ing deaf from hearing it. They withdrew those wage determinations and we suspended the application of the act to the Post Office Department while the whole matter was restudied.

An so they have been issuing contracts now for several years, without any wage determinations and so that they have got the wage rates of the star route drivers right back down to the absolute rock bottom again, the minimum wage, that is what they are getting, and now that they have got them down to the bottom again they say we are going to do it differently from now on.

Instead of comparing star route drivers to other truck drivers, other drivers of dry freight, we are going to compare them to star route drivers.

Mr. PARRISH. To what drivers?

This is what has got me confused.

Mr. O'HARA. To themselves you see. They are going to say that Star Route drivers must be paid what they are already getting paid. Right? So they say that we went through all of this work several years ago so that we could make sure that Star Route drivers would keep on getting the same lousy inadequate wages that prompted the enactment of the law.

Do you believe that?

Mr. PARRISH. This is the most confused thing, Mr. O'Hara, I have ever been through in my life. I have had many meetings with the Labor Department, with the assistance of AFL-CIO in trying to work out a system to determine the wages that should be paid people doing like work that government employees are doing or postal employees are doing. I made a suggestion one time to the Labor Department, "it is a simple matter you don't have to go through all of this study. All you have to do is pay them what postal employees are paid for doing the same work."

How can you justify it, if you intended back in 1965 when Congress passed this important legislation, you said they should be paid like wages. If a postal employee is going to leave Washington, D.C. and haul mail from here to Falls Church, Virginia, and contract employees are going to leave Washington and haul mail to Fairfax, Virginia, why shouldn't they get the same salary?

We should have a postal contract set up requiring contractors to pay fringe benefits that we pay our employees.

Mr. THOMPSON. The administrators of this act like to change the rules; if they were running a baseball game, for instance, in given circumstances, they would move second base a little bit and shorten the baseline to third, and then for the next player they could add an outfielder and change all of the rules, and it would be pretty flexible.

Mr. O'HARA. Mr. Chairman, I want to say I appreciate Mr. Parrish coming over here and I want to apologize to Mr. Parrish and Mr. Hawkins that this legislation that they helped us enact has not worked out the way we had all thought it was going to and had intended that it work. We are going to try to correct that.

Mr. THOMPSON. It is already obvious, Mr. Parrish, that the bills which Mr. O'Hara and I put in are going to have to be revised and the language in the legislation is going to have to be drafted in such a way as to be susceptible of fewer interpretations.

The question of blacklisting and the abuse of the discretion which we tried to give the Secretary of Labor will have to be reviewed.

I note that the emphasis of your statement is perfectly reasonable; you want in a sense equal pay for equal work.

Mr. PARRISH. This is our stand, right, Mr. Chairman, and I might add that we don't say that we should perform all of these duties. There are areas in the country where contractor service is necessary and needed. For example, North Dakota; we have no facility out there. We have no employees out there. There the contractors are depended upon to do it. But where we can perform duties at savings to the government, we think we should be doing so.

I attended a meeting in Youngstown, Ohio, this past Sunday. Our delegation told us his superintendent had threatened him, if they did not do something, they were going to discontinue vehicle service in Toledo, Ohio, and put it out on contract.

He does not need him. These are things we are faced with.
Mr. THOMPSON. We will take a good, hard look at them.

Mr. PARRISH. Thank you, Mr. Chairman.

We certainly appreciate the efforts of you and the members of this committee.

Mr. THOMPSON. Our next witness is Mr. David Sweeney, the Legislative and Political Director, and Mr. Daniel Curlee, the Legislative counsel for the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America.

Good morning, Gentlemen.

Please feel free to proceed as you wish.

STATEMENT OF DANIEL CURLEE, LEGISLATIVE COUNSEL, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN & HELPERS OF AMERICA, AND DAVID SWEENEY, LEGISLATIVE AND POLITICAL DIRECTOR, IBT

Mr. CURLEE. Thank you, Mr. Chairman. I am Dan Curlee, and this is David Sweeney. On behalf of the International Brotherhood of Teamsters, we want to express our appreciation for this opportunity to talk to you about what we consider to be an important problem. In the interests of time, I would like to ask that our written statement be entered into your record.

Mr. THOMPSON. Without objection it will be entered at this point. (The document referred to follows:)

STATEMENT OF DAVE SWEENEY, LEGISLATIVE AND POLITICAL DIRECTOR AND DAN CURLEE, LEGISLATIVE COUNSEL FOR THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN, & HELPERS OF AMERICA

Mr. Chairman and members of the subcommittee, on behalf of our General Vice President Frank E. Fitzsimmons, and our entire membership, we wish to express our appreciation for this opportunity to appear before your committee to express the views of the International Brotherhood of Teamsters, in connection with the administration of the Service Contract Act of 1965.

Specifically, we are concerned with the determination of prevailing wage rates for mail-haul drivers.

On March 1, 1971, the International Brotherhood of Teamsters received a letter from Mr. Robert D. Moran, who is the Administrator of Workplace Standards Administration of the Department of Labor. In his letter of March 1, Mr. Moran

said that as a result of a report prepared and forwarded to the Department of Labor by the General Accounting Office and approved and supported by the Postal Service, that the Department of Labor-Workplace Standard Administration would determine wage rates and fringe benefits for mail-haul drivers, as a separate class rather than on wage rates and fringe benefits paid to truck drivers generally.

Simply stated, the Department of Labor has determined that it will narrow the base from which determinations are made in connection with prevailing wages and fringe benefits for mail-haul drivers.

The result of this shift in policy will be a specialized inquiry in a preponderance of wage input from non-union wage sources.

Prevailing wage rates and fringe benefits will be lowered for all mail-haul drivers. The Postal Corporation may save a little bit of money, but in return for that savings all mail-haul drivers will suffer because of lower wage rates and deficient fringe benefits.

The purpose of the McNamara-O'Hara Service Contract Act is to create a structure by which employees performing services for the Government are not subjected to substandard wages and fringe benefits. The earning power of mailhaul drivers has been materially improved by the McNamara-O'Hara Service Contract Act. And now by administrative slight of hand Congressional intent is being subverted-employees providing service to the Government are going to be subjected to lower wages and inferior fringe benefits.

And even more severe result will be the fact that drivers employed by organized union carriers will not just suffer a cut in pay, but will lose their jobs. Union carriers will be penalized by this decision of the Department of Labor. It will no longer be possible for a union carrier to bid competitively with non-union carriers because non-union carriers will be able to pay wage rates and fringe benefits which are well below what the union carrier must pay according to his contract.

It must be remembered that union wages are a matter of negotiation where union and management reach an equitable distribution of the productivity for the employee.

Union and non-union employee alike will be penalized by lower wages and deficient fringe benefits because under the present system for determining mailhaul rates the non-union driver is benefitted by the fact that many of his brothers do work for organized carriers.

We are led to ask why was this move adopted? Was it a move to save a little bit of money? And if so, is it justified? Why must a truck driver suffer the ill effects of an economy move?

There is evidence that the recent shift in policy by the Workplace Standards Administration is indeed an economy move for the benefit of the Postal Service. As Mr. Robert Moran pointed out in his letter of March 1, the Administration's decision was based upon recommendations made by the General Accounting Office (GAO). The GAO determined in its study that there had been an increase in its cost of mail-haul contracts due to an increase in the wage rates. GAO took the position that this increase in wages was a problem and stated that a possible solution to this problem could be a shift in the method by which mail-haul wage rates were determined, specifically GAO recommended that mail-haul drivers be considered as a separate class of service employees.

The GAO further pointed out in its report to the Department of Labor that a shift in the method of determining mail-haul wage rates could result in a considerable savings to the government (the Postal Service) because contracts for some twenty years would be let by the Post Office during this fiscal year. Those mail-haul contracts are awarded for a four-year period. It is clear that the modification suggested by the GAO and adopted by the Work Standards Administration was not an effort to implement the purposes of the Service Contracts Act of 1965. Their purpose is to reduce the wage rate for mail-haul drivers so that contracts for the next four years can be based upon these reduced wages and fringe benefits, in direct conflict with the purpose of the Act which was designed in part to improve the lot of the mail-haul driver.

Union carriers will lose business and their employees will lose jobs and the only real winner is a non-union contractor who is willing to exploit his employees. The United States Government as the nation's most significant single purchaser and as the institution that represents the people of this country should never find itself in the position of creating an environment which encourages exploita

tion of citizens who work in any industry. This shift in policy by the Department of Labor-Workplace Standards Administration creates just such an environment and encourages such exploitation.

We may ask also, is this an anti-union move? We hope not. We hope that this is not a conscious effort to undermine trucking unions and organized firms. We are led to this question because organized carriers and their employees are going to be the most harmed.

The Department of Labor has decided to consider mail-haul drivers as a separate group, is this reasonable? It may be reasonable only so far as it applies to non-union carriers. This is true because union carriers are not generally exclusively in the mail-haul business and are parties to collective bargaining agreements that require them to pay all drivers that drive similar vehicles under similar circumstances the same amount of money, regardless of what they are carrying.

Again we restate, this move by the Department of Labor favors only the unorganized carrier that is willing to exploit his employees and that to consider mail-haul drivers as a separate group is not a reasonable method of determining wage rates for mail-haul drivers.

We would urge this committee to take whatever remedial action is necessary, to reinstitute the methods previously used by the Work Place Standard Administration for determining the rates of pay and fringe benefits for mail-haul drivers.

Mr. CURLEE. Thank you, sir. I will try to make a short summary of our points. First of all, as was just discussed, there has been a determination by the work place standard administration to shift its policy in connection with determining rates of pay and fringe benefits for mail haul drivers. And the shift in policy was based upon a study made by the General Accounting Office, recommending this shift to determine wage rates for mail haul drivers as a separate class.

In the communication from GAO, it was quite clear that the purpose of the shift in policy was to save money, to eliminate the gains that had been made by mail haul drivers. There had been an increase of maybe 60 or 65 percent in the rates of pay for mail haul drivers as a result of the Service Contract Act of 1965.

The purpose of the Service Contract Act was not to provide a means by which the Department of Labor could introduce flexibility into a determination of rates of pay. It was designed to provide a structure to insure that substandard wages and fringe benefits would not be paid to employees that were providing services for the Federal Government, so that the Federal Government was not a party to any exploitation of workers.

We feel that this exploitation should not be encouraged but should be eliminated and that the purposes of this act should be carried out. We would urge this committee to work toward that end.

I would like to point out also that there is some concern as to the effect of the proposed method of wage determination for mail haul drivers will have upon organized carriers. The impact of this move really falls most heavily on those carriers and their employees who are organized by the unions.

Their wage structures are of organized carriers of course established at a higher rate than is going to be determined by the process the Labor Department uses. Therefore, organized carriers will not be competitive and will lose mail haul business; they will not have an opportunity to bid competitively in the future. There are about 20 States wherein contracts for mail haul will be let within the next year, within this fiscal year, and these will, of course, be for a period of 4 years.

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If this new method of determination, even on a temporary basis, is put into effect, then these low rates will be the controlling for the next 4 years in 20 States. I believe that covers most of the points made in our statement.

Mr. THOMPSON. Do you have any estimate of the number of Star Route drivers that you have organized?

Mr. CURLEE. We have made an inquiry into this and have determined that we don't keep this sort of statistics because it is really not meaningful to us. This brings up an important point which is that to break down a classification of drivers by whether they haul aluminum ingots or whether they haul mail is really not meaningful. A driver for an organized carrier who drives a particular type of vehicle under particular circumstances draws a particular pay rate. A driver's pay rate is not determined by what he is carrying. I say I think it is important that we don't break it down that way, but more important, the government in its standard industrial classification manual does not break it down that way either. This will be the only instance that I know of that it will be broken down in this particular manner.

Mr. THOMPSON. It seems odd to me that, knowing the history of the Act as intimately as I do, and knowing of the late Senator McNamara and Mr. O'Hara's interest in this, arising largely from what was happening to star route drivers, that this decision by the department zeroes in on them in this fashion. I rather suspect that they don't agree with Mr. O'Hara's philosophy or mine.

Mr. O'HARA. I was very interested in your point that the Standard Industrial Classification Manual does not make any distinction between people who haul mail and people who haul other kinds of dry freight, is that right?

Mr. CURLEE. This is true, yes.

Mr. O'HARA. You don't make any in your collective bargaining agreements?

Mr. CURLEE. We do not.

Mr. O'HARA. And no group of employees have suggested to you that that is what you ought to do.

Mr. CURLEE. That is true.

Mr. O'HARA. By the way, I have borrowed your manual here. You better make sure you get it back before you leave. You may have trouble establishing ownership. Standard industrial classifications major group 42 motor freight transportation and warehousing, you have trucking local and long distance, and warehousing you have several subclassifications under trucking local and long distance.

One is local trucking and drayage without storage. Second is over the road trucking service. And third is local trucking and storage including household goods. So they have in essence three different classifications.

Mr. CURLEE. Yes, sir.

Mr. O'HARA. The way the department was doing it was that way, local and over the road, back in the beginning. I think 40 miles was their breaking point. They said under 40 miles and over 40 miles. Do you have any similar kind of classification in your collective bargaining agreements that you know of?