Senator BROCK. While he is looking, you make a great plea for craftsmanship. How much craftsmanship is involved in paying those union members in that western State not to thread a pipe?

Mr. SILBERMAN. Let me talk about the whole concept of work restrictions, because work restrictions, work practices which are not those which would maximize productivity, are not just a problem in the construction industry.

It is a problem in almost every industry that is important in this country. And the real question is how do you get at that problem. Do you get at it by legislation, which purports to prohibit work practices, which are depriving industry of productivity which someone believes it should have, or do you try to get at this problem in a cooperative nature, with labor and management.

As I say, this is really the same problem, you see. The shipping industry or the longshore industry also have this problem. I suppose I find it difficult to think of dealing with such a difficult and subtle laborrelations problem only in connection with construction, because the problem is the same wherever you go.

Now, the President has recognized this, and that is one of the reasons that the National Commission of Productivity was established, and indeed people in other countries have recognized this problem,

too.

By and large, the best way to deal with the problem is developing an atmosphere where productivity bargaining takes place, and productivity bargaining is really a euphemism for a procedure whereby management buys out practices which are inefficient, and which impede technological progress.

An example of that, back in the early 1960's, is what they call the M&M Fund out on the west coast. There, the union agreed to the introduction of a number of work practices which would eliminate certain job opportunities, in return for which they wanted their members to be paid some proportion of the profit, or the increased savings made, and it seemed to me that was an enlightened agreement on the part of both parties.

That is the way it seems to me that we have to face the kind of problems that you are concerned about, and we are concerned about in the construction industry, and in the railroad industry, and a lot of other industries.

But, I do not think we should proceed by legislation which seeks to prohibit certain agreements which somebody thinks is an impediment to technology. And I really say somebody, because anybody under your bill could sue in Federal court.

I do not think it will work, Senator. I do not think it will mean what you want.

Senator BROCK. He has to prove damage to himself?
Mr. SILBERMAN. Based on impediment.

Senator BROCK. No, sir. It says, restrictive agreement which is not necessary for health and safety. I want to know what additional criteria you want to have other than health and safety.

Mr. SILBERMAN. The health and safety is an exception, is it not? If it is not based on health and safety, how would an individual show damages then? Perhaps, I do not understand the bill.

Senator BROCK. As you point out, the Secretary can designate certain national testing agencies to determine the criteria for health and

safety. As I say, I would be willing to accept any amendment you have, which would be a warranted criteria, other than those two.

I just cannot get in my head what you think is important for the worker as well as for the builder and the home buyer.

Mr. SILBERMAN. That is fair enough, Senator, because the thrust of my testimony does not just go to technical objections to the legislation, although I felt, in good conscience, it was important that we state that openly and candidly, but the thrust goes more to the concept that I was discussing a moment ago.

I do not believe that you can pursue productivity in industries across this country simply by passing legislation which makes illegal, labor agreements which do not produce as much productivity as you might like. I just do not think that will work.

I think the problem has to be approached through a national effort and with a tripartite mechanism, such as the Productivity Commission, and you cannot ask people in our society to say, "Look, you have to give up your jobs," and restrictive work practices mean jobs, you cannot just ask those people and say, "You have to give up your jobs in accordance with the greater interest of the country, as a whole, and you get nothing for it."

Senator BROCK. My time is expired, Mr. Chairman. If I may just make one comment in conclusion.

Restrictive work agreements do mean jobs, less jobs, not more. Less jobs. They raise the price for everybody. They reduce the employment for everybody, and they make it more difficult for a free market to operate.

Mr. SILBERMAN. That is true, and I would like to associate myself entirely with that statement, Senator, but it deals with the aggregate. Sometimes, the elimination of our restrictive work practice means that some small group will have to suffer by reason of that. I think we all have to recognize that.

What we have to do is develop a mechanism whereby in our collective-bargaining process that is recognized, and in effect, we cushion the impact of those changes in a collective-bargaining context, and we pursue productivity on a joint basis.

It is something that is in the interest of the entire Nation, in the interest of the entire construction industry, both union and managemen, and it is one that I believe they can work out together. Senator BROCK. Thank you very much.

The CHAIRMAN. Senator Brooke?

Senator BROOKE. I would like to say thank you to Mr. Silberman, even though we disagree.

The CHAIRMAN. Thank you very much, Mr. Silberman.

Mr. SILBERMAN. Thank you.

The CHAIRMAN. We have received a statement from Senator Dominick, a cosponsor of S. 3373. Without objection let us insert it in the record at this point.

(The statement follows:)

STATEMENT OF PETER H. DOMINICK, U.S. SENATOR FROM THE STATE OF COLORADO

Mr. Chairman, thank you for the opportunity to express my support for S. 3654, introduced by Senator John Tower; and S. 3373, introduced by Senator Bill Brock. I am happy to be a cosponsor of the latter measure.

Let me now discuss S. 3373.

Our Nation's growth in population continues to demand that we produce good, low-cost housing. The future housing needs in my state of Colorado are an example. A recent pamphlet entitled "Let's Put Our Housing In Order!" produced by the League of Women Voters of Colorado projects that within the next five years there will be 95,000 new jobs in the Denver area alone, 60,000 of which will be for semiskilled and unskilled workers. One-half of the total new jobs will be located in the suburbs, paying approximately $7,000 per year. Currently, 21.7 percent of Colorado's population is in the 20 to 34 year old age bracket. Those in this age group are expected to double in the next five years. These statistics add up to an enormous and immediate demand for housing that is within the reach of citizens in the lower and moderate income groups.

Recognizing this need is one thing, but meeting it is another. In recent years, the cost of new housing has made it unavailable to those whose needs are the most acute. We must, therefore, find a method of decreasing construction costs. The Douglas Commission (National Commission on Urban Problems) estimated that direct labor costs equal slightly more than 40 percent of the total cost of building a house. Materials and job overhead make up the remainder of the structure cost. The Commission noted the sharp contrast in the rate of increase between materials and labor costs. As of May, 1968, the Commission reported, the price of all construction materials had increased 10.2 percent from the 19571959 period. On the other hand, during this same period wage rates for construction workers increased more than five times as fast. We all know construction wage rates have continued to climb. According to the Bureau of Labor Statistics as of April 3, 1972, building trades wage rates for cities of more than 100,000 were more than 149 percent of the 1967 base year.

The key to the building trades wage rate problem is an increase in their productivity. However, the outlook to date is bleak. In a statement to the Joint Economic Committee of Congress on January 29, 1971, Roger Blough, Chairman, Construction Users Anti-Inflation Roundtable, submitted data, based on Department of Commerce and Department of Labor figures which showed that from 1964 to 1969, depending upon which figures are used, there is at best a very slight positive trend in construction productivity, but productivity is probably decreasing at the rate of 1 percent a year. According to a survey by Engineering News-Record among union and non-union contractors, “* * * low productivity wastes from 15 percent to 40 percent of every construction payroll dollar." At least one union leader agrees in part. Hunter P. Wharton, president of the International Union of Operating Engineers, told delegates to the Union's last national convention that the large pay increases won in recent years by the building trades have not been matched by gains in productivity and that this has caused some contractors to switch to nonunion workers.

One of the most important means of increasing productivity in construction is through the use of prefabricated and factory assembled products. The Department of Commerce's Panel on Housing Technology concluded in the "Housing Industry-A Challenge for the Nation," "Sufficient evidence was found to indicate that technological innovations can indeed have far reaching beneficial effects on housing costs." A major roadblock to the use of improved technology is the resistance of organized labor, especially at the local level, to changes in onsite construction practices. In short, there must be elimination of product boycotts. Congress attempted to do this through the Taft-Hartley and LandrumGriffin acts, but its intent has been thwarted by the National Labor Relations Board and court decisions.

S. 3373 would remedy this problem in federally assisted and financed housing programs. While this bill provides a beginning with federal programs, there should be unrestricted use of the new technology throughout the construction industry. I have been working toward this goal as a member of the Committee on Labor and Public Welfare. S. 3373 allows an aggrieved party to have restrictive practices terminated by a court. This approach appeals to me since the bill does not establish another bureau or agency to set standards or to enforce the legislative remedy. It does, however, insure that health and safety requirements

are met.

Mr. Chairman, let me now turn to S. 3654. This bill would remove federally assisted housing construction authorized under the National Housing Act and the Housing Act of 1937 from the prevailing wage requirements of the DavisBacon Act, and I support this measure.

When passed in 1931, the Act was designed to protect local wage standards against the then popular practice of importing cheap labor into a local com

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munity. It was an emergency measure aimed at stabilizing wages when the cards were stacked in favor of management. Today, the building trades unions hold the high cards and no longer need this type of government help. In the event of the enactment of S. 3654, construction workers on the projects governed by the foregoing two federal Housing Acts still will have the protection of the Fair Labor Standards Act and the Contract Work Hours Standards Act.

Until enactment of this type of legislation, the least we can expect is that the Department of Labor will administer the Davis-Bacon Act correctly. The 1971 report of the General Accounting Office delineates the Department's shortcomings in this regard. The GAO surveyed the Department's wage-rate determinations governing a ten-year period for 29 selected construction projects. It estimated that, as a result of minimum wages being established by the Department at rates higher than those actually prevailing in the area of the project, construction costs increased 5% to 15%.

Gregory J. Ahard, Director, Manpower and Welfare Division of the GAO, has testified before this Subcommitteee that the Department has undertaken certain corrective action to carry out the GAO recommendations. Under Secretary of Labor Lawrence Silberman confirms this. It is, as Mr. Ahard stated, too soon to evaluate the effects of the Department's actions on wage determinations. As a member of the Committee on Labor and Public Welfare, I shall be watching the Department's performance closely.

Mr. Chairman, I hope the Subcommittee will give favorable consideration to both S. 3373 and S. 3654 at the earliest possible time. Only by decreasing construction costs can we provide the housing necessary, not only for Colorado, but for the entire nation. These bills each present a workable method of achieving this goal.

The CHAIRMAN. Next is Mr. Thomas Hails, representing Associated Builders & Contractors.

Mr. Hails, we are very glad to have you here, sir. We have a copy of your statement. The statement will be presented in full in the record. You present it as you see fit. We are glad to have you.

STATEMENT OF THOMAS HAILS, GENERAL CONTRACTOR, ON BEHALF OF ASSOCIATED BUILDERS & CONTRACTORS, ACCOMPANIED BY WILLIAM BARTON, NATIONAL LEGAL COUNSEL

Mr. HAILS. Thank you, Senator. I will ease your mind by saying I will not read the entire statement.

(The full statement is printed at p. 52.)

It is a personal pleasure to be here, Senator.

Gentlemen, I would like to introduce my associate, Mr. Bill Barton, on my right, the national counsel of the Associated Builders & Contractors, Inc., whom we represent.

This is an incorporated nonprofit association called A.B. & C. We represent about 4,000 firms as members in 39 States. The members are largely general contractors, subcontractors, and their suppliers. Most of the members would classify as small businessmen.

It is a special and personal privilege for me to appear here. Senator Sparkman and I are from the same lovely city, Huntsville, Ala. The distinguished members of this committee have ably demonstrated an abiding interest in the housing needs of our citizens. Particularly those neighbors of ours, many less fortunate than we, who through fault or circumstance, illness or environment, or for whatever reason, are not able to fully provide decent housing for themselves and require some form of Federal assistance in obtaining adequate housing. Their members are substantial, and the funding requirements to meet their needs are massive and growing enormously each year.

This is no small problem-it is a huge problem, and, unfortunately, there are no huge answers. There are huge amounts of money required, but there are only small steps available to us to get the most housing for the dollars we spend.

However, the small steps I will refer to more directly, when taken together, will stretch our housing dollars significantly, will improve the productivity of our work force, and best of all, will not impact adversely on any segment of our economy.

I submit, Mr. Chairman, there are two specific steps your committee can take that will help greatly in relieving the cost-push part of inflation in the federally aided housing sector and thereby allow our needy citizens more housing units in any given year. These two steps are the passage of the bills offered by Senator Brock and Senator Tower.

I will address myself to Senator Brock's bill, S. 3373, first, only because "B" comes before "T.”

Senator Brock has wisely proposed legislation removing the artificial constraints that prevent our industry from rapidly introducing the proven advances in technology that the manufacturing segment of our economy has developed.

Our country is in the forefront of the world in developing new technology; we have few peers. Mr. Chairman, in our hometown, we knew years ago that our men would land safely on the moon. We knew it because there at Marshall Space Flight Center in Huntsville we saw the technology being developed, manufactured, tested, and applied with the end results our magnificent Apollo flights to the moon, and soon beyond.

Some may question the wisdom or the direction of our efforts, but no one can deny that tremendous technological developments and advances did happen.

In construction, technology has developed rapidly, but its application has been at a snail's pace. The prime reason is that ours is a highly fragmented industry, more so than any other. There are literally hundreds of thousands of contractors in this country, and thousands of local boards, authorities, and codes, each having their say in what is and what is not acceptable.

An ironic thing happened in Huntsville last year, Mr. Chairman. I'm a member of the local board of licensing and appeals. This board is charged with approval of new products and technology within our building jurisdiction. We deliberated at length, and I mean at length, over approval of plastic drainage pipe for use in single-family homes. All the evidence we could gather indicated that the product was in wide use in other areas, was eminently satisfactory when properly used, and would save between $100 and $200 per house.

The board was convinced it should be approved, except for one elderly gentleman who had worked all his life in the plumbing business using cast-iron pipe only. He could not bring himself to admit that something else, something that he had not thought of, could do the job as well. This gentleman is well respected and the board often defers to his whim, especially in areas of his expertise.

A year passed while we debated the subject-all the while our spaceships were zooming here and there with their millions of newly de