this could increase this four or five times. The plumbing contractor is just a small segment in the construction industry, and if you have joint industry funds all over the State and it were forced on us, this could increase the cost of construction tremendously.

At the present time, we have contracts in California that have been negotiated and run as high as $10.65 an hour, which is $20,000 a year. It would increase this another 25 or 30 cents, which is really possible under joint industry, under H.R. 1153.

I think this will be a shame. I think it would hurt the public and I do believe it would hurt this Congress.

Gentlemen, these things we would certainly like to see you seriously consider and we believe that this should be discussed further and if you want to bring it up at the next session of Congress, we would be very happy to sit with you and work out some plan that is feasible. that makes sense because we are not opposed to labor.

We think organized labor is wonderful for our industry, but we do think that this is going too far.

Senator MORSE. I will just take a minute, Mr. Chairman. I have one question about the entirety of Mr. Mack's statement in opposition to the bill. I want to raise two matters.

I had been led to believe by previous witnesses this morning, Mr. Mack, that some employer groups in the construction business in California supported the bill, whereas from your testimony for the California Association of Plumbing, Heating & Cooling Contractors should be recorded in this record as against the bills.

Mr. MACK. Correct.

Senator MORSE. Now, I do not want to ask any improper questions but I do not think this is improper. Could you advise the committee as to how you think the employer groups in California, the associations, are lined up pro and con on this bill?

Mr. MACK. As far as I know in the construction industry in California, there are only two groups, to my knowledge, that are for the bill, and they are the plastering contractors and the painting

contractors.

Senator MORSE. The plasterers and painters?

Mr. MACK. That is right.

Senator MORSE. Now, when the bill was before the House, did you testify against the bill?

Mr. MACK. No, sir; I did not. I am 3,000 miles from Washington, D.C. We frankly did not think it would get through the House, but it did. Then we became concerned. In fact, I flew all last night to get here, so I did not hear about this meeting until 4 o'clock yesterday afternoon, so I had to catch a plane to get in here this morning to testify.

Senator MORSE. Now, on a national basis, could you advise the committee from your knowledge as to what the situation seems to be between the employer association groups in respect to the bill nationwide? Is there also a division among the employer groups similar to the one that you have testified to with respect to California?

Mr. MACK. Senator Morse, I have with me Mr. Larry Mutter who is our national director and I think he could give you the information on that.

Senator MORSE. If I may, Mr. Chairman, I would like to have him give his testimony.

STATEMENT OF LARRY MUTTER, NATIONAL DIRECTOR, CALIFORNIA ASSOCIATION OF PLUMBING, HEATING & COOLING CONTRACTORS, SAN FRANCISCO, CALIF.

Mr. MUTTER. So far as the employers in the plumbing, heating and cooling industry which belong to our association, of which there are about 8,400, the concentration of industry funds now in existence is essentially in the West, the Far West, the west coast, although the new agreements being negotiated in the last 2 years have shown that these funds are growing eastward.

We find them in some of the Middle Western cities.

To the best of our knowledge, there are approximately 80 to possibly 85 such funds now in effect; they are growing all the time; each new agreement that reaches our office shows an expansion of this activity.

At several meetings and at the last two or three national conventions, there has been discussion of this matter and my observation is that in those areas where the funds are in existence and they are familiar with the employers, they are universally against joint management.

In some areas, there is not a strong position taken because the funds are not in existence yet and there is not too much intimate knowledge with them, but where they exist, there is to my best knowledge absolute opposition to the situation which 1153 would permit.

Senator MORSE. What is your knowledge, if any, outside of the plumbing indistry as to the position of other employer associations in the contracting business with respect to the bill?

Mr. MUTTER. My understanding, and this is a reaction that is based upon conversation and contacts with other groups, my understanding is that nationally, the painting contractors and the contracting plasterers are in favor of the bill-that the plumbing, heating, and cooling contractors employers are against it. The mechanical contractors employers are against it, and that probably the AGC, general contractors are against it. This is my understanding.

Mr. MACK. Incidentally, I do know that the sheet metal contractors are opposed to this bill, and also the electrical contractors.

Senator MORSE. Now, turning to the other item I wanted to raise, Mr. Mack, it would be very helpful to the committee if you would tell the committee what your understanding is concerning the administration procedure of the funds if the bill should be passed. In your testimony this morning. I understood you to stress two main subjects with regard to administrative problems.

One, you expressed the view that you thought this bill would increase the volume of arbitrations and that under your agreements arbitration costs have to be paid by the losing party.

Would you dwell on that a bit further and tell us why you think this bill would increase (1) the number of arbitrations, and (2), therefore, the cost to the emplovers? What is there about this bill that would put the union in any better position than it is in now to petition for arbitration and why do vou think if they went to arbitration, the employers' costs would be increased and they would be in the losing side in the increasing number of cases?

I missed some connections in your argument, that is why I wanted to clear the record.

Mr. MACK. Well, the history of arbitration is that the loser of the arbitration, whether it is labor or management, pays the bill. Arbitration is expensive.

Senator MORSE. In your industry?

Mr. MACK. Yes, arbitration is very expensive. The arbitration could easily cost $10,000 or $15,000 to bring an arbitrator in to decide an issue.

Senator MORSE. In most industries, I thought the costs were generally shared by all parties to the arbitration. I want to make that clear. What you are testifying to is what could happen in the plumbing industry?

Mr. MACK. That is right, he can only tell you my experience; whether others do this or not, I do not know, but in our industry in California, the loser of the issue pays the arbitration bill. We know here 3 years ago there was a case of arbitration where the cost to the union was several thousand dollars and ever since then they are very wary and really try to get together and try to settle the issue without arbitration and this makes sense because this way it does not cost either side anything.

Now, we definitely know that if this will be paid for out of a joint industry fund, which is management's money because we are the ones that will have to pay this, every case that comes up will go to arbitration and this cannot help but increase the expense because they have everything to gain-that is, the union does-and nothing to lose to go to arbitration.

Senator MORSE. This bill does not specifically provide that arbitration will be paid for out of this fund but it is your fear that if the bill is passed, the union representatives will insist that the money be used to pay for arbitration?"

Mr. MACK. Senator, it does provide for arbitration to be paid for in the bill. It specifically states that in the bill.

Senator MORSE. You think this is arbitration over labor disputes that may develop between plumbing contractor A and plumbing union B rather than arbitrations that may arise on an industry wide basis?

See, what I want you to testify to is whether or not you think the reference to arbitration in this bill would apply to arbitration between contractor A and local lodge B rather than so-called industrywide arbitrations?

Mr. MACK. I will read to you the bill and you can judge for yourself. It specifically states it will pay cases of arbitration. Starting with line 8:

(B) a program for the establishment and maintenance of a joint labormanagement Board or committee to resolve and determine issues arising from disputes regarding interpretation of collective bargaining agreements where determinations of such committee or board are binding on all parties concerned.

Every dispute you have starts from an individual shop, that individual shop takes it to a joint committee and if the joint committee cannot settle the issue, it goes to arbitration and I think the bill clearly states that any case going to arbitration will be paid for out of joint industry funds.

Senator MORSE. Let us look at the proviso clause:

Provided, That (i) sums paid into any such fund shall be used only to defray the cost of carrying out the program for which such fund was established and may

not be commingled with any other funds or otherwise used to defray the cost of programs that are employer or management functions or labor organization functions, (ii) no labor organization and employer shall be required to bargain on the establishment of any such program, and refusal to do so shall not constitute an unfair labor practice, and (iii) the requirements of section 302(c)(5)(B) shall apply to such fund, as well as the reporting and disclosure requirements of the Welfare and Pension Plans Disclosure Act ***.

I am only trying to get some legislative history written into this record.

Suppose you as a contractor in a case where the union calls for arbitration simply said you are not going to arbitrate, is it your interpretation of this language that they can go over your head and force arbitration, and have the payment out of the general fund?

Mr. MACK. No, Senator, arbitration has to be agreed by both parties.

Senator MORSE. The point is: if you do not agree to it, are you not protected?

Mr. MACK. I am sorry, let me restate myself. I am wrong on that. The way it is in a labor negotiation, your labor dispute, if you cannot settle the dispute between the two parties, it has to go to arbitration. This is written right in the labor agreement. Arbitration does not it covers the whole labor agreement, and this starts with an individual contractor, if an individual contractor of ours in our group has a dispute with

Senator MORSE. Let us go back to the proviso, number (ii) on line 19 of the bill. The chairman and I are in doubt as to how this is going to work out procedurally if the bill should be adopted.

"*** no labor organization or employer shall be required to bargain on the establishment of any such program ***"}

You now have your arbitration agreements and the present agreement, if I understand you correctly, is that if you lose a case as an employer, you pay the arbitration cost; if the union loses the case, it pays the arbitration cost. Now you say if this bill is passed, then the general fund will have to pay the arbitration cost, but proviso (ii) says that no labor organization and employer shall be required to bargain on the establishment of any such program.

You simply say "listen, I am not going to be a party to a program whereby the joint-managed fund will pay for the arbitration costs." If you cannot get an agreement that it will pay for the arbitration cost, wouldn't your present arbitration agreement prevail?

Mr. MACK. Senator, I am not an attorney, but my interpretation of this, there are two different questions here. One is that no labor organization or employer should be required to bargain. That means that this will not be a compulsary bargaining item, that both groups can agree to bargain this, but after bargaining this particular problem, then the next issue is after it has been bargained as part of the labor agreement, as joint industry, then if you have a labor dispute and you cannot settle it, it goes to arbitration and shall be paid for from this fund.

Senator MORSE. I am glad we are making this record, Mr. Chairman, because we have to be educated

Mr. MACK. Am I clear, sir, on my statement there? Do you understand what I am getting at?

Senator MORSE. Yes. What I was about to say, Mr. Mack, legislative history has to be made to benefit the committee, and there are others in the room who I think better take note of Mr. Mack's testimony. This record I assume you will keep open probably for 5 p.m. tomorrow so that supplementary statements can be filed.

I would like to have this point very clearly covered by both the proponents and opponents of this bill because I am in grave doubt as to whether or not the procedure will flow as you state, but it may very well.

I take you back on line 14:

sums paid into any such funds shall be used only to defray the cost of carrying out the program for which such fund was established and may not be commingled with any other funds or otherwise used to defray the cost of programs that are employer or management functions or labor organization functions.

I would not presume that under this language the joint managed funds would take up defraying the cost of programs now set out in existing collective bargaining agreements between management and labor.

I would not assume, without clear proof to the contrary, that passage of the bill would be justified in saying that these joint funds shall be used henceforth to pay the arbitration costs between disputes that develop between independent employer A and independent lodge B.

I may be just dead wrong and that is why I want to get it clarified. My present opinion, Mr. Mack, is respectfully submitted, and that is why I want you to take the opportunity of filing a rebuttal memorandum for the record. My present opinion is that these funds cannot be used to take up employer-management problems that may arise under existing collective bargaining agreements but that these funds are for promotion of the industry separate and distinct from existing collective bargaining agreements.

You can see what is bothering me; I have not had the time to go to the books, so to speak. I will before I vote, and I would like to get as much help out of this hearing as I can on it, too.

Mr. MACK. Senator, again, I state I am not an attorney but I think if we just carefully read under B, on line 8:

A program for the establishment and maintenance of a joint labor-management committee or board to resolve and determine issues arising from disputes regarding the interpretation of collective bargaining agreements where determinations of such committee or board are binding on all parties concerned.

All right, you have a dispute and you cannot settle it between you, that dispute goes to arbitration, the full cost of that arbitration proceedings, whatever it is, would be paid for; there would be no commingling of funds there.

It is strictly paying for the cost of bargaining, or to settle the dispute of the bargaining, and as has been explained to me by our attorney, he said very clearly this will be taken from this fund.

Now, if you continue on under I, it says

Sums paid into any such fund shall be used only to defray the cost for carrying out the program for which this fund is established and may not be commingled with any other funds.

Now, for example, if you have a project which is being paid for either by management or labor, and you decided to use part of the money from this, and they commingled that money and paid the