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Mr. SULLIVAN. Yes; we have had a number of experiences with these contractors, and of course these examples I gave you, we could give you a lot more, but you mentioned one particular contractor. was just looking at the record here. Now he came into New York only a couple of weeks ago. We had to strike the building. It was 39 Broadway. And we had to establish rates in New York City, as I say, because of the fact that 95 percent of the rates are established. This fellow came in there, and he, of course, started to lay off, reduced the force, and he reduced the contract, and we had to strike. He would have reduced the wage from our wages down to $1.25.

Now it happens that this individual contractor, because we have made it a practice now to check up on all these contractors, and to check into their background-it happened that he is a subsidiary of some kind of a heating company. I mean, the idea, one of the basic weaknesses, as I see it, and, of course, although the Government services do say, I understand, high quality in performance, but you find out that with most of these fellows, it is just something that they pick up without any experience or any knowledge or any background.

Now, you can get, there are decent-as we say, we are not opposed to the contracting system at all, because there are highly skilled, good contracting firms who specialize in this type of work, and who have knowledge and more up-to-date equipment. But this is what you find is happening, and I think basically, it is coming, in my judgment, from the type of system that you are operating under, that the Government is operating under. They are really responsible for it.

Mr. O'HARA. And there is some indication, from what you just said, that some of this wage cutting, cutthroat competition is eminating from some of the same sources even in different areas of Federal service?

Mr. SULLIVAN. Oh, yes.

Mr. O'HARA. As I understand it, this company that came into New York, 59 Wall Street

Mr. SULLIVAN. 39 Broadway.

Mr. O'HARA (continuing). To do a heating contract at $1.25 per hour for its employees was the same Halsil Products that Mr. McGahey testified about Monday as having gone out to Michigan and under bid on a guard contract, to pay employees with no previous experience as guards $1.25 an hour.

Mr. SULLIVAN. Of course, you know, Congressman

Mr. O'HARA. They are a heating contractor. Is that right?

Mr. SULLIVAN. Congressman, we really should face up to the fact. I think the Government is responsible to itself for this situation, because of the fact that you are allowing these contractors, regardless of whether it is a contractor or anybody else, to even get into areas of where security is involved, and you can just imagine yourself when they are in buildings, and cleaning buildings, and the type of operation they have got, that this is not a healthy condition, as I see it, for our own Government to be in, and this is something which, in my opinion, is scandalous.

Now, it has been going on for years, and we could cite example after example, and some cases where you find out a contractor who bids, and he is supposed to be responsible, according to specifics, and whatnot, he is a contractor who is wanted by another Government

agency for not paying the prevailing rate under the Wage and Hour Act in another State, and we have cases where these fellows have come in and one that has come to my attention was a case in New Jersey, where this so-called highly responsible contractor who was in doing this Government work is a fellow who was sent to jail during the war because he was kiting ration-book tickets for gasoline. Now, it is very hard for us, who are involved in this situation, it is very hard especially for the working people, and especially again I emphasize it, not for any ordinary purpose, but this is an area where something is badly needed for help to these people. Not only would it be a help to these people, it would be stabilizing this situation for the Government, and the Government itself will get a better return on the dollar investment, and the taxpayers will get some return, too, because they will have people going in there who are responsible, and they will be getting a better cleaning job done, and we won't have this situation that we have today.

Mr. O'HARA. Well, I thank you. I agree with you completely, and I think you have stated the case very well in your testimony today. And since there are no further questions, I will now recess the meeting of the Special Subcommittee on Labor of the House Committee on Education and Labor until tomorrow at 10 a.m., in room 429. Mr. SULLIVAN. That you very much, gentlemen.

(Whereupon, at 11:15 a.m., the subcommittee recessed, to reconvene at 10 a.m., Thursday, January 30, 1964.)

SERVICE CONTRACTS ACT OF 1963

THURSDAY, JANUARY 30, 1964

HOUSE OF REPRESENTATIVES,
SPECIAL SUBCOMMITTEE ON LABOR

OF THE COMMITTEE ON EDUCATION AND LABOR,

Washington, D.C. The subcommittee met at 10:40 a.m. pursuant to adjournment, in room 429, Cannon Building, Hon. James G. O'Hara presiding.

Present: Representatives O'Hara and Thompson.

Staff members present: Dr. Deborah P. Wolfe, education_chief; Robert E. McCord, staff director, Special Subcommittee on Labor; and Philip R. Rodgers, minority counsel for labor.

Mr. O'HARA. The Special Subcommittee on Labor of the House Committee on Education and Labor will be in order.

We are continuing today hearings begun on Monday on bills H.R. 1678 and H.R. 6088, bills to set minimum work standards for employees of contractors on Federal service contracts.

Our first witness today will be Mr. John A. McCart, who is operations director of the Government Employes' Council, AFL-CIO.

Mr. McCart, if you will take your seat and identify yourself for the record, we would be pleased to have you proceed by reading your statement summarizing your statement, if you choose to do so.

STATEMENT OF JOHN A. McCART, OPERATIONS DIRECTOR, GOVERNMENT EMPLOYES' COUNCIL OF THE AFL-CIO

Mr. MCCART. Mr. Chairman, I am John A. McCart, operations director of the Government Employes' Council of the AFL-CIO.

If it meets with your approval, since our prepared statement has been presented to the subcommittee, I would like to proceed to summarize it extemporaneously.

Mr. O'HARA. Without objection, your prepared statement will be printed at this point in the record, and we would appreciate your offthe-cuff comments.

(The statement referred to follows:)

STATEMENT OF THE GOVERNMENT EMPLOYEES' COUNCIL

Mr. Chairman and members of the subcommittee, the Government Employees' Council desires to express its support of the measures under consideration. In our view, they represent badly needed action to guarantee to workers of firms contracting for services in Federal buildings minimum wages and other employment conditions enjoyed for many years by the bulk of our Nation's employees. Twenty-five AFL-CIO unions representing Federal wage board, classified and postal workers are members of the Government Employees' Council. We salute Representative James G. O'Hara for introducing the two measures aimed at 61

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alleviating the substandard work standards under which contractor employees are now required to perform their duties.

During the decade preceding 1963 the Federal Government increased its contracts for maintenance of buildings requiring cleaning and janitorial services. This practice developed as a matter of Government policy aimed at stimulating business activities. In the case of building service contracts, it was found necessary to discontinue many of these agreements because the services provided were below essential standards of cleanliness.

The root of the problem is lack of employment standards cleaning and custodial firms must maintain and entry of a large number of companies into the field with no concept of their obligation to their employees in current stage of employee-management relations.

H.R. 1678 and H.R. 6088 aim to improve these untenable conditions by applying to such contracts the labor philosophy contained in the Davis-Bacon and Walsh-Healy Acts. These statutes require that firms contracting for construction, alteration and repair of public buildings or supplying materials and equipment to the Federal Government pay not less than the wage prevailing in the locality.

Action by the House this week approving inclusion of fringe benefits in making wage determinations under the Davis-Bacon Act supports a similar concept in the bills which are the subject of this hearing.

Both of the bills covered by this testimony establish a similar principle on contracts for janitorial, custodial, and cleaning services in public buildings. Differences between the two measures relate principally to administration of the program. Under H.R. 1678, the Secretary of Labor is empowered to determine compliance with the terms of the law and to take appropriate action to insure the benefits guaranteed to the workers in question. This authority is vested in the agency executing the contract in H.R. 6088.

We have no preference on the detailed differences between the two bills. The basic interest of the council in the legislation is to urge acceptance of the principle that the employees involved receive minimum pay and other benefits consistent with existing precedents and the advance of workers generally in our economy.

Interest of the Government Employees' Council in the pending legislation is stimulated solely by the necessity to accord these private industry workers some measure of equitable treatment with respect to wages and related employment benefits.

As a matter of longstanding policy, the council does not favor contracting to private firms work accomplished by Federal agencies unless there is a clear showing that the work can be performed more economically and more efficiently by these companies. However, this policy is not in question under the proposals before the subcommittee. The fundamental point for consideration by Congress here is the desirability of establishing minimum pay and benefit standards for private industry employees who are assigned to perform these functions once the decision has been reached to contract for these services.

I am certain the members of the subcommittee are aware that the working conditions of employees performing cleaning and janitorial services are among the lowest in private industry in our Nation. Despite the effective work of such organizations as the Building Service Employees Union, workers in the service industries are confronted generally with pitifully low work standards. They occupy the lowest rungs on the economic ladder. In most cases, lack of opportunity has prevented them from acquiring training and skills to prepare them for more advanced occupations. As a consequence, employers without a sense of social obligation to their employees frequently exploit those they hire to perform these essential jobs.

During the past 20 years, there has been a sharp increase in the number of firms offering this type of service. Between 1948 and 1958, for example, the number of window-cleaning companies rose from 1,249 to 4,476. In the same period, the contractors providing services to buildings increased from 661 to 8,753.

In terms of employees, the workers in the cleaning services in 1940 totaled 409,000. By 1960, this figure had almost doubled to 773,000.

Proliferation of companies performing such service has intensified competition for the available business. Since no huge capital outlay-such as is found in heavy industry-is involved the determining factor for the successful competitor often is the lowest wage and other employee benefits. Thus, the employer who negotiates an agreement with a union representing his employees oftentimes is

squeezed out of competition for Federal Government contrasts simply because his nonunion colleagues pay substandard wage rates. In the absence of any

statutory minimum guaranteed pay or benefit provisions, the Federal Government becomes the recipient as well as a party to lower work standards in the completion of its mission.

If, on the other hand, the Federal Government adopts the standards suggested in the pending bills, it will contribute to the economic progress of the workers directly affected and will assist indirectly in lifting the economic level of all employees in similar jobs throughout the service industry.

In summary, Mr. Chairman, the Government Employees' Council subscribes to the basic principle embodied in both H.H. 1678 and H.R. 6088-minimum, fair wage, and benefit provisions for workers in these occupational groups.

We urge that the subcommittee act favorably at an early date on the legislation now under consideration.

Thank you for arranging the opportunity to offer our comments on these significant proposals.

Mr. MCCART. Mr. Chairman, my purpose in appearing today is to convey to the subcommittee the support of our organization for the legislation which is the subject of this hearing. The Government Employees' Council is comprised of 25 AFL-CIO unions, representing Federal workers, employees assigned to the Post Office Department and in the Wage Board and classified services of the Federal agencies. We want to commend you for your sponsorship of these two measures, and we desire to support the pending legislation, because it will bring to a group of workers in private industry who must perform their services under highly substandard conditions an element of equity with respect to their wages and the other benefits under which they work.

Now during the past 10 or 15 years, there has been an increase in the number of contracts awarded for the cleaning and maintenance of Federal buildings. This was done as a matter of Federal Government policy to stimulate business activities. This particular type of contract has declined in recent years, to some extent at least because of the unsatisfactory performance that the Government experienced. Now with respect to the bills, as you are very well aware, they attempt to introduce into this contract area the principles found in the Davis-Bacon and Walsh-Healey Acts: The principle that the wages paid to those involved in the construction, alteration, repair, or supply, supplying materials to the Federal Government, the wages paid shall be not less than those prevailing in the particular locality in which the workers perform. And, of course, action of the House this week in approving the addition of fringe benefits in making wage determinations under the Davis-Bacon Act in our opinion support that particular provision in the pending legislation.

There are differences between the two measures, H.R. 1678 and H.R. 6088, and I might say that we are not especially concerned with those differences. The employees represented by the unions associated with our council are not directly involved in these contracts, but so far as we can determine, the real difference is in the method of administration, and whatever the committee feels desirable in that connection will certainly be acceptable to our organization. We are interested primarily in seeing that the wages and the other benefits of these workers are raised, and that they are benefited directly, and the group of employees with whom they are associated in the private sectorthese employees who perform cleaning and char services and similar activities, will also benefit by having the general level of their wages lifted.

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