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giving him a chance to operate in certain areas at all, and I think this is one area.
There have been other changes that they have made down there, too, I might add, that I am in perfect agreement with. I have talked to Mr. Manger about it, and some of them are very constructive. I think the only point of disagreement, basically, is the old shoe, to you and to other members of the committee; and that is, the judicial review, and also the question of setting up this Wage Appeals Board within the Department of Labor.
Even you, in your recommendations, felt that it should be appointed by the President of the United States, and
Mr. ROOSEVELT. You said “even" I. That is correct. I am pleased that we are in agreement on some points. However, rather than write any amendments to the act at this time, I think we should allow the departmental regulations time to operate so that we may have the Department's experience under the regulations as a basis for such legislation. I know the Department is not in agreement with you and I on some points, but I feel as you do that there are some situations which should be legislated so that they are not subject to change.
I hope that this committee next year will take the experience of the Department, and will, based upon that experience, make such changes as then in its wisdom it feels are feasible and right.
Mr. Borth. I was going to ask you, Mr. Chairman, what was your timetable. How long do you think is fair to give them a chance to operate? A year, 2 years? You mentioned a year, about.
Mr. ROOSEVELT. Yes; I would think even less than a year. I would think that early next year we could ask the Department to inform us as to their experience. Then, shortly after that consultation we could be prepared to present a bill reflecting the committee's judgment.
Mr. BORTH. I think it might be interesting also for the subcommittee to keep in mind that when they set this Wage Appeals Board up, as testified by Mr. Donahue on page 6, contrary to certain members of your committee objecting to judicial review, they themselves admit that judicial review is required, because in setting up the Wage Appeals Board it says, “The Board may make decisions, decide questions of fact and law arising in appeals from the following," and they list various things.
So, they themselves admit when they set this up under Messrs. Smith, Rothman, and Barker, that these three gentlemen shall have a right to decide judicial questions, and I think this is a little odd, and I think it would be very interesting to see how many judicial cases they have come before them.
They said part of it is that they will interpret the law, but it can't go any further. You can't go to any court, and seek any further appeal.
Mr. ROOSEVELT. That was the only part of your testimony that I disagree with. I don't think they are bound by previous rulings of the Department. They do have, as you say, the right to make a decision both as to law and
Mr. BORTH. Fact and law.
Mr. ROOSEVELT. Yes; fact and law. But I don't think that they are hamstrung.
Now, it is simply a case of judgment here as to whether the existing court system, Federal court system, is better able to handle these kinds of review cases, or whether a special body should do it. After all, there is precedent, as you well know, for special types of courts.
Mr. BORTH. Right.
Mr. ROOSEVELT. In the patent field, for instance. It may well be that because of the complexity of this and because of the time factors and other things which you have discussed here, that we may feel that a judicial body would not be the wisest procedure
As I am sure you know, I have stressed the need for the independence of the body, and I am not satisfied with the independence of it.
On the other hand, the Board that is set up now, I would like to see how it works.
Mr. Borth. Oh, yes.
Mr. ROOSEVELT. How much work it has, and as experience will show, whether we are justified in having a situation where part time people as against full time people should be involved.
I think you would agree that at least in the initial instance, they appointed qualified people to this Board. Wouldn't you?
Mr. BORTH. I agree. I can't complain. When it comes to the legal end of it, of course, they only have one lawyer on there. I am not a lawyer, but I know that Mr. Barker is not, and I know that Mr. Smith is not.
Stu is—Mr. Rothman–because he is former Solicitor to the Department of Labor, and then later General Counsel of the National Labor Relations Board, so he has had plenty of experience in the legal aspects of it.
Mr. ROOSEVELT. So, I hope you wouldn't say we were unreasonable, in saying that rather than your recommendation of adopting Mr. Goodéll's bill, we probably would be a little wiser to wait until we see the operation, and the need, and the total cases and types of cases which this Board will have handled by, let's say, next January or February Mr. BORTH. Yes. I couldn't take exception, because you, yourself
, in accepting this procedure, have gone against your own report, where you, as I said, recommended eight legislative changes, and you are willing to sit back and wait now, and see, and with a lot of these, I might say, I agree.
It should be put in legislative language.
With reference to pages 4 and 6, the recent regulations of the Department do also include consultation with all Federal and State agencies requesting rate determinations, and requesting recommendations as to types of construction involved, and available data reflecting wage rates on similar construction in the area, so that again, they are moving toward the basic thought that you have in mind that final determination should reflect the situation in the local area.
Now, whether this regulation is feasible, whether it actually works out in fact—whether they will actually get the requests that they are making, that they will come in in time, that they will be properly processed, that they will be followed-is something I think we are going to have to wait a few months and see how it actually operates, before we can really make a determination as to whether they are on the right track or not.
With respect to the 30-percent rule, isn't the use of an average rate really unfair and disruptive, Mr. Borth? It seems to me that it would tend to be automatically unfair, because it does not mirror any of the actual wages paid in the community.
For instance, your weighted average_might this not actually, in essence, mean that the people who were employed, instead of getting the wage rate to which they had been paid, would suddenly find themselves getting a lower rate because of the weighted average?
Mr. BORTH. But the same thing could work on a 30-percent rule, too, though, as I point out here in my testimony.
Mr. ROOSEVELT. Yes; but at least it would have rarely been lower. As you know, part of the problem here is that in actuality, as you know, it has been higher. That is why it has been under attack, and I would think that at least the requirement should be that if you use people on the job who had been paid or were being paid at a higher rate, that some consideration should be given not to lower their wages.
Mr. Borth. I can't disagree with you, but somebody is going to be hurt under this system, no matter what. Even under the 30-percent rule, right? You will find cases where 30 percent would not cover a very high rate, maybe, several rates higher than the 30-percent rule. You would agree with that; would you not? Mr. ROOSEVELT. Oh, Yes.
Mr. BORTH. Well, the weighted average, as a matter of fact, I think is as fair as any, because if you had 100 workers, at $2.50 an hour, any you had 3 at $1.40, and 10 at $1.70, you would take and multiply 100 times $2.50, and you would average that, and you would come out to $2.50 anyway.
All I want to do is to take into consideration the number of people in the classification as well as the rate.
Mr. ROOSEVELT. Yes; but now suppose you take the $2.50. Why should they work at the weighted average?
Jír. BORTH. Well, because it will come out to that. I mean, if there is a hundred of them at $2.50, and there is only 4 at $2.40, and 10 at $2.70, and you take this and average that out, you are going to come out around $2.50.
You can't help it. It is a weighted average, because you have got 100 people in this classification.
Mr. DENT. The prevailing rate would be the hundred.
Mr. ROOSEVELT. Under the situation you gave, the prevailing rate would be there.
Mr. BORTH. That is right.
Mr. BORTH. I was just giving a simple illustration of what I meant by a weighted average. I agree with you. It would come out to $2.50. I mean, that would be the prevailing wage, and you wouldn't have to go to your 30-percent rule or any other rule, because that is the prevailing rate.
Jr. ROOSEVELT. That is right.
Mr. BORTH. Well, so many people want to take all the wages from the top to the bottom, and forget the number of people in those classifications just average the wages. Take from $5 down to $3, and just
add them all together, and then divide by the number of wage rates. This is not right. Then, you really do come out with a lousy rate.
Mr. Roosevelt. I am inclined to go along with you somewhat on that. On the other hand, just a weighted average is not the answer. We have got to give this more study. Frankly, we would appreciate your giving it more study.
Mr. BORTH. I think this is a field that anybody who is a statistician and anybody in wage rate work, can work it out.
I don't think we can sit here today and decide the exact formula. All I am trying to point out is that I don't agree with the 30-percent rule, and I think we could come up with a much better answer to this thing, is what I am trying to say to you. I am not trying to be unfair to these people.
Mr. ROOSEVELT. That I will go along with. I don't say we have to have the 30-percent rule. I am not wedded to the 30-percent rule, but until we come up with a better one and I frankly don't think the weighted average is a better one I do agree with you, I think we could well do some homework and try to figure out a better one.
Mr. BORTH. That is right.
Mr. ROOSEVELT. With reference to the area limitation, it disturbs me that you say that if you can't find a similar project in the village, the town, or the city or the county, that then you just drop the effort altogether. After all, we do not want to let this act be used as a way to break wages in similar-type projects, no matter how far away they are. Suppose there was no rate available in one county, but there is one in the next county; if suddenly you just remove the requirement, and this then could be used in this county to break the wage; having broken the wage level, then that would automatically affect the next county.
Now, we certainly don't want to get into that.
Mr. ROOSEVELT. So, it seems to me again unwise not to allow, where there is no project of that kind, to search to the area where there is a similar one. I can't see how you would object to that.
Mr. BORTH. Let's put it in reverse. Maybe this will explain it simpler than perhaps the prepared presentation.
In other words, I wouldn't drop any wage determination.
Mr. BORTH. I said no wage determination should be made based on wage data outside the county artificially imported and applied.
Mr. ROOSEVELT. That is the same thing, isn't it?
Mr. BORTH. No, because there are wage rates in the county. You say, not on a similar project, but you can't tell me there aren't carpenters, plumbers, steamfitters, and machinists, and so forth, not in every county of the United States of America perhaps, but you would find something from which you could base a wage rate. This is done every day. This isn't anything new.
Mr. ROOSEVELT. But suppose in the next county there actually was a project similar to the proposed project. You wouldn't advocate that we not use that, would you?
Mr. Borth. No. No, let me explain what I mean. All I am trying to get at in this testimony is merely to stop this going a hundred miles away to set up a wage rate, when they have wage rates in the immediate
area, and while it is beating an old shoe, and I hate to bring it up again, all I am trying to avoid in this testimony, and trying to present to you gentlemen today, is to avoid these situations that we had on the Quantico Base where they came all the way up here to Washington, D.C., when they had rates down there in the locale.
You were not depressing the wage rates of that area down there by taking the rates in the Quantico area. That wasn't the question involved at all. It was a question of seeing if they could get a higher rate for Quantico, and I don't think the Davis-Bacon Act should be used to bring higher rates into a community when they already have rates established. That is all. As simple as that.
Mr. ROOSEVELT. Now, you made an observation with respect to H.R. 7075, in which you felt that we would affect the independence of the Board by placing it for housekeeping purposes in the Labor Depart
How would that affect its independence? After all, all that means is that
Mr. Borth. Whereabouts were you reading from?
Mr. ROOSEVELT. Well, let's see. Somewhere you stated that in my bill, H.R. 7075, that I would-it is on page 2.
Mr. BORTH. Yes.
Mr. ROOSEVELT. About a little more than half way down, in the paragraph next to the bottom, you say, “The independence of this Board, however, is diluted by placing it in the Labor Department for administrative purposes.'
We do this all the time, without affecting the independence of the Board.
Mr. Borth. Oh, here it is, yes. Well, yes. I can't disagree that you do set up boards within the Department. My only point is that I can't see that if you are really trying to get at something, to do something impartial, why we don't go all the way, and set it up in that manner.
You set the Federal Mediation Conciliation Service separate from the Department of Labor. The Taft-Hartley Act, as amended, provided for this.
Mr. ROOSEVELT. But it is for housekeeping purposes, it is set up within the Department of Labor.
Mr. BORTH. Oh, no. No.
Mr. Borth. But actually you people, the Congress of the United States, prohibited the Secretary of Labor from having jurisdiction over the Federal Mediation Board.
Mr. ROOSEVELT. So do I, in H.R. 7075. The Secretary of Labor has no jurisdiction over the Board.
Mr. BORTH. Pardon?
Mr. ROOSEVELT. So do I, under H.R. 7075. The Secretary of Labor has no jurisdiction over the Board.
Mr. Borth. Well, you say such Board shall be in the Department of Labor for administrative purposes. In other words, you mean just like the Mediation Service? Is that what your point is?
Mr. ROOSEVELT. Exactly.