In conclusion, the adoption of a standard for establishing minimum prevailing rates for service employees will place them on a par with their fellow workers engaged at the same project and installation. The wage should not be frozen, as it is now, at the minimum set by the wage and hour law because of the fixed fee bidding policy for Government contracts. The service employees should no longer be relegated to second-class citizenship. They should no longer be the forgotten men of labor. They should no longer be left in this vicious circle of uncertainty and insecurity where they stand just one step ahead of the welfare rolls.

They are the helpless victims of the policy of our Government to award contracts to the lowest bidder on the one hand and the policy of that same Government which, up to now at least, denies them protection against substandard wages and other standard economic benefits. We believe both bills will go a long way toward correcting the evils which we have pointed out. However, we tend to prefer H.R. 6088 because of its wider coverage and simplicity of administration.

We again thank you for the privilege accorded us to appear and express our views.

(Appendix A referred to follows:)

Chrysler Corp.:

APPENDIX A

Fringe benefits: 80 cents per hour.

Wage rates: $125.40 per week; $3.031⁄2 per hour; shift premium, 5 and 10 percent.

General Motors Corp.:

Fringe benefits: 80 cents per hour.

Wage rates: $2.95 per hour; shift premium, 5 and 10 percent.

Detroit city employees:

Fringe benefits: Same as all city employees.

Wage rates: $2.41 to $2.46 per hour.

West coast patrols:

Fringe benefits: 16 to 18 cents shift premium; 7 holidays at double time; Group hospital-life, paid by company; vacation, 1 to 3 weeks; 6 days sick leave.

Wages: $2.70 to $2.99; cost of living; shift premium, 10 to 12 cents. Pan American World Airways:

Fringe benefits: 55 cents per hour.

Wage rates: $2.76, 18 months' service; shift premium, 9 and 18 cents. Mason-Rust:

Fringe benefits: 40 cents per hour.

Wage rates: $2.40 (21 months); shift premium, 6 and 12 cents.

Union Carbide Co., Oak Ridge, Tenn., and Paducah, Ky.:

Fringe benefits: Approximately 60 cents per hour.

Wages: $2.81 per hour; 14 and 20 cents per hour shift premium.

International Harvester:

Fringe benefits: Approximately 65 cents per hour.

Wages: $2.82 to $3.16 per hour; 10 and 15 cents per hour shift premium. General Electric Co., Louisville, Ky. :

Fringe benefits: Approximately 65 cents per hour.

Wages: $2.68 to $2.91 per hour.

North American Aviation, Rocketdyne, McGregor, Tex.:

Fringe benefits: Approximately 65 cents per hour.

Wages: $2.60 to $2.75 per hour plus cost-of-living allowance; 12 to 42 cents shift premium.

Martin Marietta Corp., Orlando, Fla. :

Fringe benefits: Approximately 70 cents per hour.

Wages: $2.28 to $2.38 per hour; plus cost-of-living allowance; 10 and 15 cents shift premium.

McDonnell Aircraft, St. Louis, Mo. :

Fringe benefits: Approximately 70 cents per hour.

Wages: $2.76 per hour; 7 percent shift premium for afternoons and nights plus 20 cents per hour for all Saturday and Sunday work.

Hercules Powder, Allegany Ballistics Laboratory, Rocket Center, West Virginia : Fringe benefits: Approximately 70 cents per hour.

Wages: $2.80 per hour; 10 and 15 cents shift premium.

Patrols in Detroit:

Fringe benefits: Approximately 26 cents per hour.
Wages: $1.65 per hour (48-hour workweek).

Great Lakes Steel:

Fringe benefits: 75 cents.

Wage: $2.76; shift differentials, 8 and 12 cents; Sunday premiums all hours worked paid at time and one-fourth.

Mr. O'HARA. Thank you, Mr. McGahey. We would like to ask you a few questions now.

Mr. Sickles, do you have any questions?

Mr. SICKLES. Just a few, Mr. Chairman.

I also want to thank you for your testimony this morning. It is certainly most complete and very clear.

I have three areas where I did have some questions. One question is, just what would be the prevailing wage rates in these areas? I do not know whether you have ever worked out these figures, but you emphasize in your testimony that a great number of these plant guards are receiving no more than $1 or $1.25 an hour. In any given community, would that be the prevailing wage, because of the fact so many of them have been receiving that wage rather than what has been negotiated by your union?

Mr. McGAHEY. Congressman, I think a good example of that would be, for instance, Wallops Island, which I referred to in my statement, where they are making $1.25 to $1.3212 per hour. Just across the bay, at the Portsmouth naval yards, where the guards are under civil service and under the No. 4 classification of Federal employees, they receive $2.62 an hour.

Mr. SICKLES. How many guards are there across the bay at Portsmouth?

Mr. McGAHEY. At Portsmouth? I don't know the approximate number at Portsmouth. I might be able to get that figure for you. Mr. SICKLES. Well, you can just give it to me later.

Mr. McGAHEY. Sixty-five.

Mr. SICKLES. How about in the Detroit area? What is the prevailing wage for guards?

Mr. McGAHEY. The prevailing wage in industry in the Detroit area is anywhere from $2.75 to $3.25 per hour plus fringe benefits, except the agency guards. With the agency guards, which I referred to in my statement here, the overall economic package for agency guards is about $1.81 to $1.83 an hour, but that has been a result of these other agencies who come in and bid for $1.25. That has held this rate down. Mr. SICKLES. You spoke of the problem created when contracts are awarded to bidders who have no previous experience in this kind of work, have no offices, and so forth. Is it a practice of the Federal Government to give the contract to the lowest bidder? It seemed to me that there was a principle that it had to be the lowest responsible bidder. Is there not some checking to see that he is a responsible bidder, and that he has some background in the field?

Mr. McGAHEY. Well, I would imagine they are supposed to be responsible, but, normally, a company who can show that they are financially sound, and they put in this bid, and may have some pretty good connection, normally winds up with the contract.

For instance, this Halsil Products, out of Middleboro, Mass., who had no base whatsoever nor personnel-in fact, they didn't start in operation of their contract for some 48 hours after it was supposed to be in operation, and they just went out and hired anybody they could and put them on the jobs, and I would not be able to answer how they got the contract because they take this contract and they get into an area where maybe the wage is $211⁄2 or $3 an hour, and then they set themselves up a base at $1.25 an hour, and then they go out into the other industry, who have higher wages, and start bidding on their jobs, which depresses the wages in that area. The Government gives them their start by this original contract.

Mr. GRIFFIN. Off the record. (Discussion off the record.) Mr. GRIFFIN. Thank you.

Mr. SICKLES. In this particular instance, though, did this firm have plant guards at its home base?

Mr. McGAHEY. They primarily were a janitorial service company. These janitorial service companies now bid for these guard contracts, the same as they have done at Houston, at the new space center. They have the Midwest Janitorial Service handling the guard contracts down there. In fact, I have seen one of their checks. It shows a check with a guard's head on one side and a man with a broom or a mop on the other side on their checks. It is a janitorial service. A dollar and thirty-two cents an hour.

Mr. SICKLES. Now, to another line of questioning. With respect to moonlighting, the employees that you represent, are there many of those employees who have two jobs? Jobs in your industry and jobs in another industry?

Mr. McGAHEY. I would say normally not those who are up in the $2.85 and $3 bracket, who work with a decent wage. Those who are normally moonlighting are the ones who are working for $1.25 an hour, and at $1.25 an hour, by the time you have deductions, you can't take care of your family very well, if you only work 32 or 40 hours a week. Mr. SICKLES. Are the employees that you represent all full-time employees or do you have part-time employees covered by your contract?

Mr. McGAHEY. In the guard agencies, we have some full-time employees but, under our contracts, all full-time, all regular employees first must get their full hours in per week, in accordance with their seniority. Then if there is anything else, they can bring in some people from the part-time list.

Mr. SICKLES. And are these part-time employees paid at the same rate as the full-time employees?

Mr. McGAHEY. Yes, they are.

Mr. SICKLES. What has been the history of guard employees? Have they normally been secured through an independent contract, or have they normally been the employees of the contractor?

Mr. McGAHEY. Normally, the past history has been that they were hired directly by the companies, worked directly for the companies,

until this new system of contracting and subcontracting started to snowball, and that seems to be the thing that is snowballing all over the country today, not only in guards but in most of the service organizations especially, because a prime contractor can take a contract, he may get $4 or $5 an hour for so many hours of service there. Then he subcontracts it to somebody else, and he may subcontract it for $3 an hour. The next subcontractor will take it for $2 an hour, and somebody makes $2 here and $1 here, and the windup is the employee gets $1.25, or $1.30 an hour. These other people make $2 and $3 an hour just by handling some paperwork. This is the problem.

Mr. SICKLES. It is not a new problem.

Mr. McGAHEY. No; but it is becoming more so.

Mr. SICKLES. Maybe it is new to this country.

Mr. McGAHEY. More people are finding out an easier way of making money, I guess.

Mr. SICKLES. It has been going on in China for years.

Did the fact that the Taft-Hartley Act provides special provision with respect to the representation of plant guards have any effect or cause any impetus to this contracting out of this particular function? Mr. McGAHEY. No; I don't think that affected or made too much difference. Really, the subcontracting has grown heavy in just the last few years.

Mr. SICKLES. Thank you very much. I have no further questions. Mr. O'HARA. Mr. Griffin?

Mr. GRIFFIN. Well, Mr. McGahey, I think you have presented a very complete and a very fine statement of your position here, and I think there is a lot of merit to some of the arguments you make. Personally, I think the basic theory of the Davis-Bacon Act, for example, that Government should pay the prevailing rate and not be a factor in either deflating or inflating the local prevailing wages is a pretty sound theory.

One of the things that is disturbing us a good deal about the way the Davis-Bacon approach has actually been working, however, is the administrative problem that we run into from time to time that, under the law, as it is now written, the Labor Department has final and arbitrary authority to say what the prevailing rate is, and if they happen to be off base, or they have not done a good job in collecting the data or the evidence, there is not much that anybody can do about it, whether they have set it too high or too low, except perhaps to bring some kind of political pressure on them, which is not a very satisfactory way to operate. And I would suggest that under this or another administration, perhaps, it might from time to time be the case that they would set the prevailing rate too low.

We have been working in this committee, many of us, trying to improve the Davis-Bacon Act by providing some type of judicial review when there is an honest basis for believing that the Labor Department is arbitrary, realizing that there are some problems in applying this. Would you have any objection to the basic concept of making the Labor Department rulings and interpretations of the Davis-Bacon law subject to judicial review, particularly if we should expand it in such a way as to bring your group under it?

Mr. McGAHEY. Well, we are looking for relief, and I am sure that you gentlemen have had a lot more exeprience into the Government regulations and such than we have. We are looking for relief some way in this thing, and we looked at these two bills and we felt that they would give us a great deal of relief.

Now, as I look at them they are along the lines of Davis-Bacon and Walsh-Healey, and our main objective is relief, Congressman. Mr. GRIFFIN. Well, that does not quite respond to my question. Do you understand the question? And I am sure you do, do you not? Mr. McGAHEY. Yes.

Mr. GRIFFIN. I am specifically asking you what you think. Would you have any objection to providing some type of judicial review of decisions and interpretations made by the Labor Department under the Davis-Bacon Act, if you come under it?

Mr. McGAHEY. Well, I haven't given too much thought to that. Mr. GRIFFIN. Well, let me suggest that the kind of support you would get on any expansion of the Davis-Bacon law might well hinge upon this question in the mind of many members, because many members feel that the Labor Department has abused the act in many instances, and they are very unhappy with the way the Labor Department uses its authority.

Mr. McGAHEY. I wouldn't have any opinion on that at this time, Congressman.

Mr. GRIFFIN. Would you give it some thought, perhaps, and provide us with a memorandum or a letter of your position?

Mr. McGAHEY. I could send you in a statement on it, sir; yes, sir. Mr. GRIFFIN. I mean, frankly, if you are opposed to any review of the Labor Department's rulings or interpretations, this would have quite an effect upon my view of this particular proposal.

Mr. McGAHEY. Well, I hadn't thought of it, but we certainly are going to give it some thinking, and we would be happy to give a statement on it.

Really, why we preferred the one bill there was we thought that they wouldn't have to make a determination on it.

Mr. GRIFFIN. That is, the second bill?

Mr. McGAHEY. Yes, the second bill.

Mr. GRIFFIN. Well, I can understand that, if that is applied, that my question would not be applicable.

Mr. McGAHEY. Would you care to have us send a statement in on this, our position?

Mr. GRIFFIN. I think it would be helpful. I wish you would.

Mr. McGAHEY. All right; we will.

(The statement referred to follows:)

UNITED PLANT GUARD WORKERS OF AMERICA,
Detroit, Mich., March 6, 1964.

Re H.R. 1678 and H.R. 6088.
Special Subcommittee on Labor, Committee on Education and Labor, House of
Representatives, Washington, D.C.

GENTLEMEN: This will supplement my statement given before this committee on January 27, 1964. Mr. Griffin inquired as to the position of our union on the right of employers to seek judicial review of determinations made by the Secretary of Labor under the Davis-Bacon Act and the above bills.

Generally, we are very dubious about the idea of judicial review of determinations made by the Secretary of Labor. This is because the Federal Government, like any other owner of property, should have the right to specify the condi