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17 9.125 an hour for each exployee 3) 1 week paid vezatic.. after 1 year of service with a contractor or successor; 2 weeks after 2 years of

service. Lenath of service includes the whole span of continuous service with the present successor contractor wherever cæployed, end with predecessor contractors in the perforrance of similar work

at the same federal acility. (Reg. 4.172(b)(2).). 3 7 paid holidays per yeer: New Year's Day, Weshington's Birthday, Mescriel Day, Independence Day,

Labor Day, Thanksgiving Day, and Christmas Dey. (A contractor may substitute for any of the rared

holidays another day off with pay in accordance with a pian communicated to the employees involved.) NOTE: Shiri difierenti le for 2kd shift (4:00 p.m. to 12:00 midnight) and 3.d shift (12:01 2.0. to 8:00 a.m.)

are $.06 and $.0) an hour, respectively. An employee having worked 5 more hours on either the 2nd or 3rd shift shall receive the appropriate shift differential for the entire 8 hour shift.

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APPENDIX I(A).—Revised predetermination relating to Palomar Corp. Mr. JACOBS. The dismal record of the administration of the Service Contracts Act can be summed up by examining the growing spread between service contract employees at Laredo Air Force Base and

wage board employees in similar classifications. Appendix II of this statement shows the relationship between wages paid in 1969 and 1970 to service contractor employees represented by Local 1057 and wage board employees at Laredo Air Force Base. These wage rates which in 1966 were quite comparable have in 1970 increased to the point where wage board employees are earning from 19¢ to $1.03 an hour more than contractor employees. For employees of Emerald and Palomar Corporation, of course, if the Department of Labor's latest determination is allowed to stand, the wages spread will be from $.49 to $1.33. (The information referred to follows:)


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Note: Wage comparisons are made between equivalent job classifications of Wage Board and Service Contractors' employees.

Mr. Jacobs. Mr. Chairman and members of the committee, it will take me very little more time to sum up this statement. The people I represent before you today are not agitators or trouble makers, but solid hard-working family men, many of whom have devoted their life to working at Laredo Air Force Base. A significant portion of my membership have been contractor employees at the Air Force Base through this whole dismal 10-year period that I have described in my statement. We have estimated that such employees over the course of ten years have lost at least $20,000 each through combination of wage cuts, lost time, labor disputes, and other lost benefits. I sincerely feel that men such as these deserve better of their government than to be skinned out of $20,000 over their working life.

It may well be asked, what do my members really want? And the answer is a very simple one, the same rights and the same protection as other employees get from the laws of the land. We ask for the right to organize and bargain collectively and not be robbed of the results of exercising that right. We ask for a continuity of bargaining

relationships which will permit us to establish mutually agreed to and jointly administered health and welfare and pension funds to which contractors coming on to the base will be required to contribute. We ask that the Air Force and other contracting agencies be restrained from undercutting bona fide wages and fringe benefits negotiated in good faith by union and management working together at Laredo Air Force Base. In sum, we ask for the right to establish by our own collective action the rights and privileges that are considered to be the common heritage of union working men in America.

In spite of the risks and the possible consequences, Laredo Air Force Base workers continue to defend their most significant gains of the years of struggle and sacrifice, dignity, and self respect and the respect of others are the heritage that we have earned. These employees are proud Americans and will never return to a status of second-class citizenship as long as they have the strength to fight to protect their rights.

The most disheartening thing of all to me at least is that a segment of our Government, which by tradition, if nothing else, should have unending thirst for justice, should be a party to and even more perhaps the sole draftsman of such an unethical and merciless emploitation scheme.

How much longer must these proud American citizens, who have had the courage and fortitude to stand firm in protection of their rights, endure this unjustifiable onslaught against their fight for justice? If this almost hopeless situation continues, it won't be long before these men and women, the like of which have made our Country strong, become tax eaters instead of tax payers.

Thank you very much Mr. Chairman and Members of the Subcommittee.

Mr. THOMPSON. Thank you Mr. Jacobs. I have just a couple of observations.

The point you make is that your wages have in effect been frozen for three years and might be frozen permanently under the Labor Department's decision not to recognize prospective wage increases. Is that a fair observation? Mr. Jacobs. Yes, sir. Relatively so.

Mr. THOMPSON. I think Mr. O'Hara will have some questions but certainly one of the purposes of the Act was to stabilize labor-management relations in the service industry, and from what you said conditions are chaotic at the Laredo Air Force Base. It seems from your recitation that almost annually you have a new contractor to deal with and to bargain with.

Mr. JACOBS. Almost annually we have a strike.
Mr. THOMPSON. And a strike as a result of those negotiations.

Why is there such a large differential between the wage board rates and the rates received by service contract employees?

Mr. JACOBS. Because there is no method within the Act by which wages can be upped. There is just no way if we are restrained from exercising our collective bargaining rights. The Trial Examiner in the Emerald Maintenance case made a very good point. He said we were neither fish nor fowl and he said if they cannot bargain with the

government and they cannot bargain with the contractor who can they bargain with? This is our situation there. We just cannot bargain with anybody.

Mr. THOMPSON. Does the Air Force follow any of these contractors that you mentioned to other bases? In other words, do they get contracts at other bases after the violations which you have mentioned ?

Mr. JACOBs. Yes, sir. To my knowledge they have got contractors, who have violations, performing work at other bases.

Mr. THOMPSON. Does Emerald, even after its admission that it falsely certified itself as a small business, still have contracts at Laredo?

Mr. Jacobs. I say they admitted by withdrawing from that particular job. Otherwise they would not have withdrawn.

Mr. THOMPSON. The fact is though, that they declared themselves to be a small business when in fact they were not. Is that correct?

Mr. JACOBS. That is correct.
Mr. THOMPSON. Mr. Ashbrook.

Mr. ASHBROOK. I am most interested in the testimony and as was predicted it did raise some questions which I would like to address to the witness at this time if I could.

It seems to me there are several different problems here and I am not quite certain in my own mind how this specific piece of legislation would deal with them. First, you related your experiences and your grievances with various employees. As I understand the legislation enacted by my friend, or introduced by my friend and colleague from Michigan, it would only address itself to the section that refers to a list of violators. I wonder how your arguments regarding deferment of wage increases relates to this specific bill. I am not sure how this works out. You are talking about a discretionary act on the part of the Secretary of Labor. The legislation, as I see it, would merely remove from the Secretary of Labor his discretionary preparing a list of violators. I am not sure how the deferred-wage aspect relates to this.

Mr. JACOBS. I am sure Mr. Connerton will get into that, because that has some legal ramifications, I think. He can answer that a little better. But essentially what it is is that the system is all bad. There is no way that employees can bargain with a contractor for a wage increase after he has been awarded a contract because he has obtained this contract by in fact being the lowest bidder. So, he has cut it down to the bare minimum. From there he is going to cut corners to try to make a profit.

Mr. ASHBROOK. I am not sure what you feel the determination of the prevailing wage should be. Let us take a hypothetical example. If you have a contract where, say you are going to have $2 an hour the first year; $2.50, the second year and $3, the third year, is it your contention that the Secretary ought to use the $3 as the prevailing wage rate even though it would be in, in effect, two years hence; or should he use the $2 or $2.50. What are you trying to get at?

Mr. JACOBS. It depends on the method the Secretary uses. If they use collective-bargaining agreements in the area to predetermine wages, I think they should include prospective wages so all contractors can bid on the same basis. If the area determination does not include these, then it encourages contractors to defy management wages.

Mr. ASHBROOK. I don't really follow that myself. You talk about continuing the previous negotiations, with which I would agree exactly. If a new employer comes in he takes what has been bargained in advance. If that particular year it is $2 and two years from now he knows he is going to have to pay $3, I would assume he would have to consider that as part of his contract, in his bid, that he is going to have to pay that. On page 12 of your statement where you say, "The Secretary of Labor refused to include deferred wage increases in prevailing wage rate predeterminations,” Am I correct in believing you think the prevailing wage should be determined on what you think the prospective maximum wage would be and not on the current wage ?

If in 1971 it is $2 but two years from now it is going to be $3, you say the prevailing wage rate should be what it will be in 1973 rather than 1971 ?

Mr. JACOBS. We have here a dual standard. On the same installation you have blue-collar workers getting more money than service contractors employees doing the same work. The end result is a subsidy on the part of the employees to the government for performing the service, working for a lot less wages. I am not saying that the service contract employees wages should be higher than blue-collar workers but I am saying they should not be that much lower as they are right now.

Mr. ASHBROOK. But the wage board employees do not receive pay on the basis of what they are going to get in 1973. They receive pay on what their rate is this year. I frankly may be missing some of the point, but it seems to me that does not make a whole lot of sense to subsidize a prevailing wage on what is going to be the prospective rate of pay two years from now. But as I say that is one aspect of the issue raised. Possibly Mr. Connerton or others will straighten out my apparent inability to understand that precisely.

The second aspect relates to the specific thrust of Mr. O'Hara's bill and that is the list of, violators. As I understand it you want no discretion left with the Secretary of Labor in preparing such a black list or whatever you want to call it. If found guilty of violating the Acts, you think they automatically should be terminated from any right to bid in the future. Is that correct?

Mr. JACOBS. No, sir.
Mr. ASHBROOK. For three years, I mean.

Mr. JACOBS. What I referred to was the R. B. Wright case in which case R. B. Wright had been found to have previously violated the Act. This was the second time around. A Hearing Officer, knowing that he violated the Act before, perhaps several times, recommended that he be relieved from the ineligibility provisions of the Act. What I am saying is that this Act should be administrated to carry out the full intents of Congress when they passed the law and this is not being done at this time by the Department of Labor.

Mr. ASHBROOK. As I understand it the O'Hara Bill would make it mandatory to put him on a blacklist for three years. Is that correct?

Mr. O'HARA. That is correct.

Mr. Jacobs. That is what we would want, that the employers would be put on a blacklist, on the ineligibility list if they have violated the prevailing rate.

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