Page images

that ". . . offerors make themselves familar with the NLRB cases covering this issue: namely, The William J. Burns International Detective Agency ..." Yet, the Air Force, with the sanction of the NLRB, has used the Service Contract Act as a repressive measure.

Rather than implement its intended purpose as minimum protective legislation; such as, the FLSA, federal agencies have either failed to enforce the Act or have used it to perpetrate repressive conditions for a substantial segment of working men and women. Surely, the U.S. Government, including the U.S. Air Force, should observe, and hopefully exceed, the rules of law imposed upon private employers.



Mr. Chairman and gentlemen of the committee: My name is James C. McGahey. I have been President of the International Union, United Plant Guard Workers of America since its formation as a labor organization in February, 1918, with the exception of a one year period during 1954-1955. Prior to the formation of our organization, I was active in representing guard employees for a number of years, having held several offices, including that of President of Plant Guard Local 114 in Detroit, Michigan, when it was affiliated with the UAW-CIO. I am proud to state that I also worked as a plant guard for a number of years.

Our organization, the United Plant Guard Workers of America, is a labor organization within the meaning of the Labor-Management Relations Act of 1947, as amended. Our membership is limited to employees performing guard functions within the meaning of Section 9(b) (3) of the Act. We are not affiliated with the AFL-CIO or any other labor organization because of the prohibitions contained in the Act and interpretative decisions by the National Labor Relations Board.*

Our membership extends from the State of Washington to Florida and from New York to California. We also have members in Hawaii and Puerto Rico as well as Canada. Our present membership numbers in excess of 10,000 working in more than 800 plants and facilities. We have collective bargaining units established in every major industrial center in the United States and have contracts with most of the major corporations, such as: General Motors Corporation, Chrysler Corporation, Ford Motor Company, International Harvester, U.S. Steel, Boeing Aircraft, North American Aviation, General Electric Company, and many others. Our membership also extends into every major industry.

We are also actively engaged in seeking and maintaining representation rights for guards at vital space projects and defense installations. Our members are employed at such defense centers and atomic projects as Oak Ridge, Tennessee, the Ballistics Laboratory at Rocket Center, West Virginia, the manned spacecraft center at Houston, Texas, and various missile sites around this nation. We point with especial pride to our members who perform the security functions at Cape Kennedy.

We appreciate the opportunity to appear here today to express our views with respect to the two Bills introduced by Congressman O'Hara, H.R. 1678 and H.R. 6088. We wholeheartedly support them. They are long overdue.

I could never really understand why employees performing janitorial, custodial, or maintenance duties should be excluded from the coverage of the BaconDavis and Walsh-Healy Acts. There appears to have been no real valid basis for denying them the same protection of minimum wages under contracts left by federal agencies as was accorded mechanics and laborers. Perhaps it was an historical omission or coincidence. Whatever the reason that may have existed in the past, there certainly is now no such valid reason. In fact, there are stronger reasons why “service” employees should be accorded the protection of the prevailing minimum wage for their respective classifications. Service employees are normally few in number at any given location as compared with employees engaged in the manufacture of commodities or the construction of public works. They lack the strength in numbers to force, through econonic coercion, their employing contractor to raise their wages or provide valuable fringe benefits. For example, a guard force at a missile site may number no more than ten or fifteen employees.

* General Motors Corporation, 77 NLRB No. 161, 22 LRRM. 1119. Chrysler Corporation, 79 NLRB No. 67. 22 LRRM 1394.

Service employees also normally work in semi-isolation and during oda and irregular hours. The janitor cleans after other employees have gone home; the maintenance employee makes his repairs after normal working hours and on weekends; the guard mans his post and makes his patrols at night and on weekends. It is therefore difficult for these employees to communicate with each other or to ban together for their mutual aid and protection. Because of their peculiar employment conditions they are helpess to assert their collective eco nomic strength to better their working conditions. They are also subject to pressure exterted by the contractors in order to force them to refrain from their self-organizational activities because of their isolation and irregular working hours. The net result is that unorganized "service" employees very rarely receive rates much above the minimum wage rates set by the Wage and Hour Law. Thus, service employees normally receive no more than $1.25-$1.35 per hour without fringe benefits.

Employers, especially in the contract agency field, have been able to keep the wages of the service employees depressed by hiring "moonlighters" and "retirees" who are willing to work at sub-standard wages for supplemental income "Moonlighting" is perhaps more prevalent among the service employees than any other occupational groups. An employee can work in a factory by day and perform janitorial duties or patrol a plant by night. The employers seek out retirees who are anxious to supplement their retirement income. Because of the $1,200.00 limitation on income under the Social Security Act, the retired employees are subject to the employer's demands that they work a large number of hours in order to earn the $1,200.00. Those employees attached to the "service" labor market must therefore find an additional source of income to sustain their livelihood because of the low wage rates existing in their groups.

As my experience has been devoted to the problems of plant guards over the years, I shall direct the balance of my remarks to the problems existing among that group resulting from the past failure of Congress to adopt a requirement for a minimum prevailing wage for guard service performed pursuant to government contracts. However, the same considerations would appear to apply to other service groups covered by the two pending Bills.

A large percentage of our membership perform guard services contracted or sub-contracted by Federal Agencies. The stepped-up atomic energy and missile programs during the past few years has created a demand for greater security. The duty of protecting the various missile sites and other defense installations is the work of the plant guard. As I will point out, the failure of our government to provide for the payment of the prevailing minimum wages (including fringe benefits) for these duties has a serious effect upon the livelihood of our members, the welfare of the community and our national security.

To illustrate : There are a number of Nike missile sites in the Detroit, Michigan area. Prior to September 30, 1963, the contract to protect these sites was awarded to Bonded Guard Services, Inc., a Detroit based guard agency. The guards were members of our Union and covered by our standard area collective bargaining contract. Our members were paid an hourly rate of $1.65 plus $.16 in fringe benefits, or a total of $1.81 per hour.

In order to fulfill the specifications of the contract, Bonded had imported trained police dogs for patrolling purposes. Invitations for the bids for the contract year October 1, 1963 to October 1, 1964 were issued on August 13, 1963. The contract was awarded to the Halsil Products Company of Middleboro, Massachusetts. This contractor had no office, personnel, or other guard contracts in Michigan. It staffed two Nike missile sites with local employees hastily recruited from the area. One such employee was a young farmer who lived nearby and who did not even know for whom he was working. He wore no uniform and was unarmed. He had received no security clearance whatsoever and had absolutely no previous training in plant protection work. Attached to this statement is a photograph of a Bonded guard and one of its trained police dogs. His replacement is shown in the bottom photograph, behind the fence. These

replacements were hired to work at the rate of $1.25 per hour without any fringe benefits. Our local union representatives observed that the “trained police dog' required by the contract was a small terrier type house pet.

Aside from the obvious breakdown in the national security, the effect of this action upon our organization were immediate and direct:

(1) It resulted in the loss of a number of jobs for our members.

(2) It depressed the prevailing wage rates for guards in the area. For example, our Chrysler Corporation guards receive the rate of $3.03%2 plus 70¢ in fringe benefits per hour or a total of $3.7312 per hour.

(3) It effectively precluded organization of the employees working for the new contractor.

The contract for these Nike missile sites was let for a one year term. It was on a fixed fee basis. The low bid was based upon the payment of the minimum wage of $1.25 per hour and was not the prevailing rate for guards in the Detroit area. The successful bidder could not possibly meet the union's Detroit area scale during the period of his contract on the basis of his bid.

To further explain : The primary cost factor for guard agencies is the direct cost per man hour. Bids are submitted upon the basis of the number of man hours required or furnished. The normal overhead factor (which includes supervision, overtime, insurance benefits, uniforms, administration, profit, etc.) is around fifty cents per man hour worked. Assume the government specifies that 10,000 guard hours shall be furnished for the contract year. If the contractor plans to hire guards for $1.25 per hour, he adds fifty cents for overhead and profit and submits a bid for $1.75 per hour. If, however, the contractor bases his bid upon a union scale of $3.00 per hour, he must bid for at least $3.50 per hour.

The competition among guard agencies is quite fierce. They are actually little more than labor brokers. Many agencies operate out of their homes or small offices. Very little capital investment is required to become a guard agency. About the only requirement is that an individual have a connection to obtain a contract and possess enough cash to meet the payroll until he receives his first payment under the contract.

Almost all government contracts for guard services are on a fixed fee basis. The bidder who bases his bid upon a minimum rate of $1.25 per hour cannot make any economic concessions to his employees during his contract year and will refuse to resubmit a bid because of inability to compete with other nonunion contractors paying the minimum rate.

Another illustration : A contract for guard services at the NASA Missile Test site at Wallops Island, Virginia had been let to Guard Services, Inc., a private guard agency. There were approximately 24 guards employed by this Agency at the site. They were paid at the rate of $1.25 to $1.3212 per hour without fringe benefits.

Our Union was certified by the National Labor Relations Board as exclusive collective bargaining agent for these employees on March 29, 1963. The contractor successfully stalled negotiations until its contract expired on October 1, 1963. The only offer ever made by the contractor to increase wages or benefits was an offer to pass along to the employees any increase that NASA might agree to make in its contract. NASA refused to make any such concessions and the employees were forced to strike on August 26, 1963. This resulted in an order by the President's Missile Sites Labor Commission in accordance with Executive Order No. 10946 to terminate the strike and return to work. Our members obeyed this directive and returned to work only to be informed that they had been discharged for engaging in this concerted activity. The National Labor Relations Board has issued to complaint against this contractor on the basis that it refused to bargain in good faith with our Union in violation of Section 8(a) (5) of the Labor Management Relations Act, and also discriminated against the employees in violation of Section 8(a) (3) of the Act because of their membership in and activities on behalf of this Union. The contractor has failed to even respond to this complaint and default proceedings are pending. **

**Guard Services, Inc., 5-CA-2573.

This contractor refused to even resubmit a bid for the 1963-1964 year and the contract has been let to another contractor who was the low bidder. This bidder has refused to recognize our Union as the bargaining agent for the guarda employed at the Wallops Island station and has hired an entirely new guard force at the minimum rate of $1.25 per hour.

This is a pathetic illustration of how 24 guards at Wallops Island lost their jobs and were deprived of their rights under the Labor Management Relations Act to be represented for purposes of collective bargaining because of the lack of a standard establishing prevailing rates for their work.

The irony of the situation at Wallops Island is that the guards, who were charged with the responsibility of protecting this highly secret and important space project, were being paid $1.25-$1.35 per hour, while common laborers were being paid a minimum of $1.73 per hour plus fringe benefits. On sa me project, asbestos workers receive a minimum of $3.65 per hour and boilermakers $4.15 per hour. This is because the Secretary of Labor had made a determination of the prevailing minimum rates for these and other classifications pursuant to the Bacon-Davis Act. But no such determination was made for the guards and they received less than $1.35 per hour.

The $1.25 to $1.35 hourly rate for guards at our space and missile defense installations is rapidly becoming a standard rate at all unorganized sites. These low rates lead to a high turnover in personnel which results in extra costs to the government for security clearances. It also results in a general deterioration in the quality of our national security and a lessening of public confidence in onr space and defense effort. Compare these hourly rates with the rates paid by industries for comparable duties and responsibilities. As noted above, Chrysler Corporation guards receive a total of $3.7342 per hour; General Motors Corpora. tion guards receive $3.95 per hour plus 70¢ in fringe benefits or $3.65 per honr. McDonnell Aircraft in St. Louis, Missouri pays its guards $2.76 per hour plus approximately 60€ per hour in fringe benefits or a total of $3.36 per hour. A listing of various benefits paid plant guards is attached to this statement as Appendix A.

The present policy of our federal agencies is to contract out such services to the lowest bidder. Such policy apparently derives from the theory held by the procurement officers of all federal agencies that they are somehow obligated to award the contracts to the lowest bidder without regard to the economic impact upon the employee or the affected community. This policy only leads to the general depressing of wages and therefore, adversely affects the economie status of all employees engaged in similar work in private industries in the community where such contracts are to be performed.

The above points out the urgent need of minimum wage protection for the guards performing duties under government contracts.

I would now like to summarize some of the benefits to be gained by establishing a formula for determining the prevailing minimum wage and fringe benefits for plant guard employees :

(1) The passage of either of the proposed Bills would decrease our unemployment rolls.

As earlier noted, the holding of two jobs or "moonlighting" is most prevalent among the service groups. An organizational campaign was conducted by our Union in the Cleveland area during the year 1960–1961, and involved annroximately 550 to 600 guards employed by the Pinkerton and Burns Detective Agencies. We ascertained that more than fifty percent of guards working for these two agencies held full time jobs in other manufacturing plants and shops.

Requiring government contractors to pay the prevailing rates would greatly reduce the number of "moonlighters," Service employees would no longer need to work at other jobs to earn a living wage. The contractor would no longer have a motive for hiring part-time employees holding, full-time jobs elsewhere because of their willingness to work for substandard wages

We would estimate that the passage and enforcement of either of the pending Bills would put another one million unemployed citizens to work.

(2) Our national economy would be strengthened.

An immediate direct effect of the higher minimum prevailing rates would be the increased purchasing power of these low income groups. There are an esti

mated one and one-half million employees performing guard duties in this nation. Another immediate effect would be the new purchasing power of the additional one million wage earners estimated to be in the service groups who are now unemployed. Payment of the prevailing rates would also preserve the present purchasing power of our organized members which has been won through the processes of many years of collective bargaining. Failure to provide for a minimum prevailing rate on government contracts will eventually lead to a depressing of wage rates among service employees in private industry in those communities where these contracts are let to the lowest bidders.

(3) The rights of employees in the service groups to self-organization and collective bargaining guaranteed by the Labor Management Relations Act will be preserved.

The contracts for services are let on a fixed fee basis. The fierce competition among contractors leaves little room for collective bargaining. So long as service contracts are let under fixed fee contracts, the employees are, for all practical purposes, denied their rights of effective collective bargaining. The enactment of either of the pending Bills will afford substantial relief to employees in this regard.

(4) Our national security will be strengthened.

The payment of sub-standard wages to guards is wasteful and weakens our national security. Sub-standard wages are destructive of morale, creates unrest and turmoil among all working men. The guards at Wallops Island, Virginia received fifty cents per hour less than the laborers. This created such unrest that it resulted in a work stoppage. Their picket line was respected by all other unions working at the site. Where the rates of $1.25 to $1.50 per hour is paid for guard work most employees accept the job as a "stop-over" or as a means of obtaining a better job in the project. The guard has an excellent opportunity to make a valuable contact for a better job inside the plant or site. The result is a high turnover of guards. This requires the government to bear the expense of extra security clearances. This is a great direct additional cost to the government.

The guards employed by Pan American at Cape Kennedy is one of the finest security forces in the missile industry in our nation. It is the subject of a special commendatory article in the September 1, 1963 issue of the FBI Law Enforcement Bulletin. The employees have high morale and there have been no work stoppages by the guards at this installation. A valuable lesson is to be learned from Cape Kennedy. During the year 1965, Pan American, the prime contractor, hired guards at the wage rates of $1.40 to $1.60 per hour. While these rates remained in effect, it experienced a turnover of 300 percent within the period of one year. Thereafter, the guards became organized in our Union and their rates were adjusted to rates paid to employees performing comparable work in private industry. The turnover has been eliminated and there are now only two or three openings per year among the approximately 430 members of the guard force. These guards now receive the rate of $2.76 per hour plus 45 cents in fringe benefits or a total of $3.21 per hour.

Another incidental benefit of establishing rates equivalent to those paid other employees for comparable work would be the elimination of the fly-by-night and marginal contractors who would be unable to successfully bid on government contracts based upon the payment of the prevailing rates. It will assure continuity of contractors and eliminate an annual turnover in personnel resulting from a change in contractors.

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 sub-standard benefits.

« PreviousContinue »