which union rates are considered to be the prevailing rates. A comparison of the State's prevailing wage rates with the rates assigned under the Davis- Bacon Act for use on four Hill-Burton-assisted projects in nonmetropolitan areas, two which were recently completed and two which were under construction, showed that most wage rates assigned under DavisBacon for the projects were from 5 to 62 percent higher than the State's determinations. On February 23, 1971, the President suspended provisions of the Davis- Bacon Act in an attempt to check the inflationary wage settlements being experienced in the construction industry. The Presidential statement stated, in part: "I am today suspending the provisions of the DavisBacon Act which require contractors working on Federal construction projects to pay certain prescribed wage rates to their workers. In my judgment, the operation of this law at a time when construction wages and prices are skyrocketing only gives Federal endorsement and encouragement to severe inflationary pressures. "The action I have taken today is based on the On March 29, 1971, the suspension was lifted with the establishment of the Construction Industry Stabilization Committee to review and approve wages in the construction industry. (See pp. 77 and 78.) To access the effect of the suspension, the Department of Labor obtained from 28 Federal agencies detailed information on construction projects for which bids had been received before the suspension and for which rebids were obtained after the suspension. On the basis of data representing about 400 projects, the Department concluded that the impact of the suspension could not accurately be measured. Requirements involving job safety The construction industry has had one of the highest injury rates over the years. To promote safety and health in the building trades and construction industry, the President signed into law on August 9, 1969, the Construction Safety Act (40 U.S.C. 327). The act gave the Secretary of Labor the responsibility for issuing and enforcing health and safety standards pertaining to conditions which are unsanitary, hazardous, or dangerous to health or safety on Federal and federally assisted construction projects. The Occupational Safety and Health Act of 1970 (29 U.S.C. 651) was passed in December 1970 and became effective in April 1971. Although the act did not repeal the Construction Safety Act of 1969, section 4 states that standards in effect under the Construction Safety Act shall be deemed to be occupational safety and health standards under the 1970 act. The act further provides that the Secretary of Labor, within 3 years after the effective date, report to the Congress his recommendations for legislation to avoid unnecessary duplication and to achieve coordination between the act and other Federal laws. The purpose of the Occupational Safety and Health Act is to insure as far as possible that every worker in the Nation has safe and healthful working conditions. The act applies to all businesses affecting interstate commerce. To accomplish the purpose of the act, the Secretary of Labor was authorized to set and enforce the mandatory standards. The Department of Labor issued the initial standards package in May 1971 which incorporated the Construction Safety Act standards in effect in April 1971. Because of the relatively short period that Federal safety standards have been in effect, contractors could give only rough estimates of the effect these standards will have on costs. Estimates of increased construction costs ranged from less than 1 percent to approximately 30 percent. The wide variation in estimates appears to be due to such factors as the safety level maintained by the contractor in the past; whether the contractor owns equipment which will require extensive modification; and the familiarity with the safety legislation. One contractor representative, for example, estimated that Federal safety requirements would increase the total costs by 1 to 2 percent. This representative leased most of his equipment and had received a national award for his firm's safety record. In another area, a contractor representative estimated that Federal job safety requirements would not increase costs above the approximately 1 percent he now spends in complying with the requirements of the State safety program which he considered to be good. Contractors stated that additional costs will be incurred to familiarize workers with requirements, to provide additional safety equipment and devices, to meet additional recording and reporting requirements, and to hire full-time safety engineers on some projects to insure compliance. For example, roll bars and load-bearing-measuring devices are required to be installed on new and old heavy equipment such as bulldozers and cranes. According to one contractor association official, installation of rollover protection systems could cost as much as $4,000 for a single piece of equipment. Some contractor representatives expressed concern with the indirect effects of the safety standards rather than the potential cost increase. They stated that legal problems may be substantial because of the complex and broad language of the 1970 legislation. They were of the opinion that there should be a provision in law for recourse against workers who fail to observe safety rules and that the legal provision entitling individual employees and unions to file complaints against contractors could be a means of harassment and leverage for negotiators at the bargaining table and for disgruntled employees. Union officials stated that they were in favor of the safety standards and that they would support contractors in maintaining safe jobsites. Requirements for equal employment opportunity It is the policy of the Federal Government to provide equal employment opportunity for all qualified persons. Executive Order 11246 of September 24, 1965, requires that there be nondiscrimination provisions in all Federal and federally assisted construction contracts. Federal plans that include goals for minority hiring are imposed where the construction industry fails to voluntarily come up with plans to adequately use minorities in an area. We found little evidence that the requirements for equal employment opportunity had affected cost significantly, but comments from construction industry officials indicate that future costs may be increased. Although future costs may be increased, the long-range effects of allowing minority workers the opportunity to obtain gainful employment is an important consideration. Both union and contractor officials generally agreed that it was difficult to recruit qualified minority workers in some areas, especially in the more highly skilled trades. They believe that the absence of qualified minority workers may lead to the hiring of unqualified workers resulting in increased costs through lower productivity. This is especially true in localities under an imposed Federal plan where minimum percentage goals increase each year until the plan is fully implemented. Some contractors also stated that they are responsible for obtaining the necessary workers but that the unions control the skilled labor supply in many areas. Availability of skilled labor In 1970 approximately one of every four skilled workers was employed in construction making it one of the largest employers of skilled workers of any major industry group. According to a Department of Labor study, construction manpower requirements for skilled workers will increase from about 1.9 million in 1970 to 2.5 million in 1980 on an annual average basis. 85-379 O 72-18 The Department of Labor forecasts an increase of as many as 100,000 job openings a year for skilled construction trades between 1970 and 1980. About 60 percent of this increase will be due to growth in construction activity and the remainder to replacement of existing workers lost through attrition. The projected increases in requirements for selected trades which work on hospital projects are shown below. In areas where we held discussions, construction industry and union representatives stated that, contrary to shortages during the period of high construction activity several years ago, labor shortages were not currently a significant problem. This is evidenced by the average unemployment rate of 10.4 percent during 1971 for the construction industry. Studies point out and contractors have stated that, because of the cyclical and seasonal nature of construction work, labor shortages have existed at one time or another in nearly every area of the country. Trades identified as being in short supply included bricklayers, carpenters, electricians, plumbers, and sheet-metal workers. Additionally officials of the Department of Labor testified in appropriation hearings for fiscal years 1971, 1972, and 1973 that bricklayers, electricians, sheet-metal workers, and roofers were in short supply in various areas. The immediate result of labor shortages can be delays in construction or scheduling of overtime work both of which increase construction costs. Over a period of time, labor shortages can also result in higher wages necessary to attract skilled manpower. |