SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 3353 words

HEADLINE: TESTIMONY July 21, 1999 MAURICE BASKIN PARTNER VENABLE, BAETJER, HOWARD & CIVILETTI, LLP HOUSE EDUCATION AND THE WORKFORCE OVERSIGHT AND INVESTIGATIONS JOB OPPORUNITTIES IN CONSTRUCTION

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Statement of Associated Builders and Contractors RECOGNITION OF HELPERS UNDER THE DAVIS-BACON ACT Before The Oversight and Investigations Subcommittee of the House Education and Work Force Committee United States House of Representatives July 21, 1999 Speaking for the Merit Shop Maurice Baskin, Esq. Venable, Baetjer, Howard & Civiletti, Llp Washington, DC Mr. Chairman and members of the Committee. My name is Maurice Baskin. I am a partner with the Venable law firm in Washington, D.C. and appear today on behalf of Associated Builders and Contractors, Inc. ("ABC"). ABC is a national trade association of more than 23,000 construction contractors and related firms, many of whom perform work on construction projects covered by the Davis-Bacon and related acts. Many of ABC's member firms, both union and non-union, use semi- skilled workers known as helpers on their private construction projects. The duties of helpers typically overlap with those of journeymen, under whose direction the helpers serve. While they may receive training in one or more trades, helpers are not limited to the role of apprentices or trainees. The helper position is an important point of entry for minorities and women into the industry, who might otherwise be excluded due to lack of experience or skills. Current estimates of the Bureau of Labor Statistics are that there are as many as 500,000 helpers working in the construction industry today. (BLS Occupational Employment Statistics, see 64 Fed. Reg. 17452). 1 Unfortunately, the Department of Labor has proposed a rule which would for all practical purposes deny recognition to helpers on work covered by the Davis-Bacon Act, even where it can be shown that the use of helpers is a "prevailing practice in the local area." The proposed rule would achieve this result by returning to an unworkable definition of "helpers" which was found to be obsolete nearly 20 years ago and which ignores the realities of the construction workplace. By denying recognition to a classification of workers which clearly prevails in the industry, the Department is violating the mandate of the Davis-Bacon Act. The Department is also rejecting numerous alternatives which would achieve a result more consistent with the statutory mandate. Finally, it is clear that the Department is operating in a vacuum, without enough hard data on the uses of helpers to justify issuance of the proposed final rule. We call upon Congress to mandate that the Labor Department delay issuance of the proposed rule on helpers until further study of this issue is conducted. 1. Background The rule by which the Department is proposing to redefine helpers is actually the same as the policy which was in place prior to 1982. The proposed rule (and the old policy) would recognize helpers only where their duties are clearly defined and distinct from those of journeyman or laborers, and where the use of such helpers is an established prevailing practice in the area, and where the term helper is not synonymous with trainee in an informal training program. 64 Fed. Reg. at 17442. 1 Even the most conservative estimate reported by DOL, the BLS Current Population Survey (CPS), estimates that are over 100,000 helpers in the construction industry. 64 Fed. Reg. 1745 1. In the early 1980's, the Department collected overwhelming evidence that this definition of helpers failed to recognize large numbers of construction workers who were neither journeymen nor laborers, but who were in fact semi-skilled workers with some overlapping duties, performing under the direction of and assisting journeymen. See 47 Fed. Reg. 23644 (1982). The Department engaged in a decade of rulemaking and litigation in order to implement a new, more realistic definition of helpers in 1992. The 1992 definition (suspended last year), simply recognized the reality of the construction workplace-that helper duties overlapped with those of journeymen, described as follows: A helper is a semi-skilled worker (rather than a skilled journeyman mechanic) who works under the direction of and assists a journeyman. Under the journeyman's direction and supervision, the helper performs a variety of duties to assist the journeyman such as preparing, carrying and furnishing materials, tools, equipment, and supplies and maintaining them in order; cleaning and preparing work areas; lifting, positioning, and holding materials or tools; and other related, semi-skilled tasks as directed by the journeyman. A helper may use tools of the trade at and under the direction and supervision of the journeyman. The particular duties performed by a helper vary according to area practice. The 1992 Rule was upheld by the U.S. Court of Appeals for the D.C. Circuit in Building and Const. Trades Dept., AFL-CIO v. Martin, 961 F. 2d 269 (D.C. Cir. 1992), but was only allowed to be in effect for 20 months during 1992-1993, before being suspended by the Clinton Administration. 2. The Department Has Improperly Ignored Its Own Previous Findings That The Old/Proposed Rule Is Unworkable and Violates the Department's Statutory Mandate. ABC's first objection to the proposed Rule is that the Department has failed to deal with its own 1982 findings, based upon over 2000 public comments, that the old definition of helpers (which the Department now wants to reinstate) "failed to reflect construction industry practices." 47 Fed. Reg. 23644 (1982). Whatever one thinks of the 1992 Rule which has been suspended, it at least attempted to address a very real problem - that a large category of workers were not being recognized on Davis-Bacon projects. The new proposed Rule, on the other hand simply ignores the requirement that the Department recognize prevailing practices in the industry. According to the Department's own statistics, hundreds of thousands of helpers are being used by both union and non-union employers on all manner of private projects. Yet, the Department's proposed Rule simply fails to recognize this obviously prevailing classification of workers on Davis-Bacon covered projects. The Department's own Notice admits that the term "helper" has multiple different meanings within the construction industry (64 Fed. Reg. at 17445). According to the Notice, helpers may include "skilled workers who are less experienced than journeymen," "workers who perform unskilled laborer duties that are related to the work of skilled journeyworkers", "longer-term specialized workers performing a limited range of work duties that somewhat overlaps those of the craft journey level worker," " and/or employees with little or no experience in the construction industry." 2 It is undisputed that none of these different meanings are encompassed within the old/proposed rule. Again, it is not enough for the Department to say what is wrong with the Suspended 1992 Rule. It is incumbent on the Department to explain how a return to the old, demonstrably unworkable definition of helpers will "reflect construction industry practices." The Proposed Rule must be withdrawn for that reason alone. 3.The Department's Stated Objections to the Suspended 1992 Rule Are Arbitrary and Capricious. The Department has also failed to justify the suspension and/or withdrawal of the 1992 Rule. The Public Notice identified three grounds for withdrawing the Suspended Rule, none of which make sense: The Suspended Definition cannot be enforced effectively. A "key underpinning" of the Suspended Definition, that helper use is "widespread," has been "seriously undermined" by new data. The Suspended Definition could negatively impact apprenticeship and training. Enforceability of the Suspended Definition The Department has not identified any allegations of specific abuse of the Suspended 1992 Rule occurring during the 20 months in which the Suspended Rule was in effect. The absence of any such complaint or abuse constitutes the best evidence that the Department's speculations about enforcement difficulties are wildly overstated. In addition, the concerns expressed by the Notice as to how "semi- skilled" employment can be differentiated from skilled work, ignore the fact that both union and non-union contractors have themselves developed methods of recognizing the differences and have implemented differences in pay scales and job duties for many years. The Department's claims of enforcement problems are greatly overstated. 2 A helpful discussion of the variations in the uses of helpers is contained in Northrup, The "Helper" Controversy in the Construction Industry, XIII Jnl of Lab. Res. 421, 429 (Fall, 1992). The "Widespread" Use of Helpers The Department has asserted, largely based on wage surveys from 1992-1993, that "helpers are less widespread than previously believed." 64 Fed. Reg. at 17445. This finding is a distortion of what was "previously believed" and is simply wrong. The Department never contended during the 1980's that helpers constituted "all" or even a majority of the industry, as Defendants now seem to imply. Rather, it was the practice of using helpers, even if only a few to each project, which was, and is, "widespread." The latest statistics seem to indicate that helpers number between 5 and 10% of the total industry workforce. We think that number is understated, but it remains a very significant group of employees outnumbering by a substantial margin those workers labeled as "apprentices," and many other recognized trades. 3 In a recent survey of ABC's own members, we found that over 80% use helpers on private construction projects. It is very strange that the Department has relied on 78 wage surveys conducted in 1992-3 as evidence that helper use is not 44 widespread." 64 Fed. Reg. at 17445. As this Committee has heard before, the Department's wage survey process has been shown to be grossly flawed and has produced erroneous data of all kinds. See the General Accounting Office Report, 96-130 (May, 1996), and the report of the Department's own InspectorGeneral,49DLR(BNA)E- 1(Marchl3,1997). Also, most non-union contractors did not even know the rules had been changed back in 1992. In short, the most logical inference to be drawn from the Department's brief experience under the Suspended Rule is that the limited and flawed wage surveys of 1992-1993 severely underreported the existence of helpers. They provide no legitimate justification for withdrawing the Suspended Rule. Impact on Apprenticeship The Department has also claimed that increased recognition of helpers will somehow interfere with apprenticeship and training programs. The Department has ignored significant developments over the last decade in the field of open shop training, which have seen significant increases in the funding and participation by open shop contractors in apprenticeship and training programs. These developments have occurred completely independently of the Davis-Bacon regulatory process, and have been driven largely by the demands for skilled workers in the private sector. The National Center for Construction Education and Research has undertaken to establish uniform curricula for the entire construction industry, again without regard to the Davis-Bacon Act. 3 According to the CPS report cited in the Notice, over 100,000 workers are presently identified as construction helpers (64 Fed. Reg. 1745 1), while the OES reports a total of over 500,000 helpers (Id. at 17452). Either figure is significantly higher than the number of workers identified by BLS as Apprentices (54,000), a category long recognized by the Department. According to BLS, the helpers also far outnumber such tradesmen as Tile Setters (47,000), Carpet Installers (85,000), Electrical Power Installers (14,000), Paperhangers (34,000), Plasterers (36,000), Concrete Finishers (75,000), Glaziers (25,000), Insulation Workers(54,000), Paving equipment Operators (4,000), Sheet Metal Duct Installers (21,000), Structural Metal Workers (46,000) and Earth Drillers (14,000). The Department has never contended that these less numerous tradesmen are insufficiently "widespread" to justify issuing wage determinations setting prevailing wage rates for each of these trades. Contrary to the apparent implication of the Notice, helpers as a classification, are distinct from apprentices, and there is clearly a place for both categories in the industry. While helpers do receive some training and may indeed go on to become apprentices and journeymen during the course of their careers, there are many helpers who do not want or are not well suited to formal training programs. They may not be qualified for the classroom instruction; they may not want to participate in structured training programs; they may be working multiple jobs. It is a mistake, therefore, to assume that all or even most helpers hold their positions only because no apprenticeships are available or that increased recognition of such helpers would somehow reduce the number of apprentice trainees. At the same time, the Department's restrictive policies with regard to apprenticeship programs and presently limited ratio requirements for many such programs have made apprenticeship training unavailable to some workers who nevertheless desire to enter the industry in semi-skilled jobs. In either case, helpers have always co-existed side by side with apprentices and other formal trainees. It is arbitrary and capricious of the Department to refuse to recognize the prevailing practice of employing helpers in a misguided effort to force such workers into formal training programs. Numerous comments over the years have also established that the helper classification remains an important point of entry into the industry for young people, women and minorities, regardless of the existence of apprenticeship programs. Denying recognition to the helper classification on Davis-Bacon projects does not result in these workers becoming apprentices or laborers; rather, it results in their not being hired on federal projects. The Department has stated that it lacks evidence of the impact of helper recognition on the hiring of minorities and women. It is irresponsible of the Department to issue the Proposed Rule without making any effort to gather such evidence. For each of the reasons set forth above, none of the grounds set forth in the Notice justify withdrawing the Suspended Rule or issuing the Proposed Rule. As is further set forth below, the Department should devote much greater study to the issues presented in the Notice before returning to an obsolete definition of helpers which undeniably fails to recognize practices prevailing in the industry. 4. The Department Has Failed Sufficiently to Consider Numerous Proposed Alternatives to the Proposed Rule. The Department has rejected five alternatives to its Proposed Rule on helpers, without. subjecting any of the alternatives to careful study or rigorous analysis. While ABC believes that the correct result of this rulemaking should be to reinstate the court- approved Suspended Rule, ABC supports further study of the proposed alternatives. Every one of the proposed alternatives is significantly preferable to the reinstatement of the old unworkable helper definition in the form of the Proposed Rule. Alternative 1 (Ratio Requirement) would, the Department concedes, protect workers from abuse of the helper classification by limiting the number of workers who could be so employed. The Department further concedes that the Court of Appeals decision allowed the Department to reinstate a ratio requirement, provide that it is supported by the record. The Department has refused to develop such a record, however, and refuses now to even attempt to set local ratios through the wage survey process, citing unspecified "administrative concerns." Alternative 2 (Clarifying the "Semi-Skilled" Definition) would, the Department concedes, correct the supposed inconsistencies in the Suspended Rule's definition of helpers. The Department further concedes that such a clarification would insure that helpers would kept distinct from laborers. The sole grounds for avoiding this alternative, according to the Notice, are that helpers would continue to overlap duties with journeymen and would replace apprentices. As discussed above, if the prevailing practice is to employ helpers in overlapping duties with journeymen, then it is the Department's statutory obligation to recognize that practice. The Department's outright rejection of this alternative without further study is again arbitrary and capricious. Alternative 3 (Use the OES Classification Scheme) would, the Department concedes, bring a measure of logical consistency to the otherwise conflicting definitional schemes within the Department. ABC disagrees with the Department's characterization of the OES definition as "eliminating the semi-skilled characterization" from the definition of helpers. Any such elimination would deny an essential component of helpers and would defeat the statutory mandate of recognizing prevailing practices. Alternative 4 (Explicitly Delineate Semi-Skilled Tasks) would, the Department concedes, bring the definitional process into line with the similar wage setting process existing under the Service Contract Act. The Department's only excuse for not adopting the "job family" approach is that developing clear definitions of helper job duties would be "very difficult," and would require further rulemaking. It is apparent from the Department's analysis of each of the possible alternatives that the primary reason why the Department has issued the Proposed Rule, in lieu of the alternatives, is that the Department does not wish to invest the time or resources necessary to properly recognize helpers. Such a rationale is not an acceptable reason for the Department's action and is a classic example of arbitrary and capricious agency rulemaking. Again, ABC believes that the Department should allow the Suspended Rule to be implemented, or at least give it a fair test in selected areas with adequate publicity and clarification. At a minimum, however, it is clear that the Department has not given sufficient study to alternative approaches to this issue and that the record does not support the Proposed Rule. The Department is now in the process of making significant changes in its wage survey system. See GAO Report No. 99-97 (May 1999). In light of these changes, it is clear that the Department should hold up the Proposed Rule with regard to helpers, and the Department should await implementation of the proposed improvements to the new wage survey system. Congress should require the Department to commission a fair and objective study of the helper issue, so that a proper method can be devised for recognizing industry practices which continue to prevail in many areas of the country. 5.The Department's Economic Impact and Flexibility Analysis is Clearly Erroneous. It is undisputed that the Department's Proposed Rule will cost the taxpayers money. The Department concedes that potential savings from the increased use of helpers would range from $73 million to $296 million dollars. 64 Fed. Reg. at 17448-17455. ABC believes that the Department's impact analysis greatly understates the economic costs of the Proposed Rule, however. The Department should reconsider its erroneous assumptions and should recognize that its Proposed Rule will cost the taxpayers hundreds of millions of dollars each year. Such costs are both unnecessary and improper in light of the Department's statutory mandate to recognize prevailing classifications throughout the construction industry. Conclusion For each of the reasons set forth above, ABC respectfully requests that Congress withhold funds for issuance or enforcement of the Department's Proposed Rule, until after the Department has given much more careful study to the proposed alternatives. In no event should the Department promulgate a rule which would codify an obsolete, unworkable definition of helpers and would fail to recognize prevailing practices in the construction industry.

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