the prevailing union contracts and come out with what he thinks the figure is in this connection. Is this a sound assumption on my part? Mr. MEIKLEJOHN. The Secretary would normally take a look only at the union contracts only in situations where that was the only type of work being done, but wage rates are determined under the DavisBacon Act for areas that are not entirely organized and where the Secretary must take into consideration the rates actually being paid, whether or not the employees are organized. Mr. TAFT. You say he must, why must he? Mr. MEIKLEJOHN. Because he is required to determine the rate in the locality. Mr. TAFT. Who checks on that to find out whether he must? Is there anyone to whom you can go if you say he does not do it? Mr. MEIKLEJOHN. My experience has been, Congressman, that where a task of this nature is assigned to a Government agency, those rates would ordinarily be taken into consideration. I used to be in the Department of Labor. Mr. TAFT. I was interested in that because I assume that your position on this bill would be the same as on the Davis-Bacon fringe benefits bill. You do not think judicial review would be appropriate; is that correct? Mr. MEIKLEJOHN. I would not think judicial review would be appropriate or necessary. I would not exclude the possibility that some form of safeguard should be included to make sure that all rates were taken into account. I think the biggest objection to the arguments for judicial review in the area of Davis-Bacon determination relates primarily to the question of timing. I do not believe that anyone would have any objection to carefully drafted procedures that did not result in interminable delays. Mr. TAFT. Would you be willing, then, to agree to a judicial review provision on the question of coverage on any issue of coverage? Mr. MEIKLEJOHN. My impression is that on the matter of coverage the courts are open. Mr. TAFT. No, I do not think that is correct, but I may be wrong. Mr. MEIKLEJOHN. I would think they would be open under these bills that question would be open to interpretation by the courts. The court might hold this was going to be decided by the Secretary of Labor, but there would still be a question which could be taken to the courts for determination. Mr. TAFT. One other question. I do not know that this comes into your category, but on the last page of your testimony, you mention the Fair Labor Standards Act. It provides special treatment in some areas, such as Puerto Rico. I take it we ought to take a look at this if we are going to put in that provision. Perhaps we ought to take a look at certain areas involved. Mr. MEIKLEJOHN. I would think the committee would want to take a look at whether the minimum wage under the Fair Labor Standards Act should be applied across the board to any employee employed under Government service contract or whether they would want to apply it only if it would be applicable to the employees if they were not employed under Government service contracts to employees under Government service contracts who were working in the same field. Mr. TAFT. Thank you. I believe that is all. Mr. GRIFFIN. Mr. Meiklejohn, at the present time, then, under this Executive order that I previously mentioned, Federal employees who are performing these services must be paid at least the minimum wage now. What impact would there be if we were to provide by law that employees working for contractors performing these services for the Government must be paid at least the minimum wage? I know that that is recommended, but suppose that only were done. Would that have much of an impact? Mr. MEIKLEJOHN. If you applied only the minimum wage that was applicable? Mr. GRIFFIN. Yes. That is applicable Mr. MEIKLEJOHN. Applicable to the category of the employee, is that what you mean? Mr. O'HARA. Laundry workers are not presently covered. Mr. MEIKLEJOHN. Is that what you mean? Food workers, for example? Mr. GRIFFIN. Well, it would be my thinking what would be the impact if we were to require that the same provisions as this Executive order established were to apply to employees working for contractors? Mr. O'HARA. If the gentleman will yield. The effect of H.R. 6088, as I invisioned it, which takes the wage body procedure, in effect the Presidential order says to the Wage Board, you go ahead and you set the rate for Government blue collar workers, but do not set any rate lower than the Federal minimum wage, and so when we just bodily pick up the Wage Board rate for an agency and apply it to the employees of that agency's service contractors in effect we have imported the Federal minimum wage. Let us take laundry as an example. If the agency is, as it is required to do by this order, paying its own laundry workers $1.25 an hour, even though the prevailing wage for laundry workers in the community may be only 75 or 65 cents, and they are going to contract out some of this work, you would pick up that rate and take it over. Mr. GRIFFIN. Now then, the witness testified that he would prefer the Davis-Bacon approach as between these two bills, and the thought occurred to me that it might make quite a difference if you applied the prevailing rate, that would not necessarily include or might not have any reference to Federal workers and the prevailing rate might be considerably less than $1.25; is that correct? Mr. O'HARA. That is right. Mr. MEIKLEJOHN. That is right. However, as you see, we are recommending that the Federal minimum wage be extended to employees covered by these contracts. Mr. GRIFFIN. I see. Do you have any idea Mr. MEIKLEJOHN. So that it would not be possible for the Secretary to determine a rate lower than the Federal minimum wage rate? Mr. GRIFFIN. Mr. Taft was not able to get too much information out of the GSA or the Department of Defense, as to this point, as to how many Federal employees would be affected if this legislation were enacted. Do you have any idea or could you give us any estimate? Mr. MEIKLEJOHN. I believe the Building Services Union provided some information with regard to employees within the area of their interest, but I would have to say I will try to get the information for you for the other areas. I do not know at this point. Mr. GRIFFIN. Anything that you can conveniently supply in that line I think would be appreciated. Mr. MEIKLEJOHN. Surely. I think that is very important to know. Mr. TAFT. Mr. Chairman. Mr. O'HARA. Mr. Taft. Mr. TAFT. There is one other question. Were you here, Mr. Meiklejohn, when I asked the questions about what is called fairly low paid and also fairly low producing workers in custodial type of work? Did you hear the questions I asked on that? Mr. MEIKLEJOHN. No, I do not believe I did. Mr. TAFT. Because enactment of this legislation would require raising rates of pay for some custodial workers, I questioned whether it would not have the possible result of causing the discharge of presently employed persons (I was thinking particularly of older women in many instances) who have cleaning jobs at fairly low rates of pay but who are not particularly efficient workers. Do you think this might happen or not? Mr. MEIKLEJOHN. Well, if the experience here were to be the same as it has been where minimum wages are raised under the Fair Labor Standards Act, and this question has come up every time that has happened, it is our belief that this would not be an appreciable problem. For the most part the increased costs, whatever they might be, would not be very great. In any case they would probably in most cases be absorbed, particularly in this case since this would involve Government contract work and I assume the Government would not be disposed to have people working for it at rates below the level of subsistence. Mr. TAFT. You do not think that would be a very great problem? Mr. MEIKLEJOHN. No; that is correct. Mr. TAFT. Actually, of course, if there are only the 1,000 employees involved which GSA testified to, it would be a minimum. That figure surprises me; I just do not see how it could possibly be accurate. Mr. MEIKLEJOHN. I was not clear what the figure referred to. Mr. TAFT. I was not either. Thank you. Mr. O'HARA. Thank you very much, Mr. Meiklejohn. Mr. MEIKLEJOHN. Thank you for the opportunity to come. Mr. O'HARA. I want to say about your testimony, it is an excellent point-by-point analysis, although I do not agree with all of it. Thank you. Mr. MEIKLEJOHN. Thank you. It was a pleasure, Mr. Chairman. Mr. O'HARA. I might just make note at this point of the fact that the Plant Guard Workers Union, Mr. McGahey, through its president, did respond to the committee's request on its views as to the question of judicial review and these views have been made a part of the record of the hearing. I might further suggest if there is no objection from the members of the committee, that the testimony of the Department of Defense with respect to the provision of guard services at the Marine City Nike base be made available to Mr. McGahey, and he would be free to make any comment thereon that he might wish to make. At this point, the committee will recess on the call of the Chair. (The following letters are submitted for the record:) AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATION, Hon. FRANK THOMPSON, DEAR CONGRESSMAN: During the course of my testimony on behalf of the AFL-CIO on H.R. 1678 and H.R. 6088, bills to establish labor standards for employees employed under Government service contracts, a question was raised as to the number or proportion of custodial workers who are covered by union contracts at the present time. The principal union in the cleaning service and maintenance industry is the Building Service Employes International Union, AFL-CIO. We have other international unions, however, representing employees employed in this industry. Based upon the best available information we have been able to obtain, approximately 500,000 workers employed in the cleaning service and maintenance industry are covered by union contracts. This is roughly 50 percent of the approximately 1 million workers who were employed in this industry in 1960. I trust this is the information that was desired by the members of the subcommittee. If there is any further information the subcommittee would like to obtain, please do not hesitate to request it of us. Sincerely yours, ΚΕΝΝΕΤΗ Α. ΜEIKLEJOHN, MARCH 26, 1964. Hon. ADAM C. POWELL, Chairman, Committee on Education and Labor, DEAR MR. POWELL: The Commissioners of the District of Columbia desire to report on H.R. 6088, a bill to provide wage standards for persons engaged by Federal contractors or subcontractors to furnish services or maintenance work to Federal agencies, and for other purpose. The Commissioners understand that the purpose of the bill is to raise the wage standards of employees of contractors furnishing services to Federal agencies. The municipal government of the District of Columbia is defined in the bill as a Federal agency for the purposes of its provisions. The bill would cover such services as custodial or maintenance, elevator, refuse collection, exterminating, cooking, waiter or dishwashing, laundry, and the like. The wages of many of the employees in these trades do not compare favorably with the rates paid in other industries. The first section of the bill gives it the name "Service Contracts Act of 1963." Section 2 provides that service contracts contain the stipulation that persons engaged to furnish services or maintenance work for a Federal agency be paid no less than the agency pays its own employees under the wage board procedures applicable to blue-collar workers. In addition the contractor must provide his employees with fringe benefits equivalent to those received by Government employees or pay them the cash equivalent of these fringe benefits. Section 2 provides further for the posting of these wage rates and the withholding of contract payments by the Federal agency for the benefit of employees in cases where the contractor has paid less than the required rates. The Federal agency is also authorized to terminate a contract with a contractor who has been found to have underpaid his employees. There is also a provision that working conditions and surroundings must not be unsanitary or hazardous. Section 3 authorizes the Comptroller General of the United States to pay, from withheld contract payments, employees found to have been underpaid, and to blacklist for 3-year periods contractors found to have underpaid employees. The Attorney General is authorized to bring suit against a contractor for amounts owed to employees, to make payments from amounts recovered and cover into the Treasury amounts which he has not been able to pay to the employee. The Commissioners note that this section of the bill contains no provision for crediting the District of Columbia in cases where unpaid amounts were withheld from District contracts. Section 4 provides that the Secretary of Labor shall prescribe standards, regulations, and procedures under the bill and conduct investigations to insure compliance as well as provide exemptions in appropriate cases. Section 5 sets out standards for the Secretary's exemptions while section 6 authorizes the President, in an emergency, to suspend section 3. Section 7 contains definitions including, as earlier stated, the inclusion of the municipal government of the District of Columbia within the meaning of “Federal agency." Section 8 contains a severability provision. Section 9 makes the bill's provisions applicable to contracts entered into pursuant to negotiations concluded or invitations for bids issued on or after 90 days from the effective date of the legislation. The Commissioners' comments are limited to the effect of the bill on the operations of the municipal government of the District of Columbia. It is estimated that the District of Columbia government has service contracts totaling approximately $3 million which may be affected by the bill. The majority of these contracts relate to the furnishing of care to indigent patients referred to private hospitals by the government of the District of Columbia. Employees of these hospitals perform many of the low-salaried services which are specified in the bill. Although the Commissioners favor the raising of wage standards for employees in occupations where such wages are inadequate, they do not subscribe to the method proposed in this bill. They do not believe the wages of Government employees can accurately be equated with those of contract employees. The fringe benefits of Government service are even more difficult to equate with those provided by private contractors. In any case, a contractual requirement that such wages must be comparable would undoubtedly result in labor costs of such contractors being noncompetitive with other contractors engaged in providing similar types of services. Employers contracting with the District government would find it necessary to consider in their costs, not only the higher wages required to be paid but also their overhead, profit, taxes, insurance, maintenance, and replacement of equipment, all of the latter not being included in the comparability provisions of the bill. The provisions of this bill would undoubtedly lead to a lessening of competition in the field of Government service contracts because of the reluctance of contractors to maintain two standards of wages, one competitive to other contractors generally, and a higher one established by Government contract provisions. While we favor the objective of the bill we believe that it would be very difficult to administer and, for that reason, we are constrained to object to the inclusion of the District of Columbia in the bill in its present form. However, were the bill amended so as to correct this difficulty, we would favor its enactment. The Commissioners have been advised by the Bureau of the Budget that, from the standpoint of the administration's program, there is no objection to the submission of this report to the Congress. Very sincerely yours, WALTER N. TOBRINER, President, Board of Commissioner, District of Columbia. (Whereupon, at 12 noon, the hearing adjourned, subject to the call of the Chair.) о |