The pension fund is now worth over 18 million dollars. The fund is now paying out, in pensions, about $190,000 per month. Employee contributions average about $80,000 per month, and the employer's contributions are twice that amount. Since July, 1968 the $110,000 per month by which pensions exceed the employee contributions has used up the fund's cash and easily-convertible-intocash holdings. In addition, the actuarial soundness of a pension plan depends not only on the principal amounts deposited, but also on their earnings. Obviously, the loss of interest on sums like $2,000,000 make a problem-future contributions will necessarily be higher to keep the fund sound, unless the lost earnings of the delinquent contributions are made up.

The situation with the health and welfare plan is more aggravating to the men. Here there is no large principal sum. Money which comes in is almost immediately paid out to provide life insurance, sickness and disability insurance and most important, hospital, surgical and medical care for employees, pensioners and their families through Blue Cross/Blue Shield or through the Group Health Association, whichever the employee chooses. Our biggest problem is the amount past due to Group Health, to whom the fund now owes approximately $160,000. Most recently, Group Health's Executive Director called that debt rather forcefully to the attention of the fund through Mr. Godfrey Butler, D.C. Transit's Senior Vice-President, who is also the chairman of the health and welfare committee. I am attaching a copy of that letter (dated April 17, 1969 to Mr. Butler from Mr. Watters) to this statement, marked Exhibit 3.

In addition to its debt to Group Health Association, the health and welfare fund owes $122,966.49 to American Security and Trust on a 30-month promissory note, on which the Union's treasury is pledged as security, as to which more in a moment.

I have given you this recitation of the present situation so that you have some of the sense of urgency which has motivated the Union members so strongly as to threaten a strike. The suggested strike action over this issue has, of course, been postponed. That the Union members reached such a position only after the greatest provocation becomes even more apparent from an examination of the history of pension and health and welfare contribution problems which, up till now, we have been able to resolve.

The present difficulty is by no means our only exposure. Similar problems arose in 1966, 1967 and 1968. In each of those cases, however, we had been able to sit down with Mr. Chalk and work out an acceptable solution. The first problem occurred in mid-1966, about the time when the WMATC directed the Company, pursuant to a decision of the U.S. Court of Appeals, to draw on the special reserve for riders, to the extent of about $1,350,000, to take care of an anticipated deficit in earnings. The Company view was that it did not get a fare increase to which it was entitled. The amount of default in pension and health and welfare payments involved came to about $450,000.

With the help of the WMATC, and specifically the then-Executive Director Delmar Ison, communication was established with Mr. Chalk, then on his yacht in Yugoslavian waters, as I remember it. The issue was resolved when Mr. Chalk personally came to town and arranged to keep contributions current, and to make good all deficiencies, including the earnings which would have been made had the contributions been transmitted on time. Correspondence from our files, including (1) our letter dated July 29, 1966 requesting immediate payment, (2) the cablegram dated August 2, 1966 to Mr. Chalk, and (3) Mr. Chalk's written commitment dated August 19, 1966 to make good, are attached and marked Exhibit 4. Similar problems arose early in 1967 and again at the end of the year. In each case we were able to resolve the issue amicably, with the help of the WMATC's Mr. Ison, and his successor, Mr. Melvin Lewis. In each case we were able to talk with Mr. Chalk.

The late 1967 problem had another facet. The health and welfare fund owed Group Health $217,000, due to the rapidly rising cost of hospital and medical care, as well as to the delay in transmitting contributions. With specific approval from the Union membership, a note was executed by the health and welfare fund to the American Security Bank with the Health Center, owned by the fund, as security. Because the bank deemed such security insufficient, the Union pledged all its reserves, investments valued at $225,000. Finally, employer and employee contributions were both increased in an amount large enough to pay off the 30-month note on time, and to continue to pay the increasing cost of medical care. The problem now is different in the major respect that we have found it impossible this time to get Mr. Chalk to sit down and talk meaningfully about get

ting the money back. Nobody but Mr. Chalk can speak for the Company, and he has not been available. I have had recurring oral assurances from Mr. Godfrey Butler that Mr. Chalk would get the money, but nothing more. Early in February of this year, a meeting with Mr. Chalk was finally arranged at which we asked that he post some of his local real estate, which was once part of the operating properties of the Company, as security for the unpaid money. He refused. The Union Trustees repeatedly tried to get the Company Trustees to help do their job of collecting the money, but they refused. On April 9, at the insistence of Mayor Washington who had almost as much trouble getting to Mr. Chalk as we have recently had, Mr. Chalk delivered his so-called "plan" to us to take care of the problem. What he said, in substance, was that he would pay, if and when he got a subsidy or a fare increase, but only after all other operating revenue deductions AND interest requirements were met, and then only to the extent of such after-interest profit. And, he has refused to give us information or discuss the matter until some future "appropriate" time. Copies of letters dated March 18 to Mr. Chalk and March 20 to Mr. Butler, as well as our exchange of correspondence with Mr. Chalk on April 9, 10, 11, documenting the above are attached and marked Exhibit 5.

For these reasons, the Union and the Union Trustees have taken the unprecedented step of filing suit against the Company and the Company Trustees and asked the Court to make the two plans, and the Union whole. The suit was filed in the U.S. District Court, District of Columbia, Civil No. 934-69. The Union has also filed unfair labor practice charges with the National Labor Relations Board for the Company's refusal to bargain with us.

I want to turn now, briefly, to the bargaining between D.C. Transit and Local Division 689, and to say, categorically, that until we got into the present difficulties, bargaining has been basically hard and fair on both sides. By and large, our Union has just about maintained its relative wage and working conditions level over the years, in this community and in this industry. The facts are these. Since D.C. Transit first came to Washington in 1956, the annual rate of pay upon entering the service for the median grade Federal employee, as determined by the Congress, has gone from $3,670 to $6,981, an increase of 90.2%. The hourly wage of the D.C. Transit operator has moved from $2.11 per hour to $3.99, an increase of 89.1%. Measured against the most recently published Department of Labor study as to the cost of a moderate City worker's family budget for Washington, D.C., a full-time (40 hours a week) D.C. Transit operator falls short by almost $2,000 a year. [The budget in the Spring of 1967 called for $9,273 a year; cost-of-living increases since then would bring that amount to $10,126, while the full-time earnings of the operator now stand at $8,300 a year.]

The 1966 settlement we reached here [which like so many other settlements at that time was reached only after the membership had refused to ratify the agreement first negotiated] provided increases equal to approximately 12¢ per hour per year, plus cost of living. Wage increases on comparable transit properties earlier in 1966 varied from 25¢ per hour down to 9 per hour. Those settlements reached in the following year varied in amount from 15¢ per hour per year to 241⁄2¢ per hour per year. A fairly complete tabulation of such average increases in the transit industry negotiated from 1966 to date is contained in Exhibit 6 attached to this statement. We have also compiled for you a summary of all wage settlements reached between D.C. Transit and our Union. It is attached and marked Exhibit 7.

I want to turn now to the two bills being considered by the Committee. First, I want to point out that ours is a Union consisting exclusively of bus drivers, mechanics and closely related working people, organized to advance our common interests as working men and women. In those areas, we are experienced, we have expertise, and are willing to resolve any differences among ourselves by the democratic process of abiding by the vote of the majority. We then speak on all such issues with a single purpose and a single voice. We recognize also that we are citizens of the Washington area and are mindful of our duties and responsibilities as such citizens. For that reason, many of us are affiliated also with different organizations, whose intent and purpose it is to deal with such community problems. The issue of whether the community should convert from private to public ownership of mass transit is a matter on which we find diversity of opinion within our membership, the resolution of which by majority vote has not at least until now, been considered essential to the performance of our primary function. In fact, there is diversity of opinion on the question whether we should take any position, pro or con, on that issue. Obviously, to the extent an

issue like this moves away from the direct purpose for which we are organized, I have more difficulty speaking for the Union as though it has the same common purpose and single voice I first mentioned.

S-1813, and its companion bill on the House side, HR-9686, sponsored primarily by the WMATC, are widely referred to as the “subsidy" bill. Our Union has in the past, and there is no reason now to change our position, supported payments by communities to transit companies to supplement revenues taken in through the fare box, under certain circumstances. We took such a position, for example, in connection with school fare subsidy. We then pointed out that in some communities, water supply, trash collection, etc. are contracted for and paid a fixed fee, which covers all costs plus a reasonable profit without the privilege of collecting charges from patrons. Such contract fees are not usually called "subsidy." If the same arrangement is made with a bus company, however, it is more likely to be called "subsidy." In our judgment, it is only because we have become accustomed to passenger fares as the major revenue source in transit, that we tend to use the characterization "subsidies" when such fare revenues fail to meet all needs and costs. Because the caracterization appears to have bad overtones, a better term, we believe, would be "supplementary revenues"—to be applied as long as the fare box remains the principal revenue source. The day may come when community economics and social convenience will abolish the fare box entirely and provide for all revenues through direct community payments.

The International President of our Union, Mr. John M. Elliott, in an address to industry representatives in March of this year, said:

"We, in the labor movement, are committeed to the proposition that a sound public transportation system must have as its purpose to give service to all who need it and not merely to those who can make it profitable. We are firm in our conviction that the revitalization of our industry should not be predicated upon inadequate wages paid to transit workers, but on the basis of equitable cost sharing by all those who benefit from mass transit. In addition to those who use the system, others who should be expected to provide their share of support in the form of tax supplements provided at the Federal, State, and local governmental levels, include property holders who benefit from the appreciation values of mass transit, as well as commuters by automobile, householders, and others who share in the benefits of reduced traffic congestion, noise, and air pollution. "Certainly we will never provide improved modern mass transportation to the millions of people who need it until we get away from the outmoded concept that increasing cost must inevitably bring increases in fares, continued reductions in passengers and corollary reductions in service.

*

"The revolutionary demands of our urban society may yet be such, and the social problems so intense, that fares will some day have to be eliminated altogether. If public transportation is seen to be an instrument for economic and social equality vital to the ghetto dweller, the poor, the elderly, the handicapped, the young, and other members of our non-motorized population, then it may be that free transit service should be so provided. Certainly, the free transportation concept is worthy of a fair try. The loss of fare box revenues could properly be made up in taxes spread on a per capita basis among the metropolitan area population served by the transit system, which, in most instances, would probably not exceed from $2 to $4 a month. Measured in terms of the true benefits that such free transportation might provide, this additional tax burden might well be worth the price. The National Advisory Commission on Civil Disorders concluded that civil disorders have, in part, reflected the failure of all levels of government to provide the transportation services vital to the ghetto dweller in seeking out employment opportunities, health care and other essential services." It is of course clear from President Elliott's comments, we do not distinguish between public and private operations in regard to so-called subsidies. The basic economics of mass transportation are the same for either public or private facilities, and if supplementary revenues are needed, they may just as fairly be paid to a private enterpreneur as to a public authority. If this simple principle had been accepted a decade or two ago, we might still have private transit operations in most of our cities. With very few exceptions (most notably here in Washington) public transit authorities have taken over transportation facilities in our major cities.

The need for and justification for direct public supplementary revenue payments to transit operations is a result of two factors-one historical, one of simple economics.

At the time the school fare subsidy was being considered, we submitted an analysis of the historical background, and of transit economics in support of this position. A summary of these analyses is attached, marked Exhibit 8.

I want finally to address myself to S-1814 which provides public ownership of the mass transit bus system operated by D.C. Transit System, Inc. and for interim assistance to D.C. Transit System, Inc. to assist in maintaining reasonable fare levels. The Bill's authors recognized that its primary purpose can be accomplished only by amendment of the Washington Metropolitan Area Transit Regulation Compact. Such amendment requires the approval of the legislatures of the States of Virginia and Maryland, and cannot be accomplished this year. The authors obviously also recognize that consideration must be given the integration of the proposed rail rapid transit program, and the existing bus system. We share both views. We feel strongly that the feeder bus system, whether publicly or privately owned or operated must be integrated with the rail system if it is to function efficiently.

We address ourselves most specifically to the provisions, or lack of them, to take care of labor problems in the event of public ownership and operation. Experience in many areas where cities or political subdivisions of a state have taken over the operation of a transit system have shown repeatedly that labor problems are sure to arise in public operation as they have in private operation. Any legislation which contemplates the possibility of operation of a transit system should be predicated upon a sound labor policy with procedures that will insure continuous operation and efficient service, and that will also protect the wages and working conditions of the employees. Experience has also shown that you won't have good service in the transit industry unless you have good employee morale.

The national labor policy is based upon collective bargaining as its foundation. The Labor-Management Relations Act, 1947, familiarly known as the TaftHartley Act, states:

"It is hereby declared to be the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection."

The need for labor protection provisions has also been recognized by the Congress in Section 13 (c) of the Urban Mass Transportation Act, and recognizes as part of the national labor policy as applied to the transit industry, the importance of negotiation and arbitration when there is public as well as private operations.

The Railway Labor Act, which provides the procedures for handling labor disputes on railroads and airlines industries with problems closely related to those of local transit, is likewise firmly based on a foundation of collective bargaining. That Act requires the prompt and orderly settlement of all disputes concerning rates of pay, rules, or working conditions through collective bargaining, and also contains provisions designed to encourage the process of voluntary arbitration.

The development of collective bargaining and arbitration in the transit industry is no accident. That development has been responsive to the special needs of the industry. Transit is an industry which provides an essential public service. Orderly procedures are necessary, therefore, in the same fashion as they are necessary in railroad and airline transportation where the Federal government has established as special system for collective bargaining, mediation, and arbitration.

The transit industry is unique in its operations and in many of its conditions of employment. The transit employee's job is distinctly different from that of a typical government worker whose wages, hours, and working conditions are established with some degree of uniformity by Civil Service regulations and Congressional action.

Operators and maintenance employees must be at work before government and other employees travel to work every day. Some D.C. Transit employees must

be at work after such employees have traveled back to their homes. Service is on an around-the-clock basis. Operators start their assignments at different times through the day, and at different places. One oper or may start at one place in the morning and after an unpaid period of two ours, at yet another place. In the exercise of an older employee's seniority, an operator may be required to work on the Company's Virginia lines. The need for the concentration of service in the morning and evening rush hours makes for special problems with reference to the scheduling of employee assignments. The run assigned to an operator will determine how many hours he will work, the amount of pay he will receive, and the burdens of his assignment. The runs will vary in difficulty and in the nature of the burden on the employee. The amount of traffic he has to combat varies at different times of day. The number of people he carries likewise varies with the time of day and the route over which he travels.

These problems of scheduling runs and determining assignments are problems in which the employees themselves must have some say if the schedules are to be practical and workable. Through the years it has been made clear that collective bargaining is the only practical way in which this can be done. Our contract with the D.C. Transit System, Inc. carries on a long-standing provision for direct participation by the Union Schedule Committee in the establishment of schedules.

It can readily be seen, therefore, that the job of the transit employee is a special one. These illustrative problems peculiar to the transit industry have resulted in the use of collective bargaining in order that such problems may be solved in an equitable, orderly, and efficient manner.

Nor can the process of wage determination in the transit industry be handled successfully except through collective bargaining. In the first place, in establishing wage rates for any dominant city transit system the wage rates must be compared with those paid employees in other comparable cities since there is only one dominant city transit system in a particular area. Collective bargaining has recognized in general in the transit industry that the employees in transit are entitled to keep in step with the progress of workers in the nation as a whole, in their own community, and in comparable transit systems elsewhere in the industry. These standards are not susceptible of simple arithmetical application. Nor is unilateral application of such standards by either public or private managements feasible or appropriate. These standards can only be applied fairly through collective bargaining conducted intelligently by experience negotiators who are familiar with the industry and its problems. When it comes to public operation, moreover, we do not write on a clean slate. A substantial number of our larger cities today operate publicly owned transit systems either directly or through an authority established for that purpose. Chicago, New York, Boston, Cleveland, Los Angeles, Detroit, San Francisco, and Seattle are among those which now operate transit systems. In nearly all of these cities collective bargaining and arbitration in some form or other have been accepted as the best method for resolving unsettled disputes. Perhaps the most successful of these procedures have been those used in Chicago and Boston. These cities took over public operation of their transit systems in 1947. There have been no transit strikes since they started public operations. Their problems have been resolved either in negotiations or in arbitration. They have recognized that when private operation becomes public operation the systems of collective bargaining and arbitration, developed during private operation, must be continued.

If the Committee is interested, we can make available the statutory and contractual provisions under which the procedures used in these cities have insured industrial peace and continuous transit operation.

Other more recently enacted provisions are those in the Pennsylvania and Rhode Island statutes, copies of the labor provisions of which we have reproduced and marked Exhibit No. 9.

Where public ownership or operation has not been accompanied by provisions for collective bargaining and arbitration, the results have been serious and unfortunate. As has been previously stated, labor relations problems in this complicated industry do not cease when the government takes over the transit system. If, however, collective bargaining and arbitration are not adopted, there is apt to be a transfer from the collective bargaining process to the area of political maneuvering. The New York Transit Authority is a good illustration. Proposals for changes in wages and working conditions in New York become