classifications
Once the wage determinations are inaccurately made (as previously
described), the errors in setting the prevailing wage are magnified by
DOL's handling of work assignments for individual job classifications.
When DOL determines that the prevailing wage rate for a classification
should be based on a union collective bargaining agreement, the job
duties for that classification also likely will be governed by the
union's work rules in that agreement. Generally, union work rules are
much more restrictive than nonunion job assignments.
Even worse, DOL wage determinations routinely fail to give
contractors enough information to decide which trade should perform a
given set of job duties. Unlike many state prevailing wage laws, DOL
does not require the union bargaining agreements or jurisdictional
rules to be published. DOL's failure to provide this information makes
it almost impossible for merit shop contractors to figure out the
correct wage rate for many construction-related jobs.
Certified Payrolls and Fringe Benefits
Another burden on small business compliance with the Davis-Bacon
Act (and also the related Copeland Act) is the requirement that
contractors submit weekly certified payroll reports to the government.
This is a paperwork nightmare for many contractors and a significant
administrative cost factor for every contractor. DOL's recent system
upgrades to include electronic filing are a small step in the right
direction, but they do nothing to solve the complexities of the
certified payroll form itself, and in particular the confusion
surrounding the proper credits allowed to nonunion contractors for
their bona fide fringe benefit costs.
Repeated Failure to Implement Reforms
ABC and others have repeatedly called on DOL to explore using
alternative data to determine wage rates--such as data collected
through the BLS Occupational Employment Statistics (OES) program. DOL
has refused to pursue this reform to the wage survey process, and has
failed to provide a corresponding rationale. Contrary to previous
claims by some, there is no statutory obstacle to having BLS conduct
Davis-Bacon wage surveys.
ABC also has requested that DOL provide better clarity about job
duties that correspond to each wage rate. Again, DOL has refused to
give contractors fair notice of what the job assignment rules are on
the published wage determinations. Finally, DOL has failed to make
publicly available many of the rulings and interpretations addressing
Davis-Bacon issues that have accumulated over the years.
Pending Legislation to Reform the Act
ABC supports full repeal of the Davis-Bacon Act, in favor of wage
and benefit rates that actually reflect the current construction
market. Accordingly, we support the Davis-Bacon Repeal Act (H.R. 2013),
introduced by Rep. Steve King (R-Iowa). In the absence of full repeal,
however, ABC also supports legislative efforts designed to improve
federal wage determinations and limit the negative impacts of DOL's
current policies, including the Responsibility in Federal Contracting
Act (H.R. 448), introduced by Rep. Paul Gosar (R-Ariz.). H.R. 448 would
require federal construction wage rates be determined scientifically by
BLS.
On behalf of ABC, I'd like to again thank you for holding today's
hearing. ABC is pleased to see the Education and the Workforce
Committee take a renewed interest in the problems associated with the
Davis-Bacon Act. Ensuring accurate wage rates that reflect open and
competitive bidding is a top priority for our members. We look forward
to working with the Subcommittee on Workforce Protections on this
issue. Mr. Chairman, this concludes my formal remarks; I am prepared to
answer any questions that you may have.
endnotes
\1\ Government Accountability Office, Davis-Bacon Act:
Methodological Changes Needed to Improve Wage Survey, April 6, 2011, at
http://www.gao.gov/new.items/d11152.pdf; See also, Government
Accountability Office, Davis-Bacon Act: Process Changes Could Raise
Confidence That Wage Rates Are Based on Accurate Data, May 1996, at
http://www.gao.gov/archive/1996/he96130.pdf.
\2\ U.S. Department of Labor, Office of the Inspector General,
Concerns Persist with the Integrity of Davis-Bacon Prevailing Wage
Determinations, Audit Report No. 04-04-003-04-420, 2004, at http://
www.oig.dol.gov/public/reports/oa/2004/04-04-003-04-420.pdf.
\3\ See, e.g., ``Examining the Department of Labor's Implementation
of the Davis-Bacon Act,'' Hearing before the Subcommittee on Workforce
Protections of the Committee on Education and the Workforce, April 14,
2011, available at http://1.usa.gov/11Bhvnz; see also ``Joint Hearing
to Review the Davis-Bacon Act,'' Joint Hearing before the Subcommittee
on Oversight and Investigations and the Subcommittee on Workforce
Protections of the Committee on Education and the Workforce, July 30,
1997 (Serial No. 105-68).
\4\ Congressional Budget Office, Discretionary Savings from Repeal
of the Davis Bacon Act, April 2011, at http://bit.ly/11lIox3. Compare
Sherk, Repealing the Davis-Bacon Act Would Save Taxpayers $10.9
Billion, Heritage Foundation Webmemo No. 3145, Feb. 14, 2011, available
at http://www.heritage.org/research/reports/2011.
\5\ Thieblot, The Case Against the Davis-Bacon Act: 54 Reasons For
Repeal (Transaction Publishers 2013); see also Leef, Prevailing Wage
Laws: Public Interest or Special Interest Legislation?, 30 Cato Journal
137 (Winter 2010); Glassman, Head, Tuerck, and Bachman, The Federal
Davis-Bacon Act: The Prevailing Mismeasure of Wages, (Beacon Hill Inst.
2008), available at www.beaconhill.org/BHIStudies/PrevWage08; Thieblot,
The Twenty-Percent Majority: Pro-Union Bias in Prevailing Rate
Determinations, 26 J. Lab. Research 99 (2005).
\6\ See, e.g., Leef, supra, n.5, at 146-152 (refuting claims that
prevailing wage laws somehow save money through increased productivity
or that workers are safer or better trained on prevailing wage
projects). See also Kersey, The Effects of Michigan's Prevailing Wage
Law, Mackinac Center for Public Policy (2007), available at
www.mackinac.org/article; Ohio Legislative Service Commission, S.B. 102
Report: the Effects of the Exemption of School Construction Projects
from Ohio's Prevailing Wage Law, Staff Research Report #149 (2002);
Thieblot, A New Evaluation of Impacts of Prevailing Wage Law Repeal,
Journal of Labor Research 17 (1996). See also Testimony of James Sherk
before the Education and Workforce Committee, April 14, 2011 and
Sherk's June 3, 2011 letter responding to supplemental statement of the
Economic Policy Institute, available at http://1.usa.gov/11Bhvnz.
\7\ U.S. Department of Labor, Bureau of Labor Statistics, Economic
News Release: Union Members Summary, Jan. 2013, at http://www.bls.gov/
news.release/union2.nr0.htm.
\8\ Government Accountability Office, Davis-Bacon Act:
Methodological Changes Needed to Improve Wage Survey, April 6, 2011, at
http://www.gao.gov/new.items/d11152.pdf.
\9\ Thieblot, The Case Against the Davis-Bacon Act: 54 Reasons For
Repeal, at 36 (Transaction Publishers 2013). In supplemental answers to
questions following the April 14, 2011 hearing before this
Subcommittee, DOL claimed that the 63 percent figure was ``misleading''
because it is based on the number of individual wage categories
surveyed. See Response of John Fraser, available at http://1.usa.gov/
11Bhvnz. To the contrary, GAO's finding of 63 percent union rates is
the most accurate measure of the results of DOL's wage survey process,
and DOL's response is itself misleading. By way of example, DOL would
apparently identify the Washington, D.C. building construction wage
determination as a ``mixed'' wage determination. But whereas the
percentage of unionized construction workers in the District is less
than 10 percent, DOL has found that union rates prevail in 32 out of 36
categories, including all of the major trades.
\10\ The Beacon Hill Institute at Suffolk University, The Federal
Davis-Bacon Act: The Prevailing Mismeasure of Wages, February 2008, at
http://www.beaconhill.org/bhistudies/prevwage08/
davisbaconprevwage080207final.pdf.
\11\ Cited at notes 1-2 above.
\12\ Government Accountability Office, Davis-Bacon Act:
Methodological Changes Needed to Improve Wage Survey, April 6, 2011, at
http://www.gao.gov/new.items/d11152.pdf.
\13\ See, e.g., Mistick Construction, Inc., No. 04-051 (ARB 2006);
Chesapeake Coalition, No. 12-010 (ARB petition pending).
______
Chairman Walberg. I appreciate the gentleman.
In fact, I guess I would like to see it extended--the
comments--but we will hear more with the questions that come
on.
Gives me pleasure to recognize the gentleman from North
Carolina here on time, ready to go, and you have 5 minutes?
Mr. Hudson. Thank you, Mr. Chairman. I appreciate this
opportunity. And it is a pleasure to be here on the top row;
usually I am down a little further. I still can't see you very
well from here, but----
Chairman Walberg. That is a benefit to you.
Mr. Hudson. Sir. I don't know about that--but anyway, thank
you.
I thank the witnesses. I believe I will start with Mr.
Baskin.
You know, the Davis-Bacon is not just about setting wages
for construction projects. Can you outline some of the
administrative issues that contractors must address in order to
be in compliance with such items like work rules and certified
payroll?
Mr. Baskin. Sure, because the wage survey is just the
beginning of the flawed process. Once the department
establishes the inaccurate rates that established union rates
as prevailing, the union work rules come along with those.
These rules are almost always unwritten. Even though many
state prevailing wage laws require job descriptions to be
published, the federal government has not done that. So the
nonunion contractors really have no way of determining, except
through perhaps contacting the right person at DOL if they even
know there is a question to ask and what the question is.
Instead of doing things the way they normally do on private
work they are told, ``Totally re-jigger your workforce to meet
these very rigid and arbitrary work rule assignments from the
unions.''
On top of that you have the certified payroll paperwork
requirement, which is very burdensome, particularly for the
smaller contractors. And again, be able to incorporate these
different--totally different terminology on many of these
projects.
And then you have the fact that the opinions are
unpublished from the Labor Department on some of the grey
areas. They used to be on their Web site, and in the name of
transparency at the beginning of the Obama administration they
were taken off the Web site, never given an explanation as to
why that has occurred.
And many requests have been made to put it back as well as
to put on there opinions that were never published from the
Wage Hour administrator's office and those still are not
available except by laborious inquiry. They are usually
discovered when someone at the Department of Labor--an
investigator--pulls it out of his pocket--total shock of the
contractor--to tell them they owe $1 million, and that is when
people find out about one of these opinions.
All of those things are wrong and should be fixed.
Mr. Hudson. I appreciate that explanation.
Federal construction contracts require Davis-Bacon wages
for all projects costing more than $2,000. That threshold
hasn't changed since 1931. Is there merit to raising that
threshold to remove the administrative burden for smaller
contractors? If so, what do you think the threshold should be?
Mr. Baskin. There certainly is merit. There were reforms
suggested back in the 1990s, as I recall; it should have gone
to $1 million back then and so that means it should go higher
now.
I think Dr. Thieblot in his book, which I hope has been
submitted for the record but we will, he indicates that the $1
million is somewhat approximate to the inflation since the
1930s and so that is a start.
Mr. Hudson. I appreciate that.
One of the issues that has sort of come up in your
testimony as well as the previous witness was talking about
barriers for folks to bid on contracts and get--receive
contracts. Could you talk a little more specifically about
that? Especially want to talk about small businesses.
Mr. Baskin. Yes. And I don't know what studies Mr.
Eisenbrey is referring to. I just have personal experience as
well as seeing other studies that do say that it hinders
economic growth and does interfere with bidding.
I have people--contractors--small contractors--who I work
with all the time who say they refuse to bid on this work
because it is so impossible to deal with. They can't have their
company placed in the hands of bureaucrats who can shock them
at the end of the job--and that is often when it happens--and
say that everything they did was wrong, they had no way of
knowing it was wrong, and that they owe a crippling amount of
money. And we see this happen a lot and I have people tell me
this a lot.
You know, the average ABC member is only 5 to 10 employees.
The vast majority of ABC members are small businesses, and they
are extremely discouraged--many of them--about doing it--the
government work.
Many of them do continue and do take the chance and go for
it and do the government work only to be frustrated by what
they find there and always asking, ``How can this make sense in
this country,'' that we have this--even--it is crazy in a way
that you have wages set by the government, but if you are going
to set them and you are going to say they are going to be the
prevailing wages then why is the effort never made to fix what
everyone has said was wrong? I think the GAO said it was 100
percent wrong with the Wage and Hour Division was doing in
their surveys, and that is a pretty high standard of wrongness.
So it is baffling to the contractors why this hasn't been
fixed in all these years and they are discouraged from bidding
on the work.
Mr. Hudson. Thank you, Mr. Chairman. My time is expired.
Chairman Walberg. I thank the gentleman.
I now recognize my colleague and the ranking member, Mr.
Courtney?
Mr. Courtney. Thank you, Mr. Chairman. Again, I want to
yield my time to Mr. Andrews from New Jersey, who has an
appointment he has to reach--get to.
Mr. Andrews. I thank my friend for his indulgence.
Mr. Baskin, I know that you favor the repeal of Davis-
Bacon. Many of us do not, as you can see from the chart--
majority of us do not.
But let's say that we still had Davis-Bacon in place and
your claim is that the wages that we are using as prevailing
wage are incorrectly calculated by the Labor Department. How
would you calculate the prevailing wage? How would you figure
that out?
Mr. Baskin. Well, we have no particular standard in mind,
but the Bureau of Labor Statistics has been offered as an
alternative and we are willing to see how it works out. We are
not here to certify----
Mr. Andrews. How does that alternative--tell me
mechanically how that alternative works.
Mr. Baskin. Well, they use statistical sampling methods,
they come up with a representative sampling of the numbers----
Mr. Andrews. So I assume the way that would work is that
contractors out in the field would get a form they would have
to fill out telling the government how much they are paying
their workers for different jobs, right?
Mr. Baskin. Not necessarily. A lot of the occupational
employment data is already being submitted to the unemployment
agencies, number one. There is also a lot more telephone
contact that is used.
Mr. Andrews. Well let me just quarrel with that one for a
second about unemployment data. Don't you think it would
produce a skewed result if you only surveyed the wages that
people were making before they were laid off? I mean, doesn't
that sort of inherently suggest that that is a labor market
where there is not much demand?
Mr. Baskin. Well, you don't want to measure them after they
are laid off.
Mr. Andrews. No, you don't----
Mr. Baskin. What is wrong with measuring before they are
laid off?
Mr. Andrews. Well, because if you are trying for an
accurate measurement, which I know that you are, if you are
trying for an accurate measurement you would want a
representative sample of the whole workforce, right? And if you
oversample people who are likely to get laid off it probably
means there is a glut of that labor in the marketplace;
wouldn't that understate those wages, logically?
Mr. Baskin. Not necessarily, but, you know, it is a
relative thing. Is it better than having two projects and three
workers set the standard for the entire community? Yes, I think
that would be better.
Mr. Andrews. But tell me what would be better, though. We
know what you think is wrong with the present method. How would
you go about finding the right answer?
Mr. Baskin. So it is our duty to defend this indefensible
law?
Mr. Andrews. No.
Mr. Baskin. Well, I don't rise to that, I am afraid.
Mr. Andrews. I didn't----
Mr. Baskin. Well, it is an important question, though,
because--and it is addressed----
Mr. Andrews. Excuse me. It is my time. You didn't hear my
question.
I said I know that you favor repeal, but you criticize the
method but you also make another claim that the method by which
the wage is calculated is wrong. Tell me the right way to do
it, in your opinion.
Mr. Baskin. Right. And you have asked us to tell you what
is the way to enforce a law that we don't think is a valid
measure.
But I will say that there are many different methods that
would be preferable. Dr. Thiebolt does--you are getting at, I
guess, should it be the mean, the median, the mode? There are
many alternatives. What we would say at the start is that it
should be as statistically representative as possible and not
relying on inaccurate and biased samples----
Mr. Andrews. To be statistically representative you have to
collect a lot of samples. I mean, I assume that the larger the
sample is, the smaller the standard deviation, the lower the--
part of the error. Wouldn't that mean you would have to ask a
lot of contractors to report to the government what they are
paying people?
Mr. Baskin. And you would get--not necessarily. That is all
I can tell you. It does not mean that. It does not mean that.
Mr. Andrews. I don't know how you couldn't, that if you are
trying to get an accurate sample of what construction
contractors are paying people you have to ask construction
contractors what they are paying people.
Mr. Baskin. And ask them--and I may have misheard what you
said, ask them--yes, but we are not in favor of mandating, if
that is what we are leading up to.
Mr. Andrews. So you are in favor of a voluntary survey?
Mr. Baskin. A voluntary service has a better chance at
response, and here is why BLS does better there. BLS does
better because they are independent.
Mr. Andrews. I thought in your testimony, though, you
specifically criticized the present method because it was
voluntary. You sound to me like--let me ask you another
question.
I want to reconcile two facts in your testimony. You cite
that Davis-Bacon costs inflate federal construction by 20
percent. You then cite a CBO study that says that there is a
$15.7 billion increase over 10 years. The amount of federal
construction over a 10-year period is about $250 billion, so
that is 6 percent. Which of your two numbers is wrong?
Mr. Baskin. The CBO number, I believe we said, is
conservative. There are other studies. Another study cited in
that same footnote says it is $8 billion a year in inflated
costs. The summary of studies ranges between--generally between
10 percent and 20 percent.
Mr. Andrews. Do you think it is 20 percent or you think it
is 6 percent?
Mr. Baskin. I am not an economist. I am just reporting what
the economists say, and there is a range of----
Mr. Andrews. No, but you say both.
Mr. Baskin. Yes.
Mr. Andrews. In the beginning of your testimony you say it
is 20, then you say it is 6. Which is it?
Mr. Baskin. No. I don't believe that is the way it is
stated. I will stand by what the testimony says and what I will
say to you now is that there are many studies which have
confirmed that there is a cost increase--a substantial cost
increase--from Davis-Bacon.
Mr. Andrews. Well, you picked two of them.
Thank you.
Chairman Walberg. I thank the gentleman.
Now I recognize for 5 minutes of questioning the chairman
of the Ed and Workforce Committee, Mr. Kline?
Mr. Kline. Thank you, Mr. Chairman.
And thank you to the witnesses for being here, for your
testimony, and for engaging in the question and answer. A lot
of sort of pieces here we are trying to put together.
Dr. Groshen, the BLS provides data, as I understand it, for
locality pay for federal workers. Is that right?
Ms. Groshen. We provide some information that that is used
for that purpose, yes.
Mr. Kline. That is data for that.
Ms. Groshen. Yes.
Mr. Kline. So what is involved in this wage category when
you are providing this data?
Ms. Groshen. I am new enough that I don't actually know the
answer to that. We provide a special tabulation for the
committee, a special tabulation that is used for that purpose,
but I can get back to you and give you the information about
what it is that is in that.
Mr. Kline. Okay. I am just trying to understand how you----
Ms. Groshen. Basically, it is occupation information by
locality.
Mr. Kline. By locality----
Ms. Groshen. Wage--yes----
Mr. Kline [continuing]. For federal workers, but we are
having some difficulty getting it by locality for private
workers. I am just trying to understand what is involved in
your process of getting that data for federal workers and why
isn't it applicable to private workers.
Mr. Baskin----
Ms. Groshen. No, I think we provide private sector data
that is used for the public's--that is used to set the federal
wages.
Mr. Kline. Right.
Ms. Groshen. Right.
Mr. Kline. So you are able to do that and it is applicable
to federal workers. I am trying to figure out why it wouldn't
be applicable to private workers.
Ms. Groshen. That is a policy decision.
Mr. Kline. We will continue to explore that. Right.
Mr. Baskin, I think in Dr. Groshen's testimony there are
several hourly wage rates for counties in Minnesota. The BLS
rate is $32.08 while the county numbers vary from $36.59 to
$39.84. This figure does not include the fringe benefits that
increase the actual wage rate to approximately $60.
Do you think that the Department of Labor numbers
demonstrate a prevailing wage for these counties?
Mr. Baskin. The Wage and Hour Division clearly seems to be
an inaccurate count that is causing the taxpayers to pay more
than they should.
Mr. Kline. Right. So, I mean, that is at the heart of the
discussion here is trying to figure out what this should be,
and clearly there are differences.
I appreciate very much Chairman Walberg holding this
hearing as we try to dig to the bottom of this and figure out
what the right numbers would be because it clearly has an
effect on the cost of these projects.
I will yield back my time, Mr. Chairman.
Mr. Baskin. If I may just finish the response by answering
a question that was previously asked about something in our
written testimony, it was represented that we said that we
picked the number $15.7 billion. What we said was the
Congressional Budget Office has estimated that it raises costs
by that amount, which ABC believes to be a conservative
estimate. And then we cited the higher numbers that we also
believe to be more accurate. Thank you.
Chairman Walberg. Would the gentleman yield?
Mr. Kline. Happy to yield.
Chairman Walberg. Thank you. Always need more time.
Let me go back, Mr. Baskin. One often overlooked issue
related to Davis-Bacon is that fringe benefits. Can you explain
how fringe benefits are paid to workers under the Davis-Bacon
work rules?
Mr. Baskin. Well, it is a very complicated process that no
time limit would save us today----
Chairman Walberg. Give us our best shot.
Mr. Baskin. Well, to begin with, they try to measure what
the union trades are paying, and then nonunion contractors, who
have totally different structures to their benefits program,
are told they can pay costs of bona fide fringes themselves.
Only the definition of bona fide fringes is very grey and murky
and how it is going to be matched up with the nonunion benefits
has led to litigation and rulings that, again, are unclear to
many contractors. So a game of gotcha is played with many of
them around the country.
Now, in terms of the survey to determine that, it is the
same garbage in, garbage out method, is what the Wage Hour
Division currently uses. It asks contractors to say what their
fringe benefits are, and on an inadequate basis they do, with
the unions doing a better job of getting their responses in
because the nonunion contractors don't know why it is
important. Many of them are not working on the public sector in
the first place so they don't want to have anything to do with
the government.
And others are worried about being targeted. They have seen
in the news that sometimes people are targeted by federal
agencies so they are reluctant to give their private personnel
information to the Labor Department.
Chairman Walberg. Thanks for giving a stab at answering.
Thanks.
I now recognize Mr. Bishop for 5 minutes of questioning?
Mr. Bishop. Thank you very much, Mr. Chairman, and thank
you for holding this hearing.
I guess I want to start by observing that the name of this
committee is the Workforce Protections Subcommittee, and I
can't think of anything more fundamental to protecting a
workforce than seeing to it that they are paid a fair wage. And
that seems to me to be at least one of the goals of Davis-
Bacon. And yet, we are here having a hearing that certainly is
not protective of Davis-Bacon and we have a record of at least
nine votes on the floor of the House that would strip Davis-
Bacon protections from various appropriations bills.
Let me ask you, Mr. Eisenbrey, let's just look--let's take
from the bottom up. We just had a vote 2 weeks ago that would
strip prevailing wage requirements from military construction
projects. If that were to take on the force of law is it
reasonable to assume that workers on those military
construction projects would be paid less for the same work?
Mr. Eisenbrey. Well, if you believe Mr. Baskin, you know,
the prevailing--even under his version of the prevailing wage,
he would have their wages cut by somewhere between 65 and 80
percent. He thinks that the--if his version of how the wages
were set were to be put into place, he is saying that the wages
should be cut by 65 to 80 percent. So, I mean, that is a
starting point--that is assuming you even have a Davis-Bacon
Act. If you didn't have the Davis-Bacon Act it would be, you
know, anything goes, and we saw what that is like after
Katrina, when the Davis-Bacon Act was suspended. Wages went
down to the minimum wage.
Mr. Bishop. Mr. Baskin, I am going to give you an
opportunity to--because I see----
Mr. Baskin. I----
Mr. Bishop. Let me just speak for a----
Mr. Baskin. I am sorry. Go ahead.
Mr. Bishop. I see you shaking your head, but the question I
am going to ask is not whether or not the citation Mr.
Eisenbrey made--65 to 80 percent--I am not going to ask you to
determine whether that is fair or unfair. But is it reasonable
to assume that if we were to take away Davis-Bacon protections
from military construction jobs or--let's look at the list--
Department of Defense jobs, or energy and water related jobs,
is it reasonable to assume that the wages paid to those workers
on those jobs would be less than what they are paid now with
Davis-Bacon protections? Is that a reasonable assumption?
Mr. Baskin. It would certainly not be 65 to 80 percent. We
just talked about 20 percent----
Mr. Bishop. I am going to take that as a yes, that it is a
reasonable presumption.
Mr. Baskin. That the taxpayers would no longer pay a
premium bonus----
Mr. Bishop. I am talking about the worker--all right.
Mr. Baskin. That is the point.
Mr. Bishop. But the point that I am making is that you have
said that Davis-Bacon hinders economic growth. Seventy percent
of our economy is consumer spending. Now, I don't think you
need to be a Nobel laureate in economics to figure out that if
you pay people less they are going to spend less, and if 70
percent of our economy is rooted in what people spend, if we
pay them less that is going to hurt our economy.
Would you agree to that, Mr. Eisenbrey?
Mr. Baskin. And what if you build 20 percent more projects
and employ 20 percent more people?
Mr. Bishop. I haven't asked you a question.
Mr. Eisenbrey, would you agree that if we pay people less,
chances are they are going to spend less?
Mr. Eisenbrey. Absolutely.
Mr. Bishop. And chances are that that is going to have a
detrimental impact on our economic growth?
Mr. Eisenbrey. Absolutely. That is one of the things that
is holding back the recovery right now is low wages.
Mr. Bishop. Okay.
What I would like to see this committee focus on is how we
really can protect wages. We have Davis-Bacon, which is under
assault.
We have the minimum wage, which has not changed in 4 years.
Minimum wage worker makes $15,000 a year. That qualifies that
person for food stamps. That qualifies that person for
Medicaid.
And yet, here we are having a hearing to determine how it
is we can pay people even less than we are paying them now when
we have a demonstrated need to pay--to hopefully see to it that
people can make more, have lives of dignity, have jobs of
dignity.
Mr. Eisenbrey. Mr. Bishop, I couldn't agree with you more.
If the minimum wage were raised to $10.10 an hour, as you have
proposed and as Mr. Miller, I think, has the bill, we estimate
that that would increase consumer spending enough to generate
another 140,000 jobs.
Mr. Bishop. Thank you very much.
I yield back, Mr. Chairman. Thank you.
Chairman Walberg. I thank the gentleman.
And these hearings all hope that we will ultimately produce
more spenders capable of spending.
Let me ask a question: Dr. Groshen, Davis-Bacon wage rates
include fringe benefits. You note that the Occupational
Employment Statistics Survey does not measure these benefits
but the National Compensation Survey does. Do you believe this
survey could be used by Wage and Hour to set fringe benefit
rates?
Ms. Groshen. The BLS takes no position on what data should
be used for Davis-Bacon or other policy purposes, so we would
not take----
Chairman Walberg. Could they be used?
Ms. Groshen. It depends on what--that wouldn't be up to us
to make the decision whether or not to use them. We produce
them and tell people exactly what is in them.
Chairman Walberg. Mr. Sumner, just to rehearse--it has been
a little while since your testimony--17 months lapsed between
the time the International Union of Operating Engineers wrote
to the Department of Labor and the issuance of All Agency
Memorandum 212. In all that time did the surveyors not receive
an inquiry about the changes contemplated by AAM 212?
Mr. Sumner. We certainly were not informed or were--we were
not part of the discussion, that is for sure. And to our
knowledge, surveyors were not informed until it was completed.
Chairman Walberg. So no knowledge. Again, an example of
after the fact of implementation you receive information.
Your testimony highlights that the industry was unaware of
the policy change applying Davis-Bacon to your industry until a
contracting officer sent an e-mail. The e-mail also indicated
that the application of the act would be retroactive--fairly
significant. Can you describe how disruptive this is to
surveying businesses?
Mr. Sumner. It is disruptive to surveying businesses
because by and large surveying businesses, as I mentioned
earlier, are small businesses. So dealing with the change,
retroactive or not, but in particular retroactively, certainly
puts a burden on that business to, as I mentioned earlier, go
back and try to determine when a particular person was doing a
particular activity.
If you look at the ruling, it talks about in particular the
position called ``instrument man.'' In today's world that is
called ``instrument person,'' by the way.
But if that person is performing duties on the project when
the party chief or the head person is not there then that
person is being considered to be exempt. But if they do the
same duties when the party chief is there then they are
considered to be laborers. And so our disagreement with this
really has to do with the fact that survey crew members in
today's world are totally inappropriately categorized by this
ruling.
Chairman Walberg. Not a traditional desk job, certainly.
Mr. Sumner. Pardon me?
Chairman Walberg. Not a traditional desk job.
Mr. Sumner. It is not.
Chairman Walberg. As your testimony illustrates and
comments you have just made, surveyors are moving between
projects on a daily basis, sometimes crossing streams, not
flyfishing on the way I don't think. Will it be easy for a
survey company to allocate an employee's time between Davis-
Bacon work and non-Davis-Bacon work?
Mr. Sumner. It is a very difficult task to do, and again,
partially because of the nature of survey crews today. As I
pointed out, sometimes survey crews are one person because of
the technology we have today. So that person is going to be
doing a lot of different things.
Many of the tasks that have been cited that have been
specifically cited for a particular person are now
interchangeable. And running my surveying company over the
years, more times than not on construction projects I was the
person, as the licensed professional, driving the pins in the
ground because I wanted to be out front to see if everything
lined up when we were doing it. The equipment allowed somebody
else to do the angle-turning and that kind of thing.
So it confuses the whole issue as to who is doing what and
at what point in time.
Chairman Walberg. Okay. I appreciate that.
Mr. Baskin, CityCenter D.C. is an innovative development
project injecting jobs, housing, and economic development into
the heart of Washington, D.C., and we see it happening in other
parts of the country, as well. If the Lapenk ruling applies,
Davis-Bacon stands, how likely will other cities be able to use
this private sector development model based on the cost
increase?
Mr. Baskin. It would seem to inhibit it, and certainly at
least in situations where it is using federal government land
it would be a----
Chairman Walberg. Could it stop what is taking place here
in Washington, D.C. in a very positive project?
Mr. Baskin. Oh, yes. The district is very concerned about
it. That is why the district has sued the administration over
this ruling, which departs from--well, it has never been done
before in the 80-year history of the act, apply it to a project
that has no government money or ownership or occupancy.
Chairman Walberg. Thank you. I see my time is expired.
I now recognize Ms. Fudge?
Ms. Fudge. Thank you, Mr. Chairman.
And thank all of you for your testimony today.
Mr. Eisenbrey, the Davis-Bacon act specifies that wage
determinations be based on the local prevailing wages paid on
projects of a character similar to the contract work, which you
know. As a result, the Wage and Hour Division of the Department
of Labor surveys four separate and distinct segments of the
construction market, including residential, heavy, highway, and
building segments, to ensure that workers are paid based upon
their skill level and productivity.
Do you believe that everyone in the construction industry
should be paid the same prevailing wage no matter the
construction work they perform? And should workers in
residential construction be paid the same as those in highway
construction? And what about workers in highway construction
and building construction? Should they be paid the same?
Mr. Eisenbrey. They should not. And one reason--the most
obvious reason is that the skills required are very different.
The skills for a carpenter doing residential construction
versus the skills required of a carpenter on bridge
construction--highway bridge construction are very different.
Everyone in the industry pays differently for those. Even
though they are both called carpenters, they are paid very
differently. And the Davis-Bacon wage rates reflect that. I
don't think that Mr. Baskin would disagree with that, as a
matter of fact.
Ms. Fudge. You sure?
Mr. Eisenbrey. I am pretty sure----
Ms. Fudge. Next question to you: The Davis-Bacon Act
instructs the secretary of labor to set the prevailing wage in
the city, town, village, or other civil division of the state
in which the work is being performed. The Wage and Hour
Division generally meets this requirement by collecting data on
a county-by-county basis.
In Commissioner Groshen's testimony she uses the example of
the metropolitan areas of Minneapolis-St. Paul, Minnesota, and
Bloomington, Wisconsin, which include 11 counties in one state
and two counties in another at the local area for the purposes
of the bureau's data collection. Do you think the bureau's
standards of defining a local area meets Davis-Bacon's standard
of setting wages based on the city, town, or village, or other
civil division of the state?
Mr. Eisenbrey. No. It clearly doesn't, and I think BLS
recognizes that. The, you know, an SMSA goes through, you know,
it includes many--sometimes many counties, many cities,
villages, and so forth. They don't claim to have and they don't
in fact have the ability to provide the granularity that the
act requires, you know, to get down to a local area and say
what is actually happening in that local community in terms of
how people are paid.
Ms. Fudge. And then lastly to you, sir: Since 1964 the act
has required construction contractors to pay workers the
prevailing wage, which often include health and retirement
benefits. As you know, the Bureau of Labor Statistics does not
include the calculation of fringe benefits in its standards. Do
you think it is fair to ignore 20 percent or more of a
construction worker's compensation when determining the
prevailing wage?
Mr. Eisenbrey. Obviously it--the Congress made the right
decision in requiring that fringe benefits be included in the
prevailing wage, since that is such an important part of
people's compensation. And the Bureau of Labor Statistics does
collect fringe benefit information in another survey--not in
the OES, as you said; in the National Compensation Survey.
But trying to marry this up and get to the point where they
could tell you what the project--what the wages are on a given
project, or, you know, a series of projects in a local area--it
is a very expensive proposition. As I said earlier, trying--
they ran four tests back in 1997 to do this and the cost
estimates were for just these four test areas for 3 years it
was almost $3 million.
So if you, you know, imagine what the cost would be for the
entire nation trying to get that fringe benefit information.
There is nothing you can't do if you spend enough money. The
Wage and Hour Division could go out and knock on the doors of
contractors and, you know, and get responses from them if they
had enough money to do it, but there is--I just think it is not
a practical solution to suggest that BLS collect that
information for the wage surveys.
Ms. Fudge. Thank you, Mr. Chairman. I yield back.
Chairman Walberg. I thank the gentlelady.
And now I recognize the gentlelady from Oregon, Ms.
Bonamici?
Ms. Bonamici. Thank you very much, Mr. Chairman.
And thank you all for your testimony. I want to follow up a
bit on Mr. Bishop's comments during his questioning about the
importance of enacting policies and maintaining policies that
actually help rising wages and help get people back to work.
And I certainly have seen very good policy reasons why Davis-
Bacon was passed decades ago and some of the benefits of Davis-
Bacon, including ensuring that contractors compete based on who
can best train, best equip, and best manage a construction
crew.
And if you look at the examples at the state level when
prevailing wage laws have been repealed, which, of course, some
here have advocated, it has led to fewer apprenticeship
programs, especially affecting minority communities, pressure
to lower wages and benefits, and declines in quality, increases
in injuries. That seems like the wrong direction.
Certainly prevailing wage regulations have had positive
effects, including better-skilled workers and increased
productivity, which is what we should be looking for. These are
the types of policies we should be considering, promoting, and
supporting in addition to policies like the Healthy Families
Act that establishes national paid sick days standard; the Fair
Minimum Wage Act, raising the minimum wage and linking it to
inflation--something my state of Oregon has already done.
So, Mr. Eisenbrey, I want to ask you if you could expand on
some of the benefits of Davis-Bacon and maybe respond to some
of the issues that have been raised here criticizing the act
and calling for repeal. Can you respond to why this Davis-Bacon
and prevailing wage have been beneficial, especially when we
are trying to build the economy? Thank you.
Mr. Eisenbrey. Well, we saw what happened when Davis-Bacon
was suspended in New Orleans and the Gulf Coast after Katrina.
That is the best way to get a sense of what the world would be
like without Davis-Bacon.
And really, for the workers there it was a disaster.
Companies came in--non-local companies--bringing workforces of,
you know, varying skills and quality, and they underbid all the
local contractors. Here was the time for that community to
rebuild and for the local people to join in rebuilding and they
were underbid and the result was a lot of heartache in the area
and wages that were, you know, pushed down to rock bottom. So
that is the world without Davis-Bacon.
We also know--and, you know, we have our competing studies,
but I have a book here that includes a review of states with
and without prevailing wages that does economic regressions to
tease out what is the effect of prevailing wage on safety and
health, and the prevailing wage laws are associated with a 10
percent decline in significant injuries. That is a significant
difference in a nation where we have about 6 million injuries
on the job each year.
As you say, training is a huge component of this because
the--it is the unions who provide the bulk--even though they
may represent a smaller segment of the construction industry
now than they used to--they are maybe only 20 percent--they
train people in a way that nonunion construction firms do not,
and the federal government could learn a lot from the building
trades and their programs.
We spend millions of dollars--and I think this committee
has jurisdiction--billions of dollars on training programs, the
results of which are really pretty pathetic. By and large,
those programs are not successful. You look at the building
trades programs, they turn out journeymen, the most skilled
workers in this industry, and you know, Davis-Bacon helps make
that possible by protecting the wages and fringe benefits and
the apprenticeship programs of those skilled trades.
Ms. Bonamici. Thank you. And I want to add that--and
actually reiterate the importance of those training programs,
especially as schools across this country have cut career and
technical education programs. Our friends in Labor have
provided those apprenticeship opportunities and those training
programs that really fill a need for those who are looking for
a good-paying job to support a family, and they have filled
that need.
So thank you very much, and I yield back, Mr. Chairman.
Chairman Walberg. I thank the gentlelady.
Now recognize my good friend from Indiana, Mr. Rokita?
Mr. Rokita. Thank you, Mr. Chairman. I appreciate the time
and also thank you for the wonderful compliment. Not sure what
I did to deserve that this morning.
I want to say good morning and welcome to our witnesses.
And my apologies, quite frankly. And I am not happy but
slightly embarrassed to say on the record that I am--I
apologize for not being able to hear all your testimony, but I
am glad to be here at least for the end of this hearing.
I have done a little bit of work in preparing for this
hearing and reviewing your written testimony, and I have a few
questions. And again, my apologies if some of this has been
covered.
First of all, Mr. Baskin, if I can start with you: The
criticism that has been leveled against contractors for not
actively participating in the Davis-Bacon wage surveys versus
some of the other surveys that they get a higher participation
rate in seems to lead to the conclusion that DOL--Department of
Labor--is hampered when collecting the survey data, resulting
in a flawed wage rate. Do you agree, disagree, and what
solutions do you have?
Mr. Baskin. I agree they are hampered, and although there
was some crosstalk about it, just to be clear--might not have
been completely in the previous discussion--one reason why BLS
would be a more effective resource, we think, is that they are
not the enforcers, as you have heard today. It is intimidating
for contractors to be told by the agency that is going to audit
them on other----
Mr. Rokita. Yes.
Mr. Baskin [continuing]. Projects that they should submit
this wage data.
Mr. Rokita. But what to do, what to do?
Mr. Baskin. Well, the suggestion has been made that BLS
could do a better job. The issue has been brought up about
fringe benefits, but I would refer the committee to the
testimony and the supplemental testimony from the last hearing
on this subject, in which Mr. Shirk refuted the statements made
by Mr. Eisenbrey today and pointed out several different ways
that fringe benefit data could be economically added to the BLS
surveys or, alternatively, what about this: The BLS does the
part that they are better at and leave to the Wage and Hour
Division to fill in the gaps with the fringe benefits? Still
better than doing it all wrong, which is what is going on
today.
Mr. Rokita. Thank you.
Dr. Groshen, would you like--is it Groshen or Groshen? I am
sorry. Groshen.
Ms. Groshen. Excuse me. Yes.
Mr. Rokita. Would you like to respond to that?
Ms. Groshen. Response that is most important here is that
we, of course, do not make--we do not make policy
recommendations and we do not make any judgments about how
wages should be determined for Davis-Bacon purposes. With a
clear set of instructions for what was needed the BLS could
provide an estimate into how much it would cost to produce
those data and we would be happy to do that.
Mr. Rokita. Okay. Just remember, we are broke.
As you have heard--Dr. Groshen, continuing on with you--GAO
found that the Wage and Hour Division's wage rates were often
outdated, and in one notable instance, 10 years out of date.
Your testimony noted that it takes approximately 1 year for you
to gather the data. How often do you update the survey? To
gather data for the Occupational Employment Statistics Survey.
How often do you update that survey?
Ms. Groshen. We put out estimates annually but we are in
the field collecting the data continually, so we have--our
latest statistics came out for May 2012.
Mr. Rokita. So are you familiar with this in one instance
being 10 years out of date? Do you know what I am talking
about?
Ms. Groshen. No. I am not sure what that refers to.
Mr. Rokita. Okay. You mind if I follow up with you in
writing?
Ms. Groshen. Absolutely not. Please.
Mr. Rokita. Okay. Great. Thank you.
Over the last--still with you, Doctor--over the last 15
years the Department of Labor has suggested it is working to
improve the timeliness, quality, and accuracy of the wage data.
It has been suggested that using the BLS data would be more
representative of prevailing wages. Can the BLS data be used as
a more representative prevailing wage or not?
Ms. Groshen. That wouldn't be up to us to decide.
Mr. Rokita. But what is your opinion?
Ms. Groshen. The BLS has no opinion on this matter.
Mr. Rokita. But what is your opinion?
Ms. Groshen. I am here testifying as the commissioner of
the BLS, so I have no opinion.
Mr. Rokita. That is a bad way to go through life.
[Laughter.]
I yield back.
Mr. Baskin. Congressman, is it too late for me to respond?
Mr. Rokita. No. I take back my time, Chairman.
Mr. Baskin. Only to point out that it has been stated that
it is somehow incompatible with the statute but the Wage and
Hour Division itself, where the Employment Standards
Administration back in 2001 said that it was feasible for the
BLS data to be used for this purpose. It was feasible from the
statutory perspective.
You also asked about 10-year-old data, and since the
District of Columbia was brought up it should be pointed out
that the current wage survey for building construction in the
District of Columbia is based on data that was collected in
2004 and 2005.
Mr. Rokita. I thank the witnesses.
I yield back.
Chairman Walberg. I thank the gentleman.
And now I recognize the ranking member, who helped to prove
that we as chairmen and ranking members don't always go ahead
of our own committee members----
Mr. Courtney. That is right.
Chairman Walberg [continuing]. But defer for better
purposes. So I recognize you now.
Mr. Courtney. Great. Thank you, Mr. Chairman.
Dr. Groshen, I would actually like to ask you a couple
questions that I think you can answer, which is the--some of
the reports that you have issued recently. And what is the
unemployment rate in the construction sector right now in the
U.S.?
Ms. Groshen. The unemployment rate in the construction
sector. Let's see. Actually----
Mr. Courtney. I will go back to my old deposition where I
used to lead the witness. It is 10.8 percent. Is that correct?
Ms. Groshen. There we go. Okay. I am sorry. Yes, it is 10.8
percent.
Mr. Courtney. Correct. Thank you.
And right now the--let's see here. The hourly pay for non-
farm workers in the first quarter of 2013--again, if you could
just give us the latest numbers, did it go up or down?
Ms. Groshen. It went down.
Mr. Courtney. And it went down significantly. Is that
correct?
Ms. Groshen. Yes. At a 3.8 percent annualized rate, and it
is the largest quarterly decline on record.
Mr. Courtney. In terms of labor productivity since 2007,
has that also declined or has that gone up?
Ms. Groshen. Labor productivity has risen. I am sorry, you
asked for 2000 from----
Mr. Courtney. Well, just in recent years.
Ms. Groshen. Yes. So 1.6 percent in--since 2007 it is
productivity grow.
Mr. Courtney. So, and normally--I mean, in the past,
historically, I mean, productivity--when productivity goes up
wages usually are somewhat follow or track that trend. Is that
correct?
Ms. Groshen. That is right. That is right. From 1947
through the 1970s productivity and real hourly compensation
tracked each other rather closely. Specifically from 1947 to
1973 there was just a 0.2 percent percentage point difference
between the two. The two series continued to track each other
rather closely from 1973 to 1979, again differing by just 0.2
percentage points.
However, since then the series have begun to diverge by
much greater amounts. The disparities between the two series
amounted to 0.9 percentage points in the 1980s, 0.6 percentage
points in the 1990s, and 1.4 percentage points both from 2000
to 2007 and also from 2007 to 2012.
Mr. Courtney. Great. Thank you.
Mr. Chairman, I am going to summarize now and then yield
back to you as we are getting close to the end here.
And again, I just want to jump off from the testimony,
which, in my opinion, should be the real focus of Congress and
our country right now, is that, you know, we are seeing, again,
a decoupling of productivity and wages in this country at a
time when median income--middle class income in this country
has been stagnant over the last 10 or 20 years. And to be
sitting here today and talking about bureaucratic churning
over, you know, who is going to calculate the Davis-Bacon
rates, frankly, misses the point.
Your members were in my office, Mr. Baskin, last week. And
we walked together through a lot of the stimulus projects and
the MILCON projects. Again, I have the largest operating
military base in New England with the Groton Sub Base. Over
$100 million of work over the last few years since the last
BRAC round--every penny of it to nonunion ABC contractors who,
again, had to comply with Davis-Bacon.
The fact of the matter is they were stampeding towards
those projects. I mean, the notion that there is some kind of
an obstruction or an obstacle that is forcing nonunion
contractors to shy away because of Davis-Bacon, again, the
experience over the last 2 or 3 years in terms of the Recovery
Act and MILCON has been completely the opposite. And again, I
can walk you through sewer treatment plants, surface projects,
streetscape projects--even the small ones--where again, you
know, that is not the problem out there right now.
The problem is we need more work. And what we need is a 5-
year surface transportation bill. We need a WRTA bill to--I
mean, we know that water systems in this country are in just
outrageous state of disrepair.
And we have an 11 percent unemployment rate in the
construction sector. That is the problem that construction
firms in my district and in my state are really worried about.
And again, if you look at the experience of the Recovery
Act, where again, in a bad economy the bidding that was taking
place, again, by your members on a lot of these projects
resulted in actually surpluses that went back to the state DOT
and they were able to recirculate that money back into other
projects because, again, the state of the economy was giving
the taxpayers probably the best deal they could have every
gotten in decades.
Thank God, in my opinion, the Recovery Act was there. I
realize that failed stimulus is, you know, the majority party's
talking point, but the fact of the matter is we have sewer
treatment plants which were sitting on the shelf for decades;
we have, again, road projects and the rail project, which I
mentioned earlier, as well as building up a Navy base that,
again, was frozen by the BRAC process back in 2005. And your
members benefitted from that and Davis-Bacon was not the
problem.
And again, that is not the problem here today. We have,
again, an economy that is still not engaged in terms of growth,
and we have this austerity belief that is crippling the
country.
And sequester, by the way, is exhibit A in that. I mean,
you want to look at what is holding back maintenance and repair
and construction work at the Navy base in Connecticut and
Navy--and military bases all across the country? It is
sequester. The operation and maintenance account of DOD is
frozen right now because of sequester and your members are the
ones who are paying the price because of that, in my opinion,
idiocy that this Congress is just ignoring and not taking up
and turning off, which again, there is many ways we can do that
just as we did with sequester back in the 1980s and 1990s with
Gramm-Rudman.
So again, you know, it was a good hearing, we had lots of
good exchanges, fun exchanges here today. But the fact of the
matter is, for people who are in the construction trades today
this is not the issue. This is not the issue that we should be
focusing on today.
And I hope as we move forward with this subcommittee we are
going to focus on what really matters, which is making sure
that we get robust infrastructure investment and turn off
sequester. And with that, I yield back.
Chairman Walberg. I thank the gentleman.
I also ask unanimous consent that the following statements
be entered into the hearing record: from the Associated General
Contractors of America, Management Association of Private
Photogrammetric Surveyors, and Stop Davis-Bacon Act Expansion
Coalition.
[The information follows:]
June 18, 2013.
Hon. Tim Walberg, Chairman,
Subcommittee on Workforce Protections, Education and the Workforce
Committee, Washington, DC 20515.
Re: Promoting the Accuracy and Accountability of the Davis-Bacon Act
Dear Chairman Walberg: On behalf of the Associated General
Contractors of America (AGC), I want to thank you for holding a hearing
on ``Promoting the Accuracy and Accountability of the Davis-Bacon
Act''. AGC represents both union and open shop firms and has long-term
experience with the Davis-Bacon Act. While many AGC members participate
in Davis-Bacon wage surveys and regularly perform work subject to the
Act, there are several concerns and recommendations that AGC would like
to share regarding Davis-Bacon wage determinations.
Sudden Increases in Davis-Bacon Wage Rates
For the purpose of establishing wages and fringe benefits to be
listed in Davis-Bacon wage determinations, the U.S. Department of
Labor's Wage and Hour Division (WHD) periodically sends out Davis-Bacon
wage surveys. These surveys are sent to both federal and nonfederal
contractors and interested third parties to request information on
wages and fringe benefits paid for various types of work performed.
Until recently, surveys were not conducted in some areas for several
years. While AGC appreciates WHD's attempt to post wage determinations
that reflect current market conditions, some areas are experiencing
sudden and dramatic increases in wage rates for which many contractors
and contracting agencies are not prepared. Furthermore, contractors are
not given an adequate amount of time to adjust to newly increased
rates.
Concerns about Survey Participation
Survey participation continues to be an issue for contractors, and
participation is vital to WHD's success with effectively establishing
market-based wage rates. A report prepared by the U.S. Government
Accountability Office (GAO) on methodological changes needed to improve
wage surveys states that according to the labor department's Office of
Inspector General (OIG), some contractors may be reluctant to provide
information to the government because they view it as proprietary or
fear that doing so will subject them to audits.
Wages and Classifications Not from Local Area
AGC has also seen cases in which wage rates and classification
practices were improperly adopted from adjacent states. In some cases,
the wage determinations rely on wage rates from collective bargaining
agreements that do not cover the area of the wage determination. In
another recent case, we found a wage determination that incorporated
the wage rate from a collective bargaining agreement that did cover the
area of the wage determination but only ``on paper.'' That is, the
union was no longer active in the state in which the wage determination
applied--it no longer represented workers there and no longer
maintained a local there--but had merely assigned jurisdiction to the
local in the adjacent state, whose rates were adopted in the wage
determination.
Missing or Inaccurate Classifications
AGC is also concerned with the increased number of missing and/or
inaccurate classifications listed in wage determinations. For example,
classifications and wage rates may be included for one type of
construction, such as Heavy, but may not be included for another type,
such as Building. This is just one example. Contractors and contracting
agencies are then required to go through the burdensome process of
requesting a conformance to have the missing or inaccurate information
updated in the wage determination. While WHD is reviewing the request,
contractors are often unsure of the rate to pay workers until a
response is received.
Conclusion
AGC believes the current Davis-Bacon wage determination system is
severely broken. AGC recommends further exploration into using Bureau
of Labor Statistics (BLS) data, specifically data from BLS's
Occupational Employment Statistics survey and National Compensation
Survey, as the primary basis for Davis-Bacon wage determinations. If,
however, the present reliance on WHD-conducted surveys and on
collective bargaining agreements is maintained, substantial changes
must be made to the process and practices so that the outcome is more
accurate and reliable. The recommendations set forth in the March 2011
GAO report should be further explored. These include:
amending the requirement that WHD issue wage rates by
civil subdivision;
obtaining objective expert advice on WHD's survey design
and methodology;
and, taking steps to improve the transparency of wage
determinations.
AGC also believes that WHD should, if it maintains the current
process:
accord contractors a reasonable amount of time before new
wage rates go into effect and, where the change is particularly
substantial, phasing in the increase;
include on the survey form language that prevents
respondents' information from being used for enforcement purposes; make
survey forms faster and easier for contractors to complete;
create a standard practice of conducting pre-survey
briefings for contractors with each new survey, and doing so
electronically to allow all interested contractors the opportunity to
participate without time away from the office; and,
clarify to survey recipients who may not work on public
projects that data is particularly needed from them in order to capture
the most accurate prevailing wages in each area.
AGC believes that the recommended modifications will enhance the
quantity and quality of the data and produce more accurate and timely
wage determinations.
Sincerely,
Jeffrey D. Shoaf,
Senior Executive Director Government Affairs.
______
June 18, 2013.
Hon. Tim Walberg, Chairman,
Subcommittee on Workforce Protections, Education and the Workforce
Committee, Washington, DC 20515.
Dear Mr. Chairman: MAPPS (www.mapps.org), the national association
of private sector geospatial firms, commends you for holding an
oversight hearing on the Davis-Bacon Act and respectfully requests that
this letter be entered into the record of the hearing.
MAPPS strongly opposes the recent Davis-Bacon Act expansion into
the professional surveying community by the Department of Labor. Our
membership includes firms with professional survey crews in the field
and thus subject to the change in regulations. We object not only to
the Department of Labor's change in policy, but also as to the process
utilized.
In March of this year, the Labor Department reversed more than 50
years of policy and determined that members of survey crews working on
Federal construction projects are ``laborers and mechanics'' as that
term is used in the Davis-Bacon Act, making those workers subject to
the Act. The Labor Department did no public notice that it was
considering a change in its regulations, made no request for public
input or comments, and did not notify or seek advice, comment or input
from the surveying profession and employers/management.
Since Arthur Goldberg was Secretary of Labor under President John
F. Kennedy, in 1962, it has been policy and understood practice that
members of survey crews were EXEMPT from the Davis-Bacon Act. He noted
that such workers are covered ONLY to the extent to which they
``perform manual work, such as clearing brush and sharpening stakes''
which he said ``are not commonplace''. The recent Department of Labor
change in policy is inconsistent with more than 50 years of settled
law.
The Department of Labor has identified the geospatial field as one
of the high growth sectors of the U.S. economy and has invested
hundreds of thousands of dollars in workforce development programs to
attract new employees to this field. Imposing a ``prevailing rate'' on
wages in the geospatial field is not needed. Moreover, this regulation
will impose a paperwork burden for our members, and increase the costs
of these firms as well as the government agencies that contract for
such services.
We look forward to working with Congress and the Administration to
reverse this unnecessary and unwise policy. For more information,
please contact me or John Byrd, MAPPS Government Affairs Manager.
Respectfully,
John M. Palatiello,
Executive Director.
______
Stop Davis-Bacon Act Expansion, June 12, 2013.
Seth D. Harris, Acting Secretary,
U.S. Department of Labor, Frances Perkins Building, 200 Constitution
Ave., NW, Washington, DC 20210.
Dear Secretary Harris: The undersigned organizations strongly
oppose the Department of Labor's expansion of the Davis-Bacon Act to
members of survey crews.
All Agency Memorandum (AAM) 212, issued by the Wage and Hour
Division on March 23, 2013, is a costly and unnecessary change in more
than 50 years of accepted and settled policy. The Department of Labor
has unilaterally expanded the application of the Act to a class of
workers who have never been heretofore considered ``laborers and
mechanics''. Rather, survey crews work under the responsible charge of
licensed, professional surveyors and their services are not directly
involved in construction.
There is no rationale for this change in policy. There has been no
action by Congress, no ruling by a court, and no other recent
development to change a 50+ year policy.
At a time of record deficit and debt, sequestration, and
unemployment, expanding wasteful and controversial laws like the Davis-
Bacon Act is ill-advised.
Finally, we are deeply concerned the Department of Labor changed
its policy and expanded the coverage of the Davis-Bacon without public
notice, hearings, or notification and engagement of affected
stakeholders.
We respectfully recommend the immediate rescission of AAM 212.
Sincerely,
James Valvo, Director of Policy,
Americans for Prosperity.
Ivan Osorio, Editorial Director,
Competitive Enterprise Institute.
Tom Schatz, President,
Council for Citizens Against Government Waste.
Dick Patten, President,
Family Business Defense Council.
Mario H. Lopez, President,
Hispanic Leadership Fund.
Hadley Heath, Senior Policy Analyst,
Independent Women's Forum.
Brandon Arnold, Vice President of Government Affairs,
National Taxpayers Union.
David Denholm, President,
Public Service Research Foundation.
Eli Lehrer, President,
R Street.
David Williams, President,
Taxpayers Protection Alliance.
Andrew Roth, Vice President of Government Affairs,
The Club for Growth.
Timothy F. Johnson, Ph.D., Founder and President,
The Frederick Douglass Foundation.
Philip J. Romero, Professor of Business Administration and
Dean Emeritus, University of Oregon; Author, ``Your Macroeconomic
Edge.''
______
Chairman Walberg. Without objection, so ordered.
I also appreciate this hearing very much. I appreciate the
passion that was brought to the table from the witnesses, and
thank you so much for taking your time and sharing your
positions, your expertise, your studies, your books. And that
information will, of course, be part of our record.
I certainly thank our committee members.
And, Mr. Courtney, I appreciate the involvement on both
sides on this hearing today. And I know there are philosophical
differences about what will produce an economy, but that is
what we want. I think both sides want that.
There is a disagreement how that approach--what approach
works best, but we are talking here about a law put in place
back in 1931. Different time, different places.
We talk about transparency issues that are of great concern
related to this. We talk about different states and localities
impact coming from Davis-Bacon. At a premier submarine
construction base there are concerns, there are issues somewhat
different from my experience back in Michigan, the motor
capital of the world, and I am glad to see it redeveloping
itself, but a state far different with issues far different.
And great concerns from my small businesses that deal with
Davis-Bacon. If they had the opportunity to have a choice it
would be a far different outcome that they would want.
We want jobs. We want to grow those jobs. As I mentioned,
we would like to see more spenders out there, and more spenders
certainly come from a growing economy and the workforce where
there are more workers. And with more workers and a more stable
economy we will see wages and benefits seek their levels, as
well.
We also will see the opportunity when we don't have an
almost $17 trillion debt and deficit spending that continues on
and taxpayers frustrated still further, will see economy that
grows. I don't like sequester either, and that is why I
supported the alternative to sequester that we passed through
the House that would have given more flexibility to our
military contracts and military spending. But those are
philosophical differences that we continue to fight.
We want to see the opportunity for realistic wages and
benefits to be in place. When we see that 46 percent of the
prevailing wages for nonunion workers were based on wages
reported more than a decade ago, that is a concern to me and I
think a concern to many. When we have a record with BLS using
well established statistical procedures to make estimates for a
single year and publishes those estimates about 10 months from
those--10 years versus 10 months.
Seems like it is worth looking at as to be the data sources
that would be--if we are going to continue Davis-Bacon, and it
appears we will for at least a period, I would guess, living in
the world of reality, that we ought to have the best record
sources available, as well.
Mr. Eisenbrey, I think you made a statement that was close
to accurate, in my perception, where you said, ``There is
nothing you can't do if you spend enough money.'' Well, I would
amend that: There is nothing you can't do if you have enough
money to spend. And I think that is the little difference I
would say.
We have to get to a point in this growing economy that will
give us enough money to spend on legitimate issues in growing
our wages, growing our benefits as they seek the level that
meets the needs as opposed to frustrating an economy. And so I
think this is all about jobs, and I think this is about growing
the economy.
And we will have other hearings, but I certainly appreciate
the attention, the detail put to this hearing today on both
sides of the aisle and at the witness table. And from this
information I guess we will develop processes forward and
hopefully all together as Americans for the good of this
country and the greatest workers, the greatest productivity,
the greatest efficiency we can produce in this country to
defeat any competition that is brought to us.
I think I have spoken enough at this point in time. And
with no further----
Mr. Sumner. Mr. Chairman? I apologize. May I ask permission
to enter into the record two rulings, one from the state of
Connecticut and one from Indiana, both of which indicate that
surveyors are not included in either federal or state Davis-
Bacon Act?
[The information follows:]
Indiana Department of Transportation
Driving Indiana's Economic Growth
Memorandum
January 24, 2007
TO: District Deputy Commissioners; District Highway Operation
Directors; District Construction Engineers; District Testing
Engineers; District Area Engineers; Project Engineers/
Supervisors
FROM: Mark A. Miller, Director, Division of Construction Management
SUBJECT: Procedures for Determining When the Davis Bacon Act (DBA)
Applies
The guidelines contained in this memorandum were provided by the
Divisions of Economic Opportunity and Legal Services to address
questions concerning which workers on a jobsite must be paid prevailing
wages pursuant to the Davis-Bacon Act. Please use these guidelines in
consultation with the District EEO Officer in making a determination
for workers on your project. Further assistance will be provided for
situations encountered that are not clearly defined in these
guidelines.
The determination of whether Davis Bacon applies to a particular
employee is based on the specific facts and circumstances of the
contract and the employee's work.
The following list of questions is a guide to help determine
whether a particular employee should be paid prevailing wages pursuant
to the Davis-Bacon Act (DBA). This guide does not cover all situations
but attempts to cover the most common situations encountered at the
Districts:
I. Is the employee working on a federal-aid contract in excess of
$2000 for the actual construction, alteration and/or repair of a
building or work?
a. If yes, go to next question.
b. If no, DBA does not apply, but also ask:
1. Is the contract in excess of $100,000? If so, the Contract Work
Hours and Safety Standards Act applies. (This includes federally
financed and assisted non-construction contracts.)
1. If yes, the contractor or subcontractor shall not require or
permit a laborer or mechanic to work over forty hours a week without
paying one and a half times the basic pay rate. Also the contractor
must maintain payrolls and payroll records for three years for all
laborers and mechanics.
2. Is the employee doing work on the site of the construction?
``Site of the work'' is the physical place or places where the work
called for in the contract will remain; and any other site where a
significant portion of the work is constructed, provided that such a
site is established specifically for the performance of the contract or
project. If the time spent on the site of the work is de minimus (less
than 20% of that employee's particular work week), then the time is not
covered under Davis-Bacon.
a. If yes, go to next question.
b. If no, DBA does not apply.
3. Is the work that the employee is performing required by the
contract specifications?
a. If yes, go to the next question.
b. If no, DBA likely does not apply.
4. Is the employee a laborer or mechanic as defined in the DBA? To
determine this, ask the following questions:
a. What are the employee's primary duties? (i.e. How does the
employee spend 20% or more of his or her particular work week?)
1. If the employee's primary duties are manual or physical in
nature (e.g. he or she uses tools or performs the work of a trade),
then the employee is a laborer or mechanic and DBA applies.
II. If the employee's primary duties are mental or managerial, the
employee is not a laborer or mechanic, and DBA does not apply.
III. If the employee's primary duties are administrative,
executive, or clerical rather than manual, then the DBA does not apply.
IV. Is the worker a working foreman who devotes more than twenty
percent of time during a particular work week to mechanic or laborer
duties?
1. If yes, then the foreman is a laborer or mechanic for the time
so spent, and the DBA applies for that time.
2. If no, then the DBA does not apply.
Davis Bacon Act Q&A
Additional Resources to Davis-Bacon Act/Davis-Bacon Related
Acts
The U.S. Department of Labor Davis-Bacon Resource Book (dated
1112002), which can be accessed at: http://www.wdol.gov/docs/
WRB2002.pdf
Q 1. Does it matter who employs the truck driver for the
application of Davis Bacon?
Answer:
No. In the decision reached in Building and Construction Trades
Dept. v. Midway, decided on May 17, 1991, the Court of Appeals for the
District of Columbia Circuit held that language in Department of Labor
(DOL) regulation was inconsistent with the Davis-Bacon Act. That case
involved truck driver employees of the prime contractor's wholly owned
subsidiary, who were delivering materials from a commercial supplier to
the construction site. The material delivery truck drivers spent ninety
percent of their workday on the highway driving to and from the
commercial supply sources, ranging up to 50 miles round trip and stayed
on the site of the work only long enough to drop off their loads,
usually for not more than ten minutes at a time. At issue before the
D.C. Circuit was whether the ``material delivery truck drivers'' were
within the scope of construction as defined by the regulatory provision
then in effect. The Court of Appeals ruled that material delivery truck
drivers, who come onto the site of the work merely to drop off
construction materials, are not covered by the Davis-Bacon Act even if
they are employed by the government contractor, because they are not
``employed directly upon the site of the work.'' Subsequent Appeals
Court rulings in two other cases further addressed the scope of the
``site of the work.'' In a Final Rule published in the Federal Register
on December 20, 2000, the Department of Labor issued revised regulatory
definitions of the terms ``site of the work'' and ``construction.''
Q 2. Are truck drivers employed by a construction prime contractor
to transport materials from the contractor plant or yard to a Davis-
Bacon covered project, or from a Davis-Bacon covered project to the
contractor's plant or yard covered?
Answer:
Yes. If the contractor/subcontractor's plant or yard is part of the
``site of the work,'' the drivers are covered. If the contractor/
subcontractor's plant or yard is not part of the ``site of the work,''
the drivers are generally not covered. The travel time between the
plant or yard and the site of work in this instance is never covered.
However, if the time spent unloading the material or equipment on the
site of work is more than de minimis (20%), then this time is covered.
Q 3. Is the time drivers spend transporting materials or equipment
from one Davis-Bacon project to another Davis-Bacon project covered?
Answer:
Generally, no. Again the regulatory definition of ``construction *
* *'' specifically states that the transportation of materials or
supplies to or from the ``site of the work'' is not considered
construction. Nevertheless, there may be some instances where the two
sections of highway construction are contiguous and the transportation
of materials or equipment is all on the ``site of the work'' of both
sections that constitute a combined covered project.
Q 4. Are drivers transporting material or equipment away from a
Davis-Bacon project or another project of the contractor which is not a
Davis-Bacon project covered?
Answer:
No. Unless the transportation of such materials or equipment is to
a dedicated facility located adjacent or virtually adjacent to the
construction area.
Q 5a. When truck drivers are engaged in hauling excavated material,
debris, dirt, asphalt, etc., for recycling away from a Davis-Bacon
covered construction site, is the time spent loading at the site
covered?
Answer:
Assuming that the location or facility to which the excavated
material or debris will be transported is not a facility that is part
of the ``site of the work'' (adjacent or virtually adjacent to the
construction work area and dedicated exclusively or nearly so to the
performance of the contract or project): If the time spent on the site
is not more than de minimis, then loading the debris, dirt, asphalt,
etc., is not covered.
Q 5b. When truck drivers are engaged in hauling excavated material,
debris, dirt, asphalt, etc., for recycling away from a Davis-Bacon
covered construction site, is the time transporting the material away
from the site covered?
Answer:
The time transporting the material away from the covered site is
not covered. The regulation specifically states that the transportation
of materials or supplies to or from the ``site of the work'' is not
considered construction.
Q 5c. When truck drivers are engaged in hauling excavated material,
debris, dirt, asphalt, etc., for recycling away from a Davis-Bacon
covered construction site, is the time unloading the material covered?
Answer:
The time unloading the material off site is not covered. Davis-
Bacon only applies to work done on the ``site of the work''.
Q 6. Are truck drivers who are employed by an independent
contractor or bona fide material man to haul material to a covered
project from a non-covered supply source (i.e., sand or gravel pit,
asphalt plant serving the public in general) covered?
Answer:
No. If the material source is commercial in nature and supplies the
general public, then the drivers are generally not covered. However if
the time spent on the site of work is more than de-minimis (20% of the
truck driver's work week), the driver would be covered (regardless of
whether they are employed by the contractor or subcontractor, or by an
independent contractor or bona fide material man/supplier).
Q 7. Are truck drivers covered for the delivery of materials to the
``site of work'' from covered supply sources (e.g., batch plants or
borrow pits, stockpiles, etc.) which have been established to serve
exclusively, or nearly so, the covered project?
Answer:
Yes. If the supply facility is part of the ``site of the work''
because it is dedicated (exclusively or nearly so) to performance of
the contract or the project and located within or near the project
limits--``adjacent or virtually adjacent'' to the actual construction
site.
Note: DOL has an enforcement position with respect to bona fide
owner-operators of trucks who own and drive their own trucks. Certified
payrolls including the names of such owner-operators do not need to
show the hours worked or rates paid, only the notation ``owner-
operator''. This position does not apply to owner-operators of other
equipment such as bulldozers, backhoes, cranes, welding machines, etc.
Q 8. A barricading company supplies traffic control products for 20
Davis-Bacon projects. The devices are dropped off and picked up at the
contractor's yard for each project. No setup work is involved. Are the
employees of this company covered?
Answer:
Generally no. If the contractor's yard is not deemed a part of the
``site of work,'' the employees are not covered. However, if the
contractor's yard is deemed a part of the ``site of work,'' then the
employees would be covered if the time spent on each project is more
than 20% of their work week.
Q 9. Would these workers be covered if they are not only involved
in drop off/pick up, but are also involved in setting up and servicing
the traffic control products?
Answer:
Yes. If a material supplier, manufacturer, or carrier undertakes to
perform part of a construction contract as a subcontractor, its
laborers and mechanics employed at the site of the work are subject to
the prevailing wage requirements under Davis-Bacon in the same manner
as those employed by any other contractor or subcontractor.
Q 10. What prevailing wage rate would apply to the workers in the
above example? Answer:
The employees driving the trucks would be paid truck drivers rates.
The employees doing the servicing would be paid at the unskilled or
miscellaneous laborers rate. If the driver is doing both activities,
Davis-Bacon compliance can be achieved by payment of the higher rate
for all hours worked. However, laborers or mechanics performing work in
more than one classification may be compensated at the rate specified
for each classification for the time actually worked in each, provided
that the employer's payroll records accurately set forth the time spent
in each classification in which work is performed.
Q 11. A barricading company places the advance warning signs per
contract, pounds posts, and places a sign cover which the prime
contractor removes when construction begins. Is all the work performed
by this company now subject to Davis Bacon?
Answer:
The USDOL position is that if this is a one-time incident, before
construction begins, and the time spent on the site of work is minimal
(less than 20% of the employee's work week) then in this instance, the
installation of the advance warning signs will not be covered by Davis-
Bacon.
Q 12. Prior to the start of construction, a barricading company
places into position and turns on a portable changeable message sign
per the contract. What Davis Bacon rules apply to this situation?
Answer:
Again if this is a one-time situation before construction begins,
and the time spent on the site of work is minimal, (less than 20% of
the employee's work week) then Davis-Bacon would not apply in this
situation.
Q 13. On the same or the next day, this company sets the drums and
temporary signs along the shoulder of the road for the prime to set
into position when construction begins. What are the Davis-Bacon rules
for this situation?
Answer:
When temporary signs and drums are placed along the shoulder of the
road for later placement per the contract, Davis-Bacon does not apply,
if the total time spent on the project is not more than 20%.
Q 14. Does it matter if the barricading company is working with a
sub-contract or a purchase order, for the purposes of applying Davis-
Bacon rules?
Answer:
No. Sub-contract status is irrelevant for the purposes of Davis-
Bacon.
Q 15. The manufacturer of concrete box beams delivers 1 0 beams to
a Davis-Bacon covered project. After beams are set the manufacturer
sends a technician out to the project to post tension the beams. Is the
post tensioning of the beams covered?
Answer:
For purposes of administration and enforcement of Davis-Bacon,
under the applicable regulations issued by the Department of Labor, the
regulatory definition of ``construction'' includes ``[m]anufacturing or
furnishing of materials, articles, supplies or equipment on the site *
* *'', as well as the installation of items fabricated off-site. (See
29 CFR 5.2(1)). As discussed regarding item 8, if a material supplier,
manufacturer, or carrier undertakes to perform part of a construction
contract as a subcontractor, its laborers and mechanics employed at the
site of the work are subject to the prevailing wage requirements under
Davis-Bacon in the same manner as those employed by any other
contractor or subcontractor. For example, employees of a materials
supplier who are required to perform more than an incidental amount of
construction work in any workweek at the site of the work would be
covered by Davis-Bacon and due the applicable wage rate for the
classification of work performed. For enforcement purposes, the
Department of Labor adopts a policy that if such an employee spends
more than 20% of his/her time in a workweek engaged in such activities
on the site, he/she is covered by Davis-Bacon for all time spent on the
site during the workweek.
Q 16. The contractor hires a company to provide inspection services
for the contractor's quality control operations on a Davis-Bacon
covered project. Are the inspectors subject to prevailing wages?
Answer:
In general, individuals who perform inspections and testing for
quality control purposes are not considered laborers or mechanics
within the meaning of the Davis-Bacon Act. However, if an employee
spends more than 20% of a workweek performing manual, physical and
mechanical functions that are normally performed by traditional
craftsmen, he/she would be considered laborers and mechanics and
covered by the DBRA and due the applicable wage rate for the
classification of work performed.
Q 17. The contractor hires an engineering firm to provide surveying
and staking activities for a Davis-Bacon covered project. Are these
workers subject to prevailing wages?
Answer:
Where surveying is performed immediately prior to and during actual
construction, in direct support of construction crews, such activity is
covered by Davis-Bacon requirements for laborers and mechanics. The
determination of whether certain members of survey crews are laborers
or mechanics is a question of fact. Such a determination must take into
account the actual duties performed. As a general matter, an instrument
man or transit man, rod man, chainman, party chief, etc., are not
considered laborers or mechanics. However, a crew member who primarily
does manual work, for example, clearing brush, is a laborer and is
covered for the time so spent.
Q 18. Does Davis Bacon apply to warranty work?
Answer:
If a material supplier, manufacturer or carrier undertakes to
perform a part of a construction contract as a subcontractor, its
laborers and mechanics employed at the site of the work would be
subject to DBRA requirements in the same manner as those employed by
any other contractor or subcontractor. This would include warranty and/
or repair work. Employees of a material supplier who are required to
perform more than an incidental amount of construction work (20%) in
any workweek at the site of the work would be covered by the DBRA and
due the applicable wage rate for the classification of work performed.
Q 19. How are truck drivers covered on ``split-trip'' operations
where a portion of the trip meets the DBRA coverage and the other
portions of the trip do not.
DBRA coverage is for ``laborers and mechanics'' for time ``employed
on the site of the work.'' If the truck driver spends more than de-
minimis (20%) of their work week on the site of work, the time he is on
the site of work is covered by Davis-Bacon.
Q 20. Does Davis Bacon apply to employees hired by professional
engineering firms?
Answer:
If an engineering firm is contracted to supply a professional
opinion that is neither required by the contract nor is part of the
construction, alteration and/or repair of the project, Davis Bacon does
not apply.
If, however, an engineering firm is employed to perform work that
is required by the contract, then whether or not Davis Bacon applies
depends on the duties of the particular employee in question. Davis
Bacon will apply only if the employee spends twenty percent or more of
his or her work week doing physical or manual work; however, it will
not apply to time spent transporting samples to a lab away from the
construction site or to time spent in a lab doing testing.
______
James Fazzino v. State of Connecticut Department of Labor, Oct. 29,
2010.
memorandum of decision
This administrative appeal is brought pursuant to General Statutes
Sec. Sec. 4-176(h), 4-183(a) by the plaintiff, James Fazzino, from a
declaratory ruling, and two explanatory rulings following the
declaratory ruling, issued by the Connecticut department of labor (the
department). The department issued a declaratory ruling that the
plaintiff, as a land surveyor, was not entitled to a ``prevailing
wage'' pursuant to General Statutes Sec. 31-53(a) for performing his
assigned tasks at state or local public works projects. The department
subsequently issued a ruling that denied the plaintiff's motion to
reconsider, and, after an agreed-upon remand for additional evidence,
issued a ruling re-affirming the initial declaratory ruling.
On May 20, 2009, the commissioner of labor issued the declaratory
ruling for the department and made the following relevant findings of
fact:
1. The [plaintiff] is a land surveyor [under General Statutes Sec.
20-299(2)].
2. The [plaintiff] has worked at various times since the mid 1990s
on state construction jobs which have been characterized as public
works projects within the meaning of [Sec. 31-53].
3. On each state public works project on which the [plaintiff] has
worked as a land surveyor, the occupation known as ``Land Surveyor''
has not been listed on a State of Connecticut Prevailing Rate Schedule.
4. As part of his actual land surveyor duties on such public works
projects, the [plaintiff] engaged in job duties described in [Sec. 20-
299], including making measurements, mapping elevations and topography,
determining positions of points with respect to appropriate horizontal
or vertical datums and reproducing dimensions within specific property
lines in accordance with zoning and setback minimums as required by
local ordinances. The [plaintiff] also laid out a grid of column lines
and corners which enabled workers engaged in the construction trades to
accurately place their work, e.g., concrete foundations, steel column
lines, storm drainage and utility lines.
5. The job duties performed by the [plaintiff] on such public works
projects are of a highly technical nature, and require significant
mental and physical proficiencies. The physical components of the
[plaintiff's] job duties include the ability to drive stakes and other
markers, endure the elements and carry equipment.
6. All of the job duties engaged in by the [plaintiff] on such
public works projects were performed as preliminary site work.
7. The [plaintiff] did not perform manual duties as an actual part
of his land surveyor duties on any public work project.
* * * * * * *
9. Pursuant to [Sec. 31-53(d)(2)], the [department] adopts and
uses such appropriate and applicable prevailing wage rate
determinations as have been made by the Secretary of Labor of the
United States under the provisions of the Davis-Bacon Act, amended [40
U.S.C. Sec. 276a et seq.].\1\
---------------------------------------------------------------------------
\1\ Land surveyors, as an occupation, are not recognized as a
prevailing rate classification pursuant to the Davis-Bacon Act unless
the land surveyor: (i) performs surveying work immediately prior to or
during actual construction in support of construction crews; or (ii)
primarily performs work in a prevailing rate classification recognized
by the Davis-Bacon Act.
---------------------------------------------------------------------------
* * * * * * *
Based on these findings of fact, the commissioner concluded first
that the Davis-Bacon Act, a federal law, excluded a land surveyor from
the prevailing wage law unless the surveyor had done work immediately
prior to or during construction or was a ``laborer or mechanic.'' The
plaintiff had failed to provide such proof to the commissioner.
The commissioner secondly concluded that while the department under
Sec. 31-53(d)(1) was permitted to make an independent determination of
whether land surveyors were subject to the prevailing wage law, it was
equally permitted under Sec. 31-53(d)(2) merely to follow the
determination as made under the Davis-Bacon Act. Here the department
had elected to follow the Davis-Bacon approach. Therefore the
commissioner issued a declaratory ruling that the plaintiff was not
entitled to a prevailing wage classification. (ROR, pp. 41-47.)
On June 30, 2009, in response to plaintiff's request for
reconsideration, the commissioner upheld her prior decision. The
commissioner first refused to consider the plaintiff's status under an
amended job title, ``construction layout technician.'' He had had full
and fair consideration of the issue under his stated classification as
``land surveyor.'' \2\ Secondly, the commissioner stated that she had
no proof that the plaintiff engaged in work immediately prior to and
during actual construction, as opposed to preliminary work. Nor did he
provide proof of any manual duties that he had engaged in. Finally, the
commissioner disagreed with the plaintiff's contention that the
department was required to develop a classification under Sec. 31-
53(d)(1) that covered the plaintiff's activities. Rather the department
was permitted by Sec. 31-53(d)(2) to rely solely on the Davis-Bacon
Act classifications. (ROR, pp. 83-93.)
---------------------------------------------------------------------------
\2\ It has been a longstanding position of the United States
Department of Labor that preliminary survey work, such as preparation
of boundary surveys and topographical maps, is not construction work
covered by the Davis-Bacon Act, especially when performed pursuant to a
separate contract of employment. (Return of Record, ROR, pp. 37-40.)
---------------------------------------------------------------------------
After an appeal was taken by the plaintiff, on April 15, 2010, the
parties agreed to remand this matter to the department so that the
plaintiff might submit to the department documentary proof supportive
of his claims. As indicated above, the commissioner noted that this
proof had not been forwarded to her at the time that she was
determining her response to the declaratory ruling. The plaintiff
subsequently submitted this material to the department.
On September 3, 2010, the acting commissioner of the department
issued a ``response to rebuttal evidence submitted by plaintiff-
Fazzino.'' The acting commissioner stated: ``After carefully reviewing
the evidence submitted by [the plaintiff], the [department] remains
unpersuaded that the surveying duties performed by [the plaintiff] on
the projects submitted were of a manual nature within a prevailing rate
classification, e.g., laborer, mechanic, carpenter, operating engineer,
etc., so as to afford him coverage under the state prevailing wage
statute.'' (ROR, p. 109.)
The commissioner reviewed one letter of a structural engineer,
submitted by the plaintiff, that stated that placing markers by
measuring and layout was an inherent component of new construction. The
engineer analogized the plaintiff's activities to a plumber,
electrician, or carpenter. (Supp.ROR, p. 100.) The commissioner,
however, stated that there was no showing that layout tasks were
``materially different from typical land surveyor duties'' as described
in Sec. 20-299(2). In addition, the plaintiff's direct supervisor
noted that the plaintiff was a Survey Crew Chief; therefore under the
Davis-Bacon Act, the plaintiff could not be considered a mechanic or
laborer. The supervisor stated that the plaintiff's work was not
``construction work.'' (Supp.ROR, pp. 101-02.) The original declaratory
ruling was therefore kept in place.\3\
The plaintiff seeks in this action a review of the department's
declaratory ruling and the subsequent follow-up rulings. His
contentions are reviewed under standards set by our appellate courts.
``Conclusions of law reached by the administrative agency [in a
declaratory ruling] must stand if the court determines that they
resulted from a correct application of the law to the facts found and
could reasonably and logically follow from such facts.'' Where the
agency has rendered a declaratory ruling on a matter not previously
reviewed by a court, the court must engage in plenary review to insure
that governing principles of law were followed. See Wallingford v.
Dept. of Public Health, 262 Conn. 758, 772, 817 A.2d 644 (2003).
As to questions of fact determined by the agency, ``it is [not] the
function of the trial court to retry the case or to substitute its
judgment for that of the administrative agency.'' Goldstar Medical
Services, Inc. v. Dept. of Social Services, 288 Conn. 790, 800, 955
A.2d 15 (2008). See also Dept. of Public Safety v. State Board of Labor
Relations, 296 Conn. 594, 598-99, 996 A.2d 729 (2010): ``According to
our well established standards, [r]eview of an administrative agency
decision requires a court to determine whether there is substantial
evidence in the administrative record to support the agency's findings
of basic fact and whether the conclusions drawn from those facts are
reasonable. Neither this court nor the trial court may retry the case
or substitute its own judgment for that of the administrative agency on
the weight of the evidence or questions of fact. It is well settled
[however] that we do not defer to the board's construction of a
statute-a question of law-when the [provisions] at issue previously
ha[ve] not been subjected to judicial scrutiny. When construing a
statute, [o]ur fundamental objective is to ascertain and give effect to
the apparent intent of the legislature. In other words, we seek to
determine, in a reasoned manner, the meaning of the statutory language
as applied to the facts of [the] case, including the question of
whether the language actually does apply.'' (Citations omitted.)
The plaintiff contests as a matter of law that the department was
permitted under Sec. 31-53(d)(2) to rely on the Davis-Bacon Act
classifications and not create a separate classification for land
surveyors. He points out that under Sec. 31-53(d)(1) the department
may decide on the amount of the prevailing wage and create
classifications, but Sec. 31-53(d)(2) speaks only of following the
prevailing wage determinations of the Davis-Bacon Act. Since subsection
(d)(2) does not mention classifications, he argues that the department
has the authority to consider developing a prevailing wage
classification for land surveyors.
While this is one interpretation, the court approves as more
logical the department's interpretation that allows it to defer to the
federal classifications as well. As our Supreme Court has stated:
``[T]he Davis-Bacon Act is persuasive authority for our interpretation
of what is required in regard to the payment of the prevailing rate of
wage.'' Electrical Contractors, Inc. v. Tianti, 223 Conn. 573, 586, 613
A.2d 281 (1992). As a matter of law, the court concludes that the
legislature intended by Sec. 31-53(d)(2) that the department have the
right to elect to follow the Davis-Bacon Act and not develop a separate
prevailing wage classification that applies in every instance to land
surveyors.
The plaintiff, on the facts, argues that his layout
responsibilities at a commercial premises include manual labor, such as
driving spikes and clearing the ground of boulders. The plaintiff
claims these activities are similar to actions taken by electricians
and iron workers, who are covered by the state prevailing wage law. On
the other hand, the department concluded that on this record, the
plaintiff's layout activities were ancillary to his special skill and
training as a professional land surveyor; and he did not qualify for
the prevailing wage. The court under the standard of review set forth
above finds that there is substantial evidence in the record to support
the department's conclusions.
Therefore the appeal is dismissed.
Henry S. Cohn, Judge.
footnotes
1. FN1. The record in this case contains an analysis of the Davis-
Bacon Act as it applies to land surveyors, issued by the U.S.
Department of Labor, and this analysis served as the guideline followed
by the commissioner. (ROR, pp. 33-35).
2. FN2. The commissioner did not abuse her discretion in refusing
to reconsider her ruling on this ground as the plaintiff had clearly
had the opportunity in the original proceeding to furnish his job title
and job description. Cf. Housing Authority v. State Board of Labor
Relations, 47 Conn.Sup. 624, 629, 820 A.2d 332 (2001) (allowing newly-
discovered evidence on reconsideration to rectify a mistake that ``went
to heart of the matter'').
3. FN3. The plaintiff is aggrieved by the declaratory ruling and
subsequent rulings for the purposes of Sec. 4-183.
Taken From: http://caselaw.findlaw.com/ct-superior-court/
1545698.html
______
Chairman Walberg. Without objection, we will include
those----
Mr. Sumner. Thank you.
Chairman Walberg [continuing]. Records.
Having no further action come before the committee, I
declare the committee adjourned.
[Questions submitted for the record and their responses
follow:]
U.S. Congress,
Washington, DC, July 3, 2013.
Hon. Erica Groshen, Commissioner,
Bureau of Labor Statistics, Postal Square Building, 2 Massachusetts
Avenue, NE Washington, DC 20212.
Dear Commissioner Groshen: Thank you for testifying at the June 18,
2013 Subcommittee on Workforce Protections hearing entitled,
``Promoting the Accuracy and Accountability of the Davis-Bacon Act.'' I
appreciate your participation.
Enclosed are additional questions submitted by committee members
following the hearing. Please provide written responses no later than
July 17, 2013, for inclusion in the official hearing record. Responses
should be sent to Owen Caine of the committee staff, who can be
contacted at (202) 225-7101.
Thank you again for your contribution to the work of the committee.
Sincerely,
Tim Walberg, Chairman,
Subcommittee on Workforce Protections.
questions from congressman rokita (in-4)
1. In April 2011, the General Accountability Office found that the
Wage and Hour Division's wage rates were often very outdated. In one
notable instance, ten years out of date. Your testimony notes that it
takes approximately one year for you to gather data for the
occupational employment statistics survey. How often do you update the
survey?
2. Over the last 15 years DOL has suggested it is working to
improve the timeliness, quality, and accuracy of wage data. It has been
suggested that using BLS data would be more representative of
prevailing wages. Can the BLS data be used as a more representative
prevailing wage?
______
U.S. Department of Labor,
Commissioner, Bureau of Labor Statistics,
Washington, DC, July 23, 2013.
Hon. Tim Walberg,
U.S. House of Representatives Washington, DC 20515-6100.
Dear Congressman Walberg: I appreciated the opportunity to
participate in the hearing on June 18, entitled ``Promoting the
Accuracy and Accountability of the Davis-Bacon Act'' before the
Subcommittee on Workforce Protections. I am providing written responses
to questions submitted by committee members following the hearing for
inclusion in the official record.
I hope you find this information useful. If you have any questions,
please do not hesitate to call me on 202-691-7800.
Sincerely,
Erica L. Groshen, Commissioner.
Enclosures.
Ms. Groshen's Response to Questions Submitted for the Record
hon. todd rokita
1. In April 2011, the General Accounting Office found that the Wage
and Hour Division's wage rates were often outdated. In one notable
instance, ten years out of date. Your testimony notes that it takes
approximately one year for you to gather data for the occupational
employment statistics survey. How often do you update the survey?
Answer: The Bureau of Labor Statistics publishes Occupational
Employment Statistics (OES) estimates annually; they are based on a
rolling three years of collected data from 1.2 million business
establishments. As I indicated in my testimony, collection of the
sample requires 3 years. Although the data are collected over a 3-year
period, BLS uses established statistical procedures to make estimates
for a single year and publishes those estimates about 10 months after
the reference date. I cannot address concerns about the currency of
Davis-Bacon prevailing wage rates.
2. Over the last 15 years DOL has suggested it is working to
improve the timeliness, quality, and accuracy of wage data. It has been
suggested that using BLS data would be more representative of
prevailing wages. Can the BLS data be used as a more representative
prevailing wage?
Answer: The OES wage estimates currently are designed to be
representative of certain geographic areas and industries. BLS produces
the mean, median, and 10th, 25th, 75th, and 90th percentile wages. We
do not publish a wage that most workers are paid. The geographic areas
we target are states, the District of Columbia, territories,
metropolitan statistical areas (MSAs), metropolitan divisions (which
are smaller parts of the 11 largest MSAs), and up to 6 nonmetropolitan
areas in each state. We do not gather data for counties. We publish
wage data by industry. However, for some geographic areas we would not
have estimates for all the occupations in the construction industry
because of limitations on the size of the survey's sample.
BLS has no role in determining what data are appropriate for
establishing prevailing wages. As I cannot address that issue, you may
wish to discuss those concerns with the Department's Wage and Hour
Division which has responsibility for administering that statute.
______
[An additional submission of Chairman Walberg follows:]
Prepared Statement of Stanley E. Kolbe Jr., Director, Governmental
Affairs, the Sheet Metal and Air Conditioning Contractors' National
Association (SMACNA)
The Sheet Metal and Air Conditioning Contractors' National
Association (SMACNA), is supported by more than 5,000 contributing
construction firms engaged in industrial, commercial, residential,
architectural, public and specialty sheet metal and air conditioning
construction throughout the United States. SMACNA's membership has
completed a wide variety of major and other public construction
projects from coast to coast and would like to express our support for
greater survey, administrative and enforcement resources for proper
implementation of the Davis--Bacon Act. Further we support improved
enforcement and enforcement sanctions against those unscrupulous
contracting firms that violate the Act and related contracting
statutes.
While we have long supported greater resources for Davis-Bacon Act
survey activity to maintain prevailing wages as current as possible, it
is well known that many in Congress have undercut the Act's potential
effectiveness by knowingly underfunding Davis-Bacon Act administration
staff and resources. Due to this often insufficient funding for
prevailing wage surveys, a number of public construction projects have
been completed at wage rates below those prevailing at the time of
project commencement. If the purpose of this hearing is to actually
improve the law's administration and enforcement effectiveness by
providing necessary financial support for the Act's administration, we
will applaud the effort. The Subcommittee should understand that when
the prevailing wage rates are significantly less than the rates paid by
the leading contracting firms in the market place the quality of the
public construction project is at risk. When the rates are below the
prevailing wages paid by those paid by average firms due to
insufficient survey resources or outdated survey generated rates
quality firms could be deterred from bidding.
Over the last decade many in the legislative and executive branch
have sought to mischaracterize, undermine and decimate the
administration and enforcement of the Davis-Bacon Act. We are hopeful
this hearing, entitled, ``Promoting the Accuracy and Accountability of
the Davis-Bacon Act'', will result in enhanced prevailing wage survey
and administrative resources leading to superior implementation of the
Act. We believe that is the intent behind the Obama Administration's
ongoing improvements to payroll surveys, wage rate analysis and program
refinement efforts within the Department of Labor. While those opposed
to the Act on ideological grounds will never support prevailing wage,
benefit and skill training standards at any level of government,
greater program support for Davis-Bacon's administrative and survey
functions will reduce the number critical of the Act on narrow,
technical issues.
Additional enforcement resources will increase the likelihood that
unscrupulous contractors skilled at cheating their workforce and the
taxpayer will be caught and properly debarred from further federal
bidding as was the clear legislative intent of the first enacted Davis-
Bacon statute and so many other contracting laws on the books to
protect the public. Recall that Davis-Bacon Act was signed into law in
tandem with The Copeland Anti-Kickback Act to bring legal and financial
integrity to the public construction marketplace as well as to increase
the quality standards of federal construction projects. A quick search
of construction project legal proceedings today would indicate no
shortage of unscrupulous firms misstating wages paid on federal work,
intentionally misclassifying workers as independent contractors and
many more contract compliance documentation violations too numerous to
mention. A brief Google search of federal and state contract violations
should lead the Congress to increase resources to enforce the Davis-
Bacon Act and public contract compliance in general.
The economic benefits of current wage rates and enforcing current
prevailing wage standards as part of assistance to still suffering
local and state economies protect the taxpayer and cannot be
overstated.
Our suggestions:
We would encourage the Subcommittee to provide greater
administrative support for the Act, increase its survey budget and its
enforcement. As a contractor organization most familiar with the Davis-
Bacon statute and regulations we do not fear the voluntary payroll
surveys, doubt technical wage determinations or seek to minimize the
consequences for those deserving of heightened enforcement.
We have long urged harsh penalties for the many
unscrupulous contractors caught willfully cheating their workers, the
local communities and the taxpayers each year.
Enhanced DOL personnel and survey resources will guarantee
that the ongoing refinement efforts for the Davis-Bacon Act within the
Department of Labor Wage and Hour Division will succeed. Our members
appreciate that the Department of Labor has a Secretary, Wage and Hour
Division Administrator and Solicitor of Labor with years of experience
in support of the Act. and
Congress should provide sustained support for improved
enforcement of the Davis-Bacon Act, including a bipartisan commitment
to stricter penalties for contractors committing federal contract
fraud.
Given adequate resources for needed additional wage surveys,
administration and enforcement they will be better equipped to
implement the Act for quality driven procurement outcomes benefitting
the tax payer and the majority of firms following the Act to the letter
of the law.
The Davis-Bacon Act has been in effect for more than 75 years.
After on-line compliance reforms made over the last decade, compliance
is fair and simple for any experienced public and/or private market
contractors. Compliance takes just a minimum of administrative
personnel for reporting and on-line instruction is available for those
needing assistance. Remember, the vast majority of self-described
construction contractors are very small with a one to three employees
generally not equipped or staffed to bid or complete federal
construction work.
Two-thirds of all firms have five or fewer employees, including the
owner! Only a fraction will ever bid or work on a federal project. This
is not due to Davis-Bacon surveys or prevailing rates but because they
do not possess the necessary, minimal administrative resources, skilled
workforce, experience or interest to do so. Rarely will the average
small contractor with their few employees rule out bidding a large
federal project due to the prevailing wage reporting requirements alone
or the strict quality apprenticeship and training standards the Act is
also designed to encourage.
After three-quarters of a century it is disappointing that so many
mischaracterize the Act's origins, valued policy goals and positive
impact maintaining local wage, skill training and benefit standards.
For educational reasons alone we appreciate the Committee's focus on
the Davis-Bacon Act and suggested refinements for greater effectiveness
and enforcement. We hope the hearing results in a bipartisan
appreciation and endorsement for the administrative support needed by
the Department of Labor to implement and enforce the Act as intended.
Even those in government hostile to the Act are responsible for seeing
its enforcement facilitated as required by statute and regulation. Lax
enforcement of federal contracting standards serves only the
unscrupulous firms too often drawn to an bidding environment where
workforce quality and project integrity is secondary.
SMACNA and our thousands of infrastructure contracting member firms
support legislation that recognizes the importance and merit in
prevailing wages as part of any quality-based public procurement
policy. Federal, state and local prevailing wage laws encourage
employers to:
Pay a locally prevailing wage
Offer health care coverage to their employees and their
families
Provide for the future retirement of their employees and
Make a significant investment in the future by training a
skilled and safety conscious workforce.
Support of prevailing wages on direct or federally assisted public
infrastructure represents a commitment to construction quality and the
future. Without prevailing wage statutes, the competitive bid system
will erode the wage and fringe benefit standards common in localities
across the nation and dismantle proven training programs funded by
private employers at more than $700 million annually. Support for a
prevailing wage policy fosters practices and programs lessening today
and tomorrow's burden on the public sector. Our member firms DO NOT
shift their health, pension and training costs to the local, state and
federal government but include them in our contract bids on private and
public work.
From decades of experience with Davis-Bacon, SMACNA member firms
understand the Act's simple requirements, goals and the merit in a
public procurement policy that encourages employers to provide quality
wages, benefits and training. Further, we know that continuing federal
commitment to requiring the payment of prevailing wages and benefits
should not be cast as a union versus nonunion issue. According to
Department of Labor reports, more than 75% of Davis-Bacon wage
determinations for federal projects pay less than the union wage. In
fact, most prevailing wage rates are far below union scale, most
without fringe benefits of any kind. Prevailing wage laws seek to
prevent the federal government from undermining local economies and
prevailing local employment and training standards and practices by
reflecting local conditions * * * regardless of the level. Oddly, some
members most hostile to Davis-Bacon come from areas with the lowest
wage determinations.
We also ask that you carefully reconsider the critical role the
Davis-Bacon Act plays in maintaining a well-trained, highly productive
construction workforce. To date this important impact has been almost
entirely overlooked. Study after study finds that when productivity,
quality of workmanship and life cycles costs of construction are taken
into consideration, it becomes apparent that prevailing wage laws are
not only NOT costing the government money, but may actually be saving
it money. More than half of major private construction is awarded based
upon a negotiated rather than a low-bid basis for this very reason--
first costs are not a true indication of the overall cost or quality of
construction projects. Numerous studies have used actual Dodge Reports
for thousands of construction projects to document lower costs for
certain building types in prevailing wage states as compared to non-
prevailing wage states due to the greater productivity of trained,
skilled workforces utilizing advanced technological equipment and
related management resources.
While Congress has received largely misleading, exaggerated and
inaccurate information from anti prevailing wage forces on both the
estimated savings and the policy consequences of using locally
prevailing wages, we applaud the bipartisan support for the Davis Bacon
Act already evidenced in recent House votes during the 113th Congress.
First-rate construction industry firms should not be disadvantaged when
bidding federal projects because they offer their employees locally
prevailing wages, health care, pensions and skill training. This would
be the impact if the prevailing wages were excluded from major federal
infrastructure legislation regardless of the form of economic
assistance. The Davis-Bacon Act does more than simply survey and
publish locally prevailing wages--it reflects and supports prevailing
employee training and benefit standards. These are critical to
supporting local economies and guaranteeing that complex federal
building standards for construction quality are met without fail.
Our contractor membership urges the Subcommittee's support of
enhanced administrative resources for the Davis-Bacon Act and general
prevailing wage coverage on federal and federally assisted
construction. We also urge the Committee to recommend sufficient survey
and general administrative Wage and Hour Division resources to assure
enhanced implementation of the Act. The Davis-Bacon Act benefits local
economies, taxpayer value and honest businesses seeking quality-driven
procurement decisions. That can be the outcome of all federal
contracting--if properly empowered administrative and enforcement is
endorsed by the Workforce Protections Subcommittee and by the 113th
Congress.
______
[Whereupon, at 11:33 a.m., the subcommittee was adjourned.]