[Congressional Record Volume 140, Number 59 (Friday, May 13, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: May 13, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                  INFLATED UNION COSTS HURT TAXPAYERS

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                          HON. CHRISTOPHER COX

                             of california

                    in the house of representatives

                         Thursday, May 12, 1994

  Mr. COX. Mr. Speaker, the Davis-Bacon Act wastes billions of taxpayer 
dollars. It's time to repeal it. Even worse, however, is Davis-Bacon's 
perverse intersection with state laws governing apprenticeship and 
prevailing wages. When added to inefficient union work rules, the whole 
mess is costing taxpayers dearly.
  The following analysis from one of my neighbors in Southern 
California, a former construction worker turned CPA, is especially 
illuminating. I commend it to my colleagues.

                Davis-Bacon Wages Boost Rebuilding Costs

                    (By W. Snow Hume, Fullerton, CA)

       In building construction, there is a sharp distinction in 
     technologies between commercial standard construction and 
     residential standard construction. In residential 
     construction that is not multistoried and built, really, to 
     commercial standards, the union workforce accounts for only 
     about 4%. In commercial standard construction, the union 
     workforce typically accounts for 40%. That is why an average 
     of 20% of the construction workforce is unionized.
       Union scale construction tradesmen are paid, on average, 
     two to three times their nonunion counterparts. Although of 
     late the building trades unions have devised special market-
     oriented scales for residential work, these are still 
     noncompetitive in the residential arena.
       At face value, union commercial construction tradesmen may 
     seem competitive, with 40% marketshare. But 50% to 70% of the 
     commercial standard union work is public works. Because of 
     the intersection of federal and state apprenticeship law and 
     state ``prevailing wage'' law, union contractors enjoys a 
     virtual monopoly on public works contracting; nonunion 
     contractors can only rarely obtain apprentices, since unions 
     typically have state-sanctioned monopolies over sponsorships 
     of apprenticeship programs. The nonunion contractor must 
     perform public works with journeymen only, unlike his union 
     counterparts who may dilute the labor cost with an apprentice 
     component. Stated differently, in Southern California the 
     unions have only a minority of even the private sector 
     commercial work.
       What does all this mean? It means that, even if the federal 
     government suspended the Davis-Bacon rules on federal 
     projects, in order to divert money to nonfederal 
     reconstruction aid, nonetheless a colossal amount of the 
     diverted amount would be squandered on union wage rates for 
     nonfederal public works in California.
       Secondly, the Congressional Budget Office and the private 
     economists perform their studies on a national scope. But the 
     disparity between union and nonunion rates, and the resulting 
     escalation of construction costs, varies from locale to 
     locale. As noted above, union rates are double and triple the 
     market rates. So in fact, in California, ``prevailing wage'' 
     rules typically escalate public works construction--at all 
     levels--by 50% to 100%. This is because union wage rates 
     affect most subcontracted work, and usually affect the costs 
     of prefabricated materials that are installed at the jobsite. 
     Cost of materials runs typically 30% on union jobs, and 50% 
     on nonunion jobs. A little arithmetic work will prove the 
     truth of my assertions.
       Further, all of these studies are predicated on parity of 
     labor performance for union and nonunion jobs. But in fact, 
     unions often impose workrules that are not imposed upon the 
     nonunion contractor. This affects productivity and thus the 
     final labor costs. The effect is most dramatic when one 
     examines the types of work that are reserved for journeymen 
     that could be delegated to apprentices/helpers, but are not 
     because of the union way of doing things. For instance, the 
     labor-contractual ``mix'' of journeymen to apprentices is a 
     labor standard that is enforceable on public works jobs, even 
     on those nonunion contractors that can obtain apprentices.
       California ``Prevailing wage'' law and current combined 
     federal and California apprenticeship law really do often 
     double the cost of public works.
       I would like to add that minorities are still effectively 
     kept out of the skilled construction trades on public works--
     despite consent decrees forced by the State of California 
     forced upon certain union apprenticeship programs. The 
     discriminatory ``design'' of ``prevailing wage'' may have 
     changed, but combination federal and California 
     apprenticeship law perpetuates the discriminatory effect. 
     Why, for instance, should the lack of a high school degree 
     keep a person-of-color out of a state-sanctioned plumbing or 
     electrical apprenticeship, and thereby out of union-dominated 
     public works?
       I have considerable first-hand knowledge about these 
     matters. I was in union-sponsored apprenticeships from May, 
     1989 through November, 1990. I have also worked in the 
     nonunion construction sector prior to entering those 
     apprenticeships. I went to two different construction trade 
     schools in 1988 that were overwhelmingly minority. Only a 
     microscopic fraction of the students got into apprenticeship 
     programs, even though they know how to do the work, and are 
     now doing that work in the nonunion sector.

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