Procedures for Predetermination of Wage Rates; Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction and to Certain Nonconstruction Contracts

SUMMARY: This document is a proposal resulting from the reexamination

by the Wage and Hour Division, Employment Standards Administration,

U.S. Department of Labor (Wage and Hour) of regulations previously

issued to govern the employment of ``helpers'' on federally-financed

and assisted construction contracts subject to the prevailing wage

standards of the Davis-Bacon and Related Acts (DBRA).

Based on the Department's experience both prior to and during

implementation of the suspended regulations, and a reexamination of the

reasons and data underlying promulgation of the suspended helper

regulations, Wage and Hour proposes to amend the regulations to

incorporate its longstanding policy allowing use of helpers only where

their duties are clearly defined and distinct from journeymen and

laborer classifications in the area.

DATES: Comments are due June 8, 1999.

ADDRESSES: Submit written comments to John Fraser, Deputy

Administrator, Wage and Hour Division (ATTN: Government Contracts

Team), Employment Standards Administration, U.S. Department of Labor,

Room S-3020, 200 Constitution Avenue, N.W., Washington, DC 20210. Any

commenters desiring notification of receipt of comments should include

a self-addressed, stamped post card.

FOR FURTHER INFORMATION CONTACT: William W. Gross, Director, Office of

Wage Determinations, Wage and Hour Division, Employment Standards

Administration, U.S. Department of Labor, Room S-3028, 200 Constitution

Avenue, NW, Washington, DC 20210. Telephone (202) 692-0062. (This is

not a toll free number.)

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act

This rule does not contain any new information collection

requirements and does not modify any existing requirements. Thus, the

rule contains no reporting or recordkeeping requirements subject to the

Paperwork Reduction Act of 1995.

II. Background

The Department's longstanding practice regarding the issuance of

helper classifications, apart from the periods, as discussed below,

when the suspended ``helper'' regulations were implemented, has been to

allow the use of helpers on construction projects covered by the labor

standards provisions of the Davis-Bacon and Related Acts only where (1)

the duties of the helper are clearly defined and distinct from those of

the journeyman or laborer, (2) the use of such helpers is an

established prevailing practice in the area, and (3) the term

``helper'' is not synonymous with ``trainee'' in an informal training

program.

On May 28, 1982, Wage and Hour published revised final Regulations,

29 CFR Part 1, Procedures for Predetermination of Wage Rates, and 29

CFR Part 5, Subpart A--Davis-Bacon and Related Acts Provisions and

Procedures (47 FR 23644 and 23658, respectively), containing the

following four new provisions intended to allow contractors to expand

their use of helpers on Davis-Bacon covered projects at wages lower

than those paid to skilled journeyworkers:

A new definition of the term ``helper,'' allowing a

helper's duties to overlap with those of a journeylevel worker:

A helper is a semi-skilled worker (rather than a skilled journeyman

mechanic) who works under the direction of and assists a journeyman.

Under the journeyman's direction and supervision, the helper performs a

variety of duties to assist the journeyman such as preparing, carrying

and furnishing materials, tools, equipment, and supplies and

maintaining them in order; cleaning and preparing work areas; lifting,

positioning, and holding materials or tools; and other related, semi-

skilled tasks as directed by the journeyman. A helper may use tools of

the trade at and under the direction and supervision of the journeyman.

The particular duties performed by a helper vary according to area

practice. (29 CFR 5.2(n)(4), 47 FR 23667.)

A provision allowing a helper classification to be

included in the wage determination if it was an ``identifiable'' local

practice. 29 CFR 1.7(d), 47 FR 23655.

A provision limiting the number of helpers to two for

every three journeyworkers. 29 CFR 5.5(a)(4)(iv), 47 FR 23670.

A provision allowing the addition of helper

classifications on contracts containing wage determinations without

helper classifications. 29 CFR 5.5(a)(1)(ii)(A), 47 FR 23688.

These regulations were challenged in a lawsuit brought by the

Building and Construction Trades Department, AFL-CIO, and a number of

individual unions. On December 23, 1982, the U.S. District Court for

the District of Columbia held that the new helper regulations

conflicted with the Davis-Bacon Act and enjoined DOL from implementing

the regulations. See Building and Construction Trades Department, AFL-

CIO, et al. v. Donovan, et al., 553 F. Supp. 352 (D.D.C. 1982). The

court held that the regulations improperly defined the helper

classification in terms of the level of supervision instead of in the

traditional terms of the tasks performed. Id. at 355.

On appeal, the U.S. Court of Appeals for the District of Columbia

affirmed in part and reversed in part. Building and Construction Trades

Department, AFL-CIO, et al. v. Donovan, et al., 712 F.2d 611 (D.C. Cir.

1983), cert. denied, 464 U.S. 1069 (1983). The court upheld the

Department's authority to allow the increased use of helpers and

concluded that the Secretary's regulatory definition of a helper was

``not clearly unreasonable.'' Id. at 630. However, the court struck

down the regulation allowing for the issuance of a helper wage rate

where helpers were only ``identifiable.'' Id. at 624.

On remand, the district court lifted the injunction as it applied

to the helper definition, but maintained it as to the remaining helper

regulations. The district court added that the Secretary ``may,

however, submit to this Court reissued regulations governing the use of

helpers, and if these regulations conform to the decision of the Court

of Appeals, they will be approved.'' 102 CCH Labor Cases para.34,648,

p. 46,702 (D.D.C. 1984).

In accordance with the district court's order, DOL published in the

Federal Register (52 FR 31366, August 19, 1987) proposed revisions to

the helper regulations to add the requirement that helpers must prevail

in an area in order to be recognized. After analyzing the comments on

this proposal, the Department, on January 27, 1989, published a revised

final rule governing the use of semi-skilled helpers on

[[Page 17443]]

federal and federally assisted construction contracts subject to the

Davis-Bacon and Related Acts (54 FR 4234).

On September 24, 1990, the district court vacated its injunction,

and on December 4, 1990, Wage and Hour published a Federal Register

notice implementing the helper regulations, effective February 4, 1991

(55 FR 50148).

In April 1991, Congress passed the Dire Emergency Supplemental

Appropriations Act of 1991, Public Law 102-27 (105 Stat. 130), which

was signed into law on April 10, 1991. Section 303 of Public Law 102-27

(105 Stat. 152) prohibited the Department of Labor from spending any

funds to implement or administer the helper regulations as published,

or to implement or administer any other regulation that would have the

same or similar effect. In compliance with this directive, the

Department did not implement or administer the helper regulations for

the remainder of fiscal year 1991.

After fiscal year 1991 concluded and subsequent continuing

resolutions expired, a new appropriations act was passed which did not

include a ban restricting the implementation of the helper regulations.

On January 29, 1992, Wage and Hour issued All Agency Memorandum No.

161, instructing the contracting agencies to include the helper

contract clauses in contracts for which bids were solicited or

negotiations were concluded after that date. On April 21, 1992, the U.

S. Court of Appeals for the District of Columbia invalidated the

regulation that prescribed a ratio of two helpers for every three

journeyworkers as being without sufficient support in the record, but

upheld the remaining helper provisions. Building and Construction

Trades Department, AFL-CIO v. Martin, 961 F.2d 269 (D.C. Cir. 1992). To

comply with this ruling, on June 26, 1992, Wage and Hour issued a

Federal Register notice removing 29 CFR 5.5(a)(4)(iv) from the Code of

Federal Regulations. 57 FR 28776. Further advice regarding

implementation of the helper regulations in light of the lifting of the

appropriations ban and the court action was given in All Agency

Memorandum No. 163, dated June 22, 1992, and All Agency Memorandum No.

165, dated July 24, 1992.

Subsequently, Section 104 of the Department of Labor Appropriations

Act of 1994, Public Law 103-112, enacted on October 21, 1993,

prohibited the Department of Labor from expending funds to implement or

administer the helper regulations during fiscal year 1994.

Accordingly, on November 5, 1993, Wage and Hour published a Federal

Register notice (58 FR 58954) suspending the regulations governing the

use of semi-skilled helpers on DBRA-covered contracts, and reinstating

the Department's prior policy regarding the use of helpers. The

Department of Labor Appropriations Act for fiscal year 1995 again

barred the Department from expending funds with respect to the helper

regulations. Section 102, Public Law 103-333. That prohibition extended

into fiscal 1996 as a result of several continuing resolutions. There

was no such prohibition in the Department of Labor's Appropriations

Acts for fiscal 1996 and 1997, Public Law 104-134, enacted on April 26,

1996 and Public Law 104-208, enacted on September 30, 1996.

On August 2, 1996, Wage and Hour published in the Federal Register

(61 FR 40366) a proposal to continue to suspend the implementation of

the helper regulations while additional rulemaking procedures are

undertaken to determine whether further amendments should be made to

those regulations. On December 30, 1996, a final rule was published in

the Federal Register (61 FR 68641) continuing the suspension. Pursuant

to that final rule, the November 5, 1993 suspension of the helper

regulations continues in effect until Wage and Hour either (1) issues a

final rule amending (and superseding) the suspended helper regulations;

or (2) determines that no further rulemaking is appropriate, and issues

a final rule reinstating the suspended regulations.

By decision dated July 23, 1997, the U.S. District Court for the

District of Columbia upheld the Department's December 30 final rule

continuing the suspension of the helper regulations until the

completion of rulemaking proceedings. Associated Builders &

Contractors, Inc. v. Herman, C.A. No. 96-1490, 1997 WL 525268 (D.D.C.

July 23, 1997). The Associated Builders and Contractors had filed suit

challenging the Department's failure to immediately reinstate the rule

when the appropriations ban was lifted. The district court dismissed

the suit, ruling that any error in failing to act immediately to issue

a new effective date for the rule was mooted by the suspension

rulemaking completed in December. The court observed that the

Department was not required to ignore changed circumstances in the two-

and-a-half years since the rule was last implemented, and went on to

hold that the December rule was a valid rule, supported by the record,

and consistent with the requirements of the Davis-Bacon Act.

III. Discussion

During the period following the passage of the appropriations act

for fiscal year 1996, Wage and Hour has carefully considered whether

the suspended regulations governing the use of helpers should be

modified. Seventeen years have passed since Wage and Hour first

promulgated the regulations, and more than five years have passed since

the Department's last attempt to put a revised version of those

regulations in effect was curtailed by legislative action. The final

helpers rule, which first became effective on February 4, 1991, was

originally proposed and adopted because it was believed that it would

result in employment practices on federal construction projects that

more closely mirrored the private construction industry's practice of

using helpers, which was assumed to be widespread, and would at the

same time effect significant savings in federal construction costs. It

was also believed that the expanded helper definition would provide

additional job and training opportunities to unskilled workers, in

particular women and minorities.

Implementation of the suspended helper definition and development

of enforcement guidelines proved, however, to be more difficult than

was anticipated, particularly in light of the court-ordered abandonment

of the ratio provision.

Furthermore, the Department's experience with surveys conducted to

implement the regulation and information from the surveys, and other

data sources which were previously unavailable or not examined,

indicated that the use of helpers was not as widespread as previously

thought. Wage and Hour was also concerned about the possible negative

impact of the suspended regulation on formal apprenticeship and

training programs. These concerns, and the controversy evidenced by the

rule's long history of litigation and by Congressional action over the

1989 final rule, led Wage and Hour to reexamine the basis and effect of

the semi-skilled helper regulations.

As the Circuit Court of Appeals noted in its 1983 decision

upholding the Secretary's authority to adopt a new definition of

helper, it is within the Secretary's province to alter or overturn

administrative rulings upon reconsideration of relevant facts. See

Building and Construction Trades Department, AFL-CIO v. Donovan, 712

F.2d 611, 629 (D.C. Cir. 1983). The court

[[Page 17444]]

also made clear the authority of the Secretary to choose from among

various regulatory programs the one he or she believes will best serve

the purpose of the statute. As the Court of Appeals acknowledged, the

Secretary is especially entitled to deference when his or her

``decision turns on the enforceability of various regulatory schemes.''

Donovan, 712 F.2d at 629. An important factor to consider in making

that choice is whether a particular regulatory scheme is sufficiently

capable of practical and efficient administration and enforcement to

achieve the statutory goal.

Wage and Hour has preliminarily concluded, after a full review of

the suspended rule and all available information, that it is likely

that the suspended rule cannot be enforced effectively. Furthermore, a

key underpinning of the rule, that helper use is widespread, has been

seriously undermined by an examination of all available data sources.

Wage and Hour also believes that the suspended helper rule, if fully

implemented, could have a negative impact on apprenticeship and

training.

Wage and Hour therefore carefully considered a number of

alternative approaches, focusing particularly on consistency with the

purposes of the Act, enforceability, administrative feasibility, and

ease of compliance. Although not a primary consideration, Wage and Hour

also considered the potential impact of the various alternatives on

employment and training opportunities for unskilled workers, including

women and minorities. A necessary consideration was also consistency

with the Department's ``reinvention'' efforts to revise and improve the

Davis-Bacon wage determination process.1

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\1\ Wage and Hour is currently considering two potentially

viable options:

(1) Through procedural changes and the application of

technology, reengineer the current wage survey system to make it

more efficient and to produce more accurate and timely wage

determinations.

(2) Use redesigned and expanded BLS survey instruments--the

Occupational Employment Statistics (OES) Survey and the National

Compensation Survey (NCS, formerly known as ``Comp 2000''), when

these are available, and modified as may be needed--for Davis-Bacon

prevailing wage/fringe benefits determination purposes. (The OES

survey would use government-wide Standard Occupational

Classification (SOC) definitions, which are currently undergoing

review. See 60 FR 10998 (February 28, 1995), 60 FR 52284 (October 5,

1995), and 62 FR 36338 (July 7, 1997).)

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After a thorough review, Wage and Hour has preliminarily concluded

that the current, longstanding practice of recognizing helpers only

where they are a separate and distinct class with clearly defined

duties is the sole alternative considered that is both capable of

effective enforcement and administration, and at the same time fully

consistent with the purposes of the Act.

Comments are invited on the regulation proposed, as well as the

other alternatives considered, including the Department's analysis and

conclusions thereon.

Problems With the Suspended Helper Definition

1. The Suspended Helper Definition Would Be Difficult To Administer and

Enforce

Wage and Hour has preliminarily concluded that the suspended

regulation poses significant administrative difficulties, and cannot be

effectively enforced in a manner consistent with the goals of the

statute. The Department's experience in trying to develop enforcement

guidelines to implement the helper regulations during the period they

were in effect (from February 4, 1991 to April 10, 1991, and from

January 29, 1992 to October 21, 1993) has led Wage and Hour to conclude

that a supervisory-based, semi-skilled helper definition would be

difficult to administer and enforce consistent with the purpose of the

statute, namely to identify and preserve the locally prevailing wage

for construction job classifications.

The suspended regulation defines a helper, not by the traditional

test of the specific tasks performed by the worker, but as ``a semi-

skilled worker'' who ``may use tools of the trade at and under the

direction and supervision of the journeyman.'' The suspended helper

definition is the first and only instance of determining a Davis-Bacon

classification solely on the basis of the worker's skill level and

work-site supervision. Furthermore, the definition is internally

inconsistent in that the examples given of the types of assistance the

helper might provide to a journeyworker are not semi-skilled but rather

are largely unskilled duties commonly performed by

laborers.2 Thus, the suspended definition specifically

allows extensive overlap with duties performed by both journeylevel

craft workers and laborers, instead of providing an objective means for

distinguishing between helpers and other classifications.

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\2\ E.g., ``preparing, carrying and furnishing materials, tools,

equipment, and supplies and maintaining them in order; cleaning and

preparing work areas; lifting, positioning, and holding materials or

tools. * * *'' 47 FR 23667.

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During the period the suspended regulation was in effect, Wage and

Hour tried to develop enforcement guidelines to implement the

regulation. A fundamental problem that emerged was how to make a

meaningful distinction between semi-skilled and skilled workers under

the suspended definition. Wage and Hour has traditionally identified

and differentiated among job classifications on the basis of the tasks

performed by each classification. Among the issues Wage and Hour

struggled with in trying to develop enforcement guidelines were: (1)

What it means to be semi-skilled; (2) how to identify the line between

a semi-skilled and skilled journeyworkers; (3) whether at some point a

semi-skilled helper could acquire sufficient skills to qualify as a

skilled worker, and how to determine when that had occurred; (4)

whether a skilled worker could accept a position as a semi-skilled

helper--and therefore be paid the lower helper wage rate--without

violating the regulation or the intent of the Act; and (5) whether

hiring as a semi-skilled helper a skilled worker who failed to disclose

his skill level would violate the regulation or the Act.

The supervision aspect of the suspended helper definition likewise

provides little assistance in distinguishing a helper from other

classifications of workers. The definition states that a `` `helper' *

* * works under the direction of and assists a journeyman. Under the

journeyman's direction and supervision, the helper performs a variety

of duties to assist the journeyman * * *.'' Supervision by a

journeyworker is not a practical standard for distinguishing semi-

skilled helpers from others on the worksite, as even laborers and

journeylevel construction workers may work under the ``direction and

supervision'' of other journeyworkers. The definition does not indicate

the nature or amount of direction and supervision that helpers must

receive to distinguish them from others on the worksite. The definition

similarly provides little meaningful guidance for distinguishing

between a ``semi-skilled helper'' who uses the tools of the trade, and

a journeyworker with little experience, thus increasing the instances

in which journeyworkers may be misclassified as helpers.

In addition, the definition's allowance of significant overlap

between the duties of helpers and those of laborers increases the

difficulty of identifying helpers as a distinct classification.

Although the definition states that a helper must be ``semi-skilled,''

the unskilled tasks listed in the definition as examples of a helper's

duties are

[[Page 17445]]

commonly performed by unskilled laborers. Thus, it would be difficult

to distinguish between a laborer and a helper when a worker is

performing only unskilled work. It may theoretically be possible for a

helper under this definition to be distinguished from a laborer if the

helper directly assists a particular class of journeyworker(s) and uses

the tools of the trade. However, based on a further review of the

duties of laborers who assist craft workers, together with the

Department's experience in conducting conformance surveys during the

brief period the suspended regulation was in effect, and the low wages

paid helpers in the Current Population Survey (CPS), Wage and Hour now

believes--contrary to its earlier assumptions--that many laborers also

assist journeylevel workers and that laborers sometimes use tools of

the trade to perform certain limited duties (e.g., demolition/removal

of materials, building of scaffolding or forms). The overlap of duties

therefore increases the likelihood that helpers will displace laborers,

or that laborers will be misclassified as helpers. For example, a

laborer working under the supervision of a journeyworker could be

classified as a lower-paid ``helper'' simply by adding to his or her

duties a few relatively low-skilled tasks.3

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\3\ As set forth in the economic impact analysis set forth

herein, the Current Population Survey (CPS) indicates that average

earnings for helpers are less than the average earnings received by

laborers.

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Wage and Hour recognized the subjectivity of the suspended

definition when it first proposed the helper regulations in 1981, and

sought ``to protect against possible abuse'' by proposing to establish

a maximum ratio of helpers to journeyworkers. Wage and Hour originally

proposed a 1:5 ratio, then settled on a ratio of 2 helpers for every 3

journeyworkers in the final regulation. (46 FR 41456, August 14, 1981;

47 FR 23658, May 28, 1982). While not a guarantee against

misclassification in any particular case, the ratio would at least have

decreased the likelihood of widespread misclassification between

journeyworkers and helpers and provided one objective measure for

compliance and enforcement. As the Court stated in its 1983 decision,

the ratio ``increased the likelihood that gross violations will be

caught, or at least that evasion will not get too far out of line.''

712 F.2d. at 630. In rejecting the 2:3 ratio in its 1992 decision on

the ground that the rulemaking record lacked adequate support for that

particular numeric ratio, the Court of Appeals deprived Wage and Hour

of the mechanism designed to mitigate the possibility of abuse.

What remains is a vague standard that Wage and Hour has

preliminarily concluded is not amenable to effective enforcement. Thus,

Wage and Hour believes that the suspended regulation does not define

helpers in a manner sufficient to differentiate readily between semi-

skilled helpers and journeyworkers or laborers, as a practical matter,

in day-to-day compliance and enforcement. Contractors would likely find

it difficult to apply the regulation in classifying their workers and

could find themselves unwittingly in violation of prevailing wage

requirements due to misclassification. It would also be difficult to

prevent unscrupulous contractors from taking advantage of the

uncertainties created by the definition by intentionally misclassifying

large numbers of workers.

The definitional problems discussed above are compounded by

evidence that the term ``helper'' has multiple, quite different

meanings within the construction industry. A review of comments

received in response to the Department's rulemaking proposal to

continue the suspension of the helper rule (61 FR 40366) disclosed that

some contractors use the term ``helper'' to refer to skilled workers

who are less experienced, i.e., those who use tools of a trade to

perform some tasks, but have not been trained in the full range of

journeylevel work. Others use the term to refer to workers who perform

unskilled laborer duties that are related to the work of skilled

journeyworkers, as a short-term entry level job, or as a longer-term

specialized worker to perform a limited range of work duties that

somewhat overlaps those of the craft journeylevel worker. Still others

use the term helper to refer to employees with little or no experience

in the construction industry, i.e., untrained entry level workers. Wage

and Hour believes that these variations in the use of the term helper

may exist in any given local area where use of helper classifications

is prevalent. Direct assistance to, or supervision by, a

journeyworker--the central component of the suspended regulatory

definition--does not appear to be an important consideration for

commenters in distinguishing helpers from other workers. Thus, it

appears that the suspended definition, and perhaps any regulatory

definition of helpers, does not adequately reflect the actual and

varied practice in the construction industry as a whole or even in any

particular area. However, Wage and Hour is interested in obtaining

further evidence regarding how helpers are in fact used by contractors,

particularly any data regarding whether there is in fact a generally

recognized definition of helpers that is capable of being objectively

identified.

Wage and Hour also believes it would be difficult for it to conduct

a meaningful wage determination process concerning helpers in light of

the likelihood that contractors responding to area wage surveys would

ascribe very different meanings to the term ``helpers.'' Thus, contrary

to basic principles of the Davis-Bacon Act, it is assumed that workers

who perform quite different work would likely be grouped together for

purposes of determining prevailing wage rates for a single class of

``helpers'' within a given area. Moreover, Wage and Hour believes that

some contractors may report workers as helpers, whereas other

contractors might report the same type of worker as a laborer or craft

journeyworker. Such data would not provide a meaningful basis for

determining prevailing wage rates for the affected classifications, as

required by the statute.

2. Helpers Are Less Widespread Than Previously Believed.

The belief that a distinct class known as ``helpers'' was in

widespread use in the construction industry was a key assumption

underlying the Department's development of the helper regulation.

Indeed, in the preamble to the proposed rule published in 1987, the

Secretary projected that helpers would be determined to be prevailing

in two-thirds to 100% of all craft classifications. 52 FR 31366, 31369-

370 (August 19, 1987).4 The Department's actual experience

with the helper regulation reflects a different picture.

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\4\ This was amended by the statement (without quantification)

in the final rule that this would be reduced somewhat to the extent

that collectively bargained rates were recognized as prevailing and

did not provide for use of a helper classification. 54 FR 4242.

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During implementation of the suspended regulations, Wage and Hour

collected data and determined whether helpers prevailed in various

areas, in accord with the Court's ruling and the requirements of the

now-suspended rule. Thus, implementation of the suspended regulations,

albeit brief, did provide some data and insight into whether the use of

helpers is, in fact, widespread in the construction industry.

The data Wage and Hour received in implementing the regulations

failed to substantiate the prior assumption that the use of helpers is

widespread.

[[Page 17446]]

Whether analyzed by individual classifications covered or by surveys

completed (each of which would include various classifications), the

survey data showed a substantially lower rate of helper use than was

anticipated. For example, a review of the wage schedules issued based

on the 78 prevailing wage surveys completed during the period the rule

was in effect,5 revealed that the use of helpers prevailed

with respect to only 69, or 3.9 percent, of the 1763 classifications

included in wage schedules. Of the 69 classifications in which helpers

prevailed, only 48, or 2.7 percent of the 1763 classifications, were in

the non-union sector.6 This is particularly noteworthy

because it had been assumed in the past that helpers would almost

always be found to prevail for classifications in the non-union sector.

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\5\ Not included in the 69 helper classifications are instances

where the number of helpers actually used or the number of

contractors using helpers was not enough to provide an adequate

basis for determining a prevailing wage rate. (Wage and Hour

procedures at the time these surveys were conducted required that

there be at least 6 workers employed by at least 3 employers if the

contractor-response rate to the survey was less than 50 percent, and

at least 3 workers employed by at least 2 employers if the response

rate was 50 percent or more.)

\6\ Fifteen of the 21 union-sector helpers classifications were

elevator constructor helpers--a classification historically

recognized nationwide in the union sector of the constructor trade.

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Furthermore, use of helpers was not prevailing in any

classifications in 43 of the 78 surveys conducted, covering 229 of 328

counties surveyed. The 78 surveys included two in which the resulting

wage schedules contained only collectively bargained rates, ten surveys

in which the schedules contained only open shop rates, and 66 mixed

schedules, 51 of which contained 50 percent or more open shop rates. In

13 of the 35 surveys where a helper classification was issued, the only

helper classification found to prevail was a union helper. A total of

only 48 open shop helper classifications were found to prevail. Thus,

in only 20 of the 78 surveys conducted, covering only 52 of 328

counties surveyed, were any open shop helper classifications found to

prevail. See 61 FR 68644-68645.

The conclusion that helpers are less widespread than had been

expected is also supported by the Economic Impact and Flexibility

Analysis. The 1996 Current Population Survey (CPS), compiled and

published by the Bureau of Labor Statistics (BLS) and the Bureau of the

Census, which Wage and Hour believes is most likely to be

representative of the distribution of employment of helpers in the

construction industry, shows that helpers account for only 1.2 percent

of total construction industry employment. Data from the Occupational

Employment Statistics (``OES'') program, which formed the basis for

earlier analyses of helper employment, shows that helpers comprise 8.7

percent of the total construction workforce--higher than the CPS data

but a much lower incidence than the Department's economic impact

analysis in 1987 and 1989 would suggest. Furthermore, as is discussed

more fully in the Economic Impact Analysis, infra, the OES figure is

based on a helper definition that appears to correspond to what is

commonly considered to be laborers' or tenders' work and does not

appear to envision that helpers use tools of the trade--an important

component of the definition in the suspended regulation. For this

reason Wage and Hour believes that the OES figure significantly

overstates the use of helpers in the construction industry.7

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\7\ As discussed in the Impact Analysis, there are strengths and

weaknesses to both the CPS and the OES data sources. For example,

CPS is a household survey and it may be that a carpenter's helper

would self-report his or her duties and occupation as a carpenter.

The Impact Analysis also contains an alternative estimate of the

number of helpers, utilizing the percentage of laborers in the CPS

workforce to adjust the OES data. Under that methodology, described

further in the Impact Analysis, helpers constitute 3.4% of the total

construction workforce.

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3. The Suspended Regulation Could Have a Negative Impact on Formal

Apprenticeship and Training Programs

Wage and Hour has long been of the view that formal structured

training programs are more effective than informal on-the-job training

alone. Workers enrolled in formal apprenticeship training programs are

more likely to achieve journeylevel status, and to do so more quickly,

than workers trained informally, who may become stuck in low-paying

jobs. Apprenticeship programs are also more likely to produce better

skilled, more productive and safety-conscious workers.8

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\8\ Indicative of the lesser efficacy of informal training is

the report issued by the Business Roundtable, which found that more

than 60 percent of its member respondents said they could not find

adequate numbers of skilled workers, and 75 percent said the trend

had accelerated in the past ten years. 203 Daily Labor Report (DLR)

A-9 (Oct. 21, 1997). The report associated the problem with the

``lack of a unified approach to training nonunion trades workers,''

which surfaced 14 years ago, and ``the lack of a consistent delivery

method and commitment to training by other than a small minority of

major contractors.'' Significantly, the Bureau of Apprenticeship and

Training reports almost three times as many union as non-union

apprentices (77,163 union apprentices, compared to 28,542 non-union

apprentices, out of data reported for 36 states (14 states and the

of Columbia do not maintain data byP union affiliation)).

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Although not its primary concern in this rulemaking, Wage and Hour

is concerned about the potential impact of the suspended regulations on

formal apprenticeship and training programs. An acknowledged goal of

Wage and Hour when it proposed the suspended helpers definition was to

encourage training for unskilled and semi-skilled workers, including in

particular, women and minorities,9 (47 FR 23647 (May 28,

1982)) and to that end Wage and Hour encourages formal training and

work advancement to assure that workers--particularly young, minority,

and female workers--are not frozen into low paying, low skilled jobs.

Because the Department's experience suggests that some contractors may

establish apprenticeship programs to take advantage of the lower wages

which can be paid apprentices and trainees on Davis-Bacon

projects,10 Wage and Hour believes that the suspended helper

regulations could undermine effective training in the industry if

contractors use helpers, who may never become journeylevel workers, in

lieu of apprentices and trainees participating in formal programs.

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\9\ Wage and Hour has no data to support or refute the

proposition that employment of helpers leads to an increase in

minority and female skilled employment in the non-union sector.

\10\ Effective training for targeted under-represented or

economically disadvantaged workers who are not qualified for

apprenticeship programs can be designed under the existing

regulations. For example, the Step-Up Program developed by the

Department of Housing and Urban Development (HUD) provides

disadvantaged workers with training necessary for them to move on to

other more skilled jobs or into a formal apprenticeship program.

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The Proposed Rule--Helpers as a Separate and Distinct Class with

Clearly Defined Duties Which Do Not Overlap With Laborer or Journeyman

Classifications

Wage and Hour proposes to amend the regulations to reflect the

longstanding policy of recognizing helpers as a distinct classification

on DBRA-covered work only where Wage and Hour determines that (1) the

duties of the helpers are not performed by other classifications in a

given area, i.e., the duties of the helper are clearly defined and

distinct from those of the journeyworker and laborer; 11 (2)

the use of such helpers is an established prevailing practice in the

area; and (3) the term ``helper'' is not synonymous

[[Page 17447]]

with ``trainee'' in an informal training program.12

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\11\ For example, roofing subcontractors, like other specialty

subcontractors, often do not hire laborers, and might employ helpers

to perform duties such as bringing materials to the roof and

removing the old roof.

\12\ Where Wage and Hour has determined that this standard is

met, the helper classification will be listed on the wage

determination. Where no helper is listed on the wage determination,

a contractor who believes that use of a helper classification

meeting the criteria is prevailing in the locality may request an

additional classification in accordance with 29 CFR 5.5(a)(1)(ii).

Like other classifications, the particular duties such a helper may

perform are determined by area practice.

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This approach retains the duties-based classification distinction

that provides an objective basis for administration and enforcement. It

provides clear criteria to facilitate compliance. It is also consistent

with the intent of the Davis-Bacon Act to assure that workers employed

on federal and federally-assisted construction work be paid at least

the wages paid to workers doing similar work on similar construction in

the area. Lack of overlapping duties should also discourage contractor

misclassification and/or abuse. This approach also encourages

contractors to establish or participate in structured training programs

leading to journeylevel status if they want to pay subminimum rates to

entry-level or less skilled workers.

Unlike some of the other alternatives considered, this policy

concerning helpers does not require Wage and Hour to make a fact-bound

inquiry in each case to assess a worker's skill level and the nature of

work-site supervision to determine whether the worker will be

recognized as a ``helper'' for Davis-Bacon prevailing wage compliance

and enforcement purposes. The requirement that helpers be separate and

distinct from journeylevel workers and laborers should also facilitate

collection of wage data to establish the prevailing wage rates to be

paid on DBRA-covered construction work.

Although this proposal could be said to disregard local area

practices in those instances where there may be a prevailing practice

of employing ``helpers'' who do not meet the regulatory test set forth

above, it appears that there is wide variation in how helpers are used,

such that change in practices by contractors would be likely under any

definition. Wage and Hour has been unable to identify a generally

accepted definition of helper that corresponds to industry practices.

Similarly, Wage and Hour has been unable to find a practical method of

determining prevailing practice regarding how helpers are in fact

utilized in an area.

Discussion of Other Alternatives Considered

1. Add a Ratio Requirement to the Suspended Helper Definition

Wage and Hour recognized that the broad scope of the helper rule's

definition created the potential for abuse when it originally proposed

to amend the regulations to allow the expanded use of helpers. The rule

as proposed in 1981, as well as subsequent modifications, sought ``to

protect against possible abuse'' by establishing a maximum ratio of

helpers to journeyworkers. In 1992, the Court of Appeals ruling

nullified the ratio of two helpers to every three journeyworkers

because that specific numeric ratio had not been justified in the

rulemaking record. As noted in the foregoing discussion, the inherent

definitional problems regarding the suspended ``helper'' rule were

compounded by elimination of the ratio provision, which was intended to

ameliorate the possible overuse of helpers.

Since the Court of Appeals ruling does not prevent Wage and Hour

from implementing a ratio, provided it has support in the rulemaking

record, implementation of a new ratio was the first alternative

considered. Implementation of a ratio provision would be essential if

the suspended rule were implemented, since it would reduce the

potential for abuse. However, adoption of such a provision would not

address or resolve the inherent definitional problems discussed above,

which make it extremely difficult under the suspended rule for

contractors, as well as Wage and Hour and contracting agencies, to

identify helpers for Davis-Bacon enforcement and wage determination

purposes.

Furthermore, determination of an appropriate ratio standard --

either a single nationwide ratio or local ratios--would be difficult.

While a nationwide ratio would not accord with local practices, local

ratios would present significant administrative and enforcement

concerns, and would require substantial resources for implementation.

2. Change the ``Helper'' Definition To Emphasize the Semi-Skilled

Nature of the Classification

The intention of Wage and Hour in promulgating the suspended rule

was to allow the expanded employment on Davis-Bacon covered projects of

helpers who are ``semi-skilled,'' in other words, they perform some

journeylevel duties, but not the entire range of journeylevel work.

This attempt to define helpers as similar to but less skilled than a

journeyworker resulted in a helper definition that is internally

inconsistent, since the specific tasks listed as within the scope of a

helper's duties are commonly performed by unskilled workers. Wage and

Hour therefore considered possible modifications to the helper

definition to emphasize the semi-skilled nature of helpers, elaborate

on the supervisory relationship of the journeyworkers with the helper

and the craft-specific assistance provided, and expressly limit the

unskilled work the helper may perform.

This approach to the definition would help assure that the

``helper'' classification would be a true ``semi-skilled''

classification rather than a broad catch-all classification that can

perform everything from laborer duties to an undefined assortment of

skilled tasks overlapping the work of the journeyworkers. Such a

definition would therefore aid in distinguishing helpers from laborers.

However, this alternative would not resolve the administrative and

enforcement problems that stem from the overlap of duties between

journeyworkers and helpers. Furthermore, Wage and Hour is concerned

that this type of definition, with its emphasis on semi-skilled duties,

may result in helper classifications being used to replace, rather than

supplement, the use of apprentices and trainees registered in bona fide

training programs.

3. Define ``Helpers'' Based on the Bureau of Labor Statistics,

Occupational Employment Statistics (OES) Dictionary of Occupations,

Which Focuses on Unskilled Duties and the Worker's Interaction With

Journeylevel Craft Workers

The Bureau of Labor Statistics Occupational Employment Statistics

(OES) Dictionary of Occupations classification scheme includes a broad

category titled ``Helpers, Laborers, and Material Movers, Hand,

Exclud[ing] Agriculture and Forestry Laborers.'' The work of helpers so

defined in the construction industry is currently described generally

as follows:

Help workers in the construction trades, such as Bricklayers,

Carpenters, Electricians, Painters, Plumbers and Surveyors. Perform

duties such as furnishing tools, materials and supplies to other

workers; cleaning work areas, machines, and tools; and holding

materials or tools for other workers.

Use of this approach would provide for definitional consistency

with other uses of the OES data and would take advantage of a standard

definition that could be easily followed and understood by contractors

from whom data is collected for various purposes,

[[Page 17448]]

including Davis-Bacon prevailing wage surveys. The OES definitions

would focus on the role of the helper in assisting the journeyworker,

in accord with the Department's intention that such a role be a key

component of any definition selected.

These definitions, which would eliminate the ``semi-skilled''

characterization from the definition and highlight unskilled duties,

could provide a more practical basis for distinguishing helpers from

journeyworkers. On the other hand, laborers may often perform the same

work encompassed within the OES helper definition, thereby raising

significant problems in conducting wage and area practice surveys and

in enforcement. It may be difficult for contractors to determine

whether workers performing similar or identical duties are ``laborers''

or ``helpers'' when submitting Davis-Bacon survey data and in

classifying workers on Davis-Bacon projects. In turn, Wage and Hour

believes it would likely be difficult for it to determine whether

contractors have properly classified workers paid as helpers as

distinguished from laborers on Davis-Bacon projects, and therefore

whether contractors have submitted accurate wage data in regard to

helpers.

4. Explicitly Delineate the Semi-Skilled Tasks Performed by Each Helper

Classification

The ``job family'' concept is currently employed for certain

occupations under the McNamara-O'Hara Service Contract Act. An employee

who performs only lower level duties that are associated with a

particular job family may be classified and paid at the lower level

helper rate; however, an employee who performs some lower level duties

and some higher level duties must be paid the higher level journeylevel

rate for all of the employee's work time.

In effect, this approach would allow for the expanded use of

helpers, with differentiation based on the skill and knowledge required

to perform particular duties. Once the duties or tasks that the helpers

could perform were clearly defined, wage data could be collected on

that basis, and contractors could reasonably be expected to comply with

the wage requirements for the various classifications employed on their

contracts, thereby facilitating administration and enforcement.

However, developing clear definitions of the duties or tasks that

helpers to each journeylevel craft worker would be allowed to perform

would be very difficult. It would require extensive occupational

analyses and further rulemaking to promulgate helpers duties

descriptions. Furthermore, this alternative--like other alternatives

considered--presumably would result in uniform, nationwide definitions,

departing from the principle that classifications are determined based

on local area practice.

IV. Executive Order 12866; Sec. 202 of the Unfunded Mandates Reform

Act of 1995; Small Business Regulatory Enforcement Fairness Act

Wage and Hour has determined that this proposed rule should be

treated as ``economically significant'' within the meaning of Executive

Order 12866 and as a major rule within the meaning of the Small

Business Regulatory Enforcement Fairness Act. This proposed rule would

continue the status quo which has been in effect since November 1993,

and therefore it would have no economic impact compared to current

practices. However, various alternatives considered would result in

potential savings which could be in excess of $100 million per year.

Therefore a full economic impact analysis has been prepared.

However, for purposes of the Unfunded Mandates Reform Act of 1995,

this rule does not include any federal mandate that may result in

increased annual expenditures in excess of $100 million by state, local

and tribal governments in the aggregate, or by the private sector. The

requirements of the Unfunded Mandates Reform Act, 2 U.S.C. 1532, do not

apply here because the proposed rule does not include a ``Federal

mandate.'' The term ``Federal mandate'' is defined to include either a

``Federal intergovernmental mandate'' or a ``Federal private sector

mandate.'' 2 U.S.C. 658(6). Except in limited circumstances not

applicable here, those terms do not include an enforceable duty which

is ``a condition of Federal assistance'' or ``a duty arising from

participation in a voluntary program.'' 2 U.S.C. 658(5)(A)(I) and

(7)(A). A decision by contractors to bid on Federal or Federally-

assisted construction contracts is purely voluntary in nature, and

their duty to meet Davis-Bacon requirements are ``conditions of Federal

assistance'' which arise ``from participation in a voluntary Federal

program.''

Similarly, the proposed rule is not an ``unfunded mandate'' within

the meaning of Executive Order 12875 since it does not create any

unfunded mandate not currently required by the Davis-Bacon and Related

Acts and regulations thereunder. Furthermore, most of the funds

necessary to pay the direct costs incurred by State, local and tribal

governments under projects subject to the Davis-Bacon and related Acts

are provided by the Federal Government.13 Thus, any

additional savings to States if the proposed rule increased use of

helpers allowed on Davis-Bacon projects would not be significant.

---------------------------------------------------------------------------

\13\ It is significant that no such entities commented on the

proposed rule published in August 1996.

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V. Economic Impact and Flexibility Analysis on Davis-Bacon Helper

Regulations

Summary

This document presents an Economic Impact Analysis comparing the

proposed rule governing the use of helpers under the Davis-Bacon and

Related Acts to the suspended rule. The basic process utilized to

estimate the potential savings impact of the suspended regulation is to

compare the occupational distribution of workers with, and without

helpers. The alternative occupational employment patterns are then

assessed in terms of their costs, based upon the annual earnings of the

workers in the occupations affected by the suspended regulation:

journeyworkers, apprentices, laborers, and helpers. The total wage bill

with the suspended regulation in force is then subtracted from the wage

bill estimated without the regulation. The difference, then, is the

estimated savings.

The principal finding of the analysis is that any impact which

would result from the increased use of helpers under the suspended

rule, or any of the other alternatives considered, would be relatively

modest. Potential savings are estimated to be from $72.8 million

(utilizing Current Population Survey--CPS data) to $296.0 million

(utilizing Occupational Employment Statistics--OES data). A methodology

that is OES-based, but utilizes CPS data to estimate the number of

laborers and helpers in the OES, provides an estimate of $108.6 million

in possible savings. This alternative OES estimate was developed to

compensate for the likelihood that OES data overestimate the number of

helpers.14 In any case, for reasons discussed below, Wage

and Hour believes that the potential savings are likely to be closer to

$72.8 million than to $296.0 million.

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\14\ As explained in detail below, OES has no distinct

classification for laborer. This characteristic of the OES program,

in combination with the helper OES definition that includes workers

who would normally be classified as construction laborers, inflates

the OES helper total.

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Relative to total construction expenditures covered by the Davis-

[[Page 17449]]

Bacon and Related Acts, these potential cost savings are very small,

ranging from 0.2 percent to 1.0 percent. As discussed below, the

estimated savings are far less than previously believed. For the most

part, changes in the savings potential resulted from the use of

improved data, including information derived from experience

administering the suspended regulations, which temporarily expanded the

use of helpers.

A. Introduction

Over the years, Wage and Hour has prepared and updated regulatory

impact and flexibility analyses in connection with proposed and final

regulations governing the use of semi-skilled helpers under the Davis-

Bacon and Related Acts. Specifically, cost savings derived from the

increased use of helpers were estimated in the August 14, 1981 proposed

rule (46 FR 41456); the May 28, 1982 final rule (47 FR 23644); the

August 19, 1987 proposed rule (52 FR 31366); and the January 27, 1989

final rule (54 FR 4234). Wage and Hour is now updating its cost

estimates in connection with the proposed rule being published today,

as set forth above.

This latest economic impact analysis has the advantage of utilizing

information not previously available. For example, for the first time,

survey data are available from a limited period when the regulations

expanding the use of helpers were actually being implemented. Other

data sources, utilized for the first time in such an analysis, include:

Estimates of apprentice employment, based upon information

provided by the Bureau of Apprenticeship and Training (BAT) from its

Apprentice Information System (AIMS).

F.W. Dodge construction reports.

Detailed published occupational information and

unpublished Bureau of Labor Statistics (BLS) tabulations from the

Current Population Survey (CPS).

National Occupational Employment Statistics (OES) Program

data.

B. Assumptions and Data Sources

1. Assumptions

a. There is a strong positive correlation between the value of

construction and the level of construction employment. This assumption

is derived from the fact that labor costs generally are considered to

constitute a significant proportion of total construction expenditures.

b. Under the suspended rule, helpers would replace laborers,

apprentices, and journeyworkers in proportion to the number of workers

in each of these occupations. The previous helper impact analysis

assumed that helpers would only replace journeyworkers, and measured

only the wage differentials from this replacement effect. This

exaggerated the estimates of possible cost savings from the expanded

use of helpers. Since wage rates generally reflect skill levels, the

relative closeness of average annual earnings for helpers, laborers,

and apprentices, compared to journeyworkers, strongly suggests that

this assumption was incorrect. These wage data suggested that helpers

(at $9,008 per year) are more likely to assume the duties of laborers

(at $15,907 per year) and apprentices (at $12,564 per year) than

journeyworkers (at $23,007 per year).15 In fact, had the

redistribution of employment been strictly in accordance with

occupational wages, savings estimates would have been reduced

significantly (see Estimating Process, Step 2).

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\15\ Source: 1996 BLS/CPS.

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The assumption that helpers would perform tasks previously

performed by laborers and apprentices, as well as journeyworkers, is

also based upon comments made by general contractors surveyed during

the processing of helper conformance requests during the period

February 1992 to October 1993. These comments indicated that the job

title ``laborer'' was often applied to those performing the work of a

``helper'' (as defined in the suspended regulations). In order to take

the middle ground for this analysis, it is assumed that when a helper

classification is added, the jobs which would be performed by helpers

were previously those of laborers, apprentices, and journeyworkers, in

the same proportion as their relative occupational employment.

c. Utilizing the decision rules specified in Section 1.7(d), 29 CFR

of the suspended regulations (see Section C, Part 2, Estimating

Process, Step 3, below), helpers would be likely to ``prevail'' for a

limited number of classes in areas that represent about half the

construction employment covered by the Davis-Bacon and Related Acts.

This estimate is based on the findings of prevailing wage surveys

conducted during the period from February 1992 to October 1993. This is

generally consistent with the small number of helpers relative to total

construction employment found in the CPS, OES, and adjusted OES

databases, only 1.3 percent, 8.7 percent, and 3.4 percent of

construction employment, respectively.16

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\16\ Based upon the results of the methodology utilized, if the

suspended regulations were in effect, the proportion of helpers to

total employment would increase from 1.3 to 1.4 percent (CPS), 8.7

to 9.2 percent (OES) and 3.4 to 3.5 percent (Adjusted OES, hereafter

``AdjOES'').

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d. The proportion of employment by occupation would be consistent

in all areas, and therefore the average national proportion of helpers,

apprentices, laborers, and journeyworkers would be the same in areas

where helpers prevail and where they do not. One could, of course,

contend that a proportion higher than the national average should be

used for helpers in the half of Davis-Bacon construction in which it is

assumed that some helpers would prevail. However, some helpers would

also be employed in the much larger group of classifications in which

helpers would not be determined to prevail. Furthermore, an analysis of

helper employment from Davis-Bacon surveys during the period when the

suspended Regulation was in effect, found that in areas where helpers

prevailed for one or more classifications, versus those where no

helpers prevailed, the percent helpers were of total employment was

almost identical (1.8 percent vs. 1.7 percent). Therefore, it is

reasonable to assume that, on average, the level of helpers employed in

areas where helpers prevail would be consistent with the level of

helper employment overall.

e. Approximately one-third of public, non-Federal construction

projects receive Federal assistance. This estimate is based upon the

extensive experience of the Office of Federal Contract Compliance

Programs (OFCCP) with F.W. Dodge data (which classifies public projects

into Federal and public non-Federal classifications) to select

construction sites for compliance inspections (only Federal and

Federally-assisted projects are inspected by OFCCP). However, since not

all types of Federal assistance trigger Davis-Bacon and Related Acts

coverage, recent prevailing wage surveys were used to determine the

average proportion of public, non-Federal construction covered by the

Davis-Bacon and Related Acts. Based upon a study of 34 prevailing wage

surveys, approximately 23 percent of the value of public non-Federal

construction is covered by Davis-Bacon.

f. Except for the specific requirements of Davis-Bacon, such as

those concerning helpers, primary characteristics of the labor force,

i.e., occupational distribution, work assignments, etc. under Davis-

Bacon are

[[Page 17450]]

comparable to those of the labor force not covered by prevailing wages.

2. Data Sources

Databases from which estimates were developed include:

The BAT AIMS Reporting System (number of apprentices).

The BLS/Bureau of the Census CPS (total construction

industry employment, distribution of employment by selected occupation,

and total annual earnings by occupation).

The BLS OES Program (total construction industry

employment and distribution of employment for selected occupational

combinations).

F.W. Dodge Construction Reports (construction value by

ownership).

Wage and Hour Division Regional Survey Planning Reports

(RSPR) (public construction value by wage determinations reflecting

union, open shop, and mixed wage rates).

Information gained through conduct of Wage and Hour

Division wage surveys.

There are significant differences in the CPS and OES data, some of

which are due to the way the data are collected. The CPS is a household

survey and relies on information provided by residents, whereas the OES

is an establishment survey, with data usually provided by employers'

personnel offices. The most apparent difference is in the total number

of construction workers. In the CPS survey, the total number is much

higher than in the OES, in part because the OES does not count the

self-employed. (See tables in Section C.1.b., below.)

Although they constitute the best available data on occupational

employment and wages in the construction industry, neither the CPS nor

the OES is ideal for the purpose of this analysis. In fact, there are a

number of differences between the two surveys that are of particular

importance to this analysis. Specifically, each has strengths and

weaknesses that impact the helper savings derived from database use.

For the purpose of estimating the impact of the proposed helper

regulation, the Current Population Survey has the following strengths:

The CPS survey includes those workers not covered by State

unemployment insurance--primarily self-employed workers. This latter

group is particularly important since the construction industry

includes a significant number of workers (e.g., painters, carpenters,

and plumbers) who are independent contractors, and therefore self-

employed. Davis-Bacon prevailing wage requirements extend to every

laborer and mechanic working on a covered project, regardless of

contractual relationship, including the self-employed (independent

contractors). Thus, the CPS number of construction workers,

particularly the skilled workers who are more likely to be self-

employed, reflects the universe of construction employment that is

relevant to this analysis.

The CPS provides separate employment totals for helper,

apprentice, laborer, and journeyworker classes, all of which are needed

to conduct this impact analysis.

The CPS provides annual average earnings for the above

classes. These data are also essential to estimating the impact of

implementing the suspended rule.

For purposes of this analysis, the CPS survey program also has the

following weaknesses:

CPS is a household survey, rather than an establishment

survey. In general, household surveys are likely to produce less

accurate and consistent wage and classification information than

establishment surveys. Self-reporting can result in some workers

exaggerating their level of responsibility or wages. For example, a

carpenter's helper may self-report his or her duties and occupation as

carpenter.17

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\17\ A 1973 comparison of CPS earnings reported by those

surveyed versus corresponding IRS records indicated that

exaggeration is minimal. See Herriot, Roger A., and Spiers, Emmet

F., ``Measuring the Impact on Income Statistics of Reporting

Differences between the Current Population Survey and Administrative

Sources,'' Unpublished, 1973.

---------------------------------------------------------------------------

The CPS data on annual earnings include wages earned

outside construction, although construction is the industry of longest

employment for each worker.

Apprentice data, other than four separately identified

classes, are combined with data for the associated journeyworkers. This

has the effect of inflating journeyworker employment totals and

lowering journeyworker wages.

CPS responses can be provided by the worker's spouse or

adult child if the worker is unavailable.

For the purpose of estimating potential savings, the OES Program

exhibits three particular strengths:

The OES Program utilizes standard occupational

definitions, describing those workers who should be reported in each.

Establishment (i.e., employer) personnel staff usually

provides the survey data requested. This, together with the standard

definitions, is likely to result in more accurate and consistent

assignment of occupational classes, and more accurate wage reporting

than that characteristic of surveys with self-reporting of workers,

such as the CPS.

The OES sample size (1.2 million employers) is larger than

the CPS sample size (50,000), with one-third of the 1.2 million

establishments surveyed each year. This large sample increases the

number of participating establishments and reduces sampling error.

Weaknesses of the OES survey program, for purposes of this

analysis, include:

The OES does not provide a specific employment total for

``laborer.'' Instead, laborers appear to be combined with craft

helpers, as well as in an OES occupational category titled ``All Other

Helpers, Laborers, and Material Movers, Hand.'' Since it is assumed

that some helpers would replace laborers under the suspended

regulation, separate laborers and helpers totals are required for

development of an accurate savings estimate.

The OES definitions of the various helper classifications

are very similar to unskilled laborers who provide assistance to

journeyworkers. (Helpers ``perform duties such as furnishing tools,

materials and supplies to other workers; cleaning work areas, machines,

and tools; and holding materials or tools for other workers.'') Thus,

the OES craft helper may often be an unskilled worker (and thus a

laborer) rather than the semi-skilled worker required in the suspended

regulation. As a result, laborer employment in the OES likely is, to a

great extent, included with helper employment, thereby overstating the

number of helpers.

The OES survey collects only hourly wage data and does not

collect annual hours worked data. At the same time, OES counts jobs

rather than employees. As a result, if one person holds a job at more

than one establishment, each one of those jobs will be counted,

providing a total that exceeds the number of employees. Since labor

costs are computed by multiplying the number of employees times annual

CPS wages, the OES jobs count acts to overestimate costs.

The OES excludes those who are self-employed (independent

contractors) and those not covered by State unemployment insurance,

thus significantly understating the total number of construction

workers and the number of construction workers in the Davis-Bacon

workforce.

All apprentice data are combined with the journeyworker

data, thus overstating the number of journeyworkers.

[[Page 17451]]

Based principally on the fact that at this time the OES does not

have a separate classification for laborer, together with the fact that

OES does not collect data on self-employed individuals, Wage and Hour

believes that the CPS data are more likely than the OES data to be

representative of the distribution of employment in construction by

occupation for helpers and laborers. However, given that neither

database is ideal for this purpose, and the fact that OES data are also

relevant, both CPS and OES will be used to develop a range of possible

savings estimates.

3. Measuring Helpers and Laborers

The major difficulty in developing an impact analysis to estimate

potential savings from the expanded use of Davis-Bacon helpers is the

dearth of data that reasonably represent the employment of helpers as

defined by the suspended regulations, and of laborers. As noted in the

Data Sources section, above, the Current Population Survey (CPS) does

have separate categories for helper and laborer. However, the survey

does not contain standard occupational definitions. Therefore, there

can be no assurance that the number of those reported as helpers truly

corresponds to the definition in the suspended regulation. For example,

it is believed that some helpers--defined by the regulation as semi-

skilled workers who may use tools of the trade--may actually be

reported in the CPS as journeyworkers. On the other hand, many laborers

may be reported as helpers.

Also, as noted above, although the Occupational Employment

Statistics (OES) program includes the use of standard occupational

definitions, it has no distinct category for laborers and the helper

definitions used in the survey are quite different than the definitions

in the suspended regulations. In fact, the OES helper definition likely

includes many laborers who primarily work with or assist

journeyworkers. Also, many of those reported as helpers under OES may

not be semi-skilled at all, but unskilled workers who perform ``duties

of lesser skill'' and do not have the knowledge and abilities necessary

to use tools of the trade. Therefore, Wage and Hour believes that the

OES employment totals for helpers likely include many laborers and

unskilled helpers.

Since the OES database has no distinct class for laborer, the

methodology to estimate potential savings using OES data requires

development of a methodology for separating laborers from helpers.

Therefore, OES classes were identified that by their terms appeared to

primarily include laborers. The classes selected for that purpose

included Helpers, Mechanic and Repairer; Helpers, Extractive Workers;

Freight, Stock, and Material Movers, Hand; Vehicle Washers and

Equipment Cleaners; and Other Helpers, Laborers, & Material Movers,

Hand. On the one hand, given these job titles, some workers other than

laborers would be included in these totals. On the other hand, the

total number of laborers derived from this process (262,310) is well

below what would be expected, leading one to believe that many laborers

are included in the OES craft helper employment totals.

Corroborating evidence that this approach to the OES data without

further adjustment overestimates the number of helpers, underestimates

the number of laborers, and therefore overestimates potential savings,

when utilized in a helpers impact analysis, may be found in both

Decennial Census and CPS data. The Decennial Census estimates 949,000

construction laborers (a ratio of 1 laborer for every 5 journeymen),

the CPS estimates 988,000 (1 laborer for every 4 journeymen), and OES

estimates just 262,310 (1 laborer for every 10

journeymen).18

---------------------------------------------------------------------------

\18\ Since the OES universe is 60.7 percent of the CPS universe,

one would expect the OES laborers total to be about 600,000.

---------------------------------------------------------------------------

One way to compensate for this likely undercount of laborers and

overestimate of helpers is to determine what percent laborers

constitute in the CPS universe, and apply that to the OES data. The

laborer category is chosen for this purpose because it is the least

likely to suffer from error due to the reporting workers exaggerating

their duties. In the CPS, the laborers constitute 18.8 percent of the

total for journeymen, apprentices, laborers, and helpers. Multiplying

that percent times the comparable OES total provides an adjusted number

of OES laborers. Subtracting the adjusted laborer total from the

laborer-helper combination (called helper) in OES yields an adjusted

number for helpers. While this figure (and therefore the potential

savings estimate) is probably an improvement over the unadjusted OES

helper total, one cannot be certain of problems that may have

inappropriately affected the resulting estimates, since two dissimilar

databases have been combined.19

---------------------------------------------------------------------------

\19\ As discussed below, it is also necessary to utilize CPS

wage data, thereby combining dissimilar data bases with attendant

problems.

---------------------------------------------------------------------------

In light of these problems, it is advised that the estimates

included in this impact analysis be considered with caution. All the

figures provided should be treated as very rough measures that provide

a general range within which possible savings could fall.

C. Key Data Elements, Estimating Process and Computations

1. Key Data Elements

a. Value of total construction starts, 1996:

Total: $321,736,705,000

Federally owned: $10,799,923,000

Public-Non-Fed: $87,122,347,000

b. Construction industry employment, and average annual earnings,

1996:

Table 1.--Construction Industry Employment and Average Total Earnings, Total and Selected Occupations, CPS

Database, 1996

----------------------------------------------------------------------------------------------------------------

Average total

Data source and occupation Total Percent of annual

employment * total earnings **

----------------------------------------------------------------------------------------------------------------

CPS.......................................................... 9,333,000 100.000 N.A.

Construction Trades, Except Supervisors and Apprentices ***.. 3,958,000 42.409 $23,007

Apprentices.................................................. 192,000 2.057 12,564

Helpers...................................................... 124,000 1.329 9,008

Laborers..................................................... 988,000 10.586 15,907

Other Occupations ****....................................... 4,071,000 43.619 N.A.

----------------------------------------------------------------------------------------------------------------

* CPS data include the incorporated self-employed.

** Total average annual earnings data are for workers who reported their longest job during the year to be in

the construction industry. The data are for 1996. Compensation for non-construction work by these workers is

included.

[[Page 17452]]

*** The CPS figure for four classes of apprentices is 48,000, while the BAT/AIMS total for all occupations is

192,000. For this purpose, the BAT apprentice figure was utilized, with the 144,000 ``additional'' apprentices

subtracted from the CPS construction trades total, based on the assumption that a number of apprentices self-

reported their occupation to be journeyworkers. AIMS data are generated as part of the national apprenticeship

program and represent active apprentices at the end of the year. Since several states do not report these

data, BAT staff estimated the U.S. total based upon the percent of construction employment represented by the

missing States.

**** Other occupations include Executive, Administrative, and Managerial positions; Technical, Sales, and

Administrative Support; etc., and others, such as those in Service occupations.

Table 2.--Construction Industry Employment and Average Total Earnings, Total and Selected Occupations, OES

Database, 1996

----------------------------------------------------------------------------------------------------------------

Total Percent of

Data source and occupation employment * total Average total annual earnings **

----------------------------------------------------------------------------------------------------------------

OES......................................... 5,666,150 100.000 N.A.

Construction Trades Except Supervisors and 2,064,900 36.443 N.A.

Apprentices ***.

Apprentices................................. 192,000 3.389 N.A.

Helpers ****................................ 495,600 8.747 N.A.

Laborers *****.............................. 262,310 4.629 N.A.

Other Occupations........................... 2,651,340 46.793 N.A.

----------------------------------------------------------------------------------------------------------------

* Excludes self-employed and those not covered by UI.

** Data on wages provided in hourly rates only.

*** Since all apprentices are combined with OES journeyworkers, the BAT apprentice total of 192,000 was

subtracted from the OES journeyworker total.

**** Likely includes significant numbers of unskilled helpers and laborers who primarily work with or assist

journeyworkers.

***** Figure taken from a catchall classification that includes ``All Other Helpers, Laborers, And Material

Movers, Hand,'' plus the OES classifications of Helpers, Mechanic and Repairer; Helpers, Extractive Workers;

Freight, Stock, and Material Movers, Hand; and Vehicle Washers and Equipment Cleaners.

Table 3.--Construction Industry Employment and Average Total Earnings, Total and Selected Occupations, Adjusted

OES Database, 1996

----------------------------------------------------------------------------------------------------------------

Total Percent of

Data source and occupation employment * total Average total annual earnings **

----------------------------------------------------------------------------------------------------------------

Adjusted OES................................ 5,666,150 100.000 N.A.

Construction Trades Except Supervisors and 2,064,900 36.443 N.A.

Apprentices ***.

Apprentices................................. 192,000 3.389 N.A.

Helpers ****................................ 191,126 3.373 N.A.

Laborers.................................... 566,784 10.003 N.A.

Other Occupations........................... 2,651,340 46.793 N.A.

----------------------------------------------------------------------------------------------------------------

* Excludes self-employed and those not covered by UI.

** Hourly rates only.

*** BAT figure subtracted from journeyworker total.

**** The OES reports a laborer/helper combination employment of 757,910 (Helpers, Laborers, & Material Movers,

Hand). To separate laborer from helper, the percent that CPS laborers (988,000) are of the CPS employment sum

(5,262,000) for journeyman, apprentices, laborers, and helpers (18.8 %) was multiplied by the comparable OES

employment total (3,014,810). That product (566,784) then was adopted as the OES laborer total, and subtracted

from the laborer/helper combination to yield the OES helper figure (191,126).

2. Estimating Process and Computations

A 5-step estimating process was developed and utilized to

approximate annual savings that might have been realized in 1996 from

the increased use of helpers, if the suspended regulations had been

implemented:

Step 1: Davis-Bacon Employment. Determine the value of construction

covered by the Davis-Bacon and Related Acts. This is achieved by adding

100 percent of Federal construction starts value to 23 percent of the

value of public, non-Federal construction starts. Divide that sum by

the total value of construction starts to obtain the proportion that

Davis-Bacon covered construction is of total construction value.

Multiply the Davis-Bacon proportion times total construction employment

to estimate the share of total construction employment allocated to

Davis-Bacon construction.

Value of DB Construction = ($10,799,923,000) + (0.23 x

$87,122,347,000) = $30,838,062,810

Proportion DB is of Total = $30,838,062,810/$321,736,705,000 = 9.585%

DB Employment =

CPS: 9,333,000 x 0.09585 = 894,568

OES: 5,666,150 x 0.09585 = 543,100

AdjOES: 5,666,150 x 0.09585 = 543,100

Step 2: Occupational Employment, 1996. First, the number of

additional apprentices, estimated by BAT and above the CPS apprentice's

estimate, was added into the CPS construction apprentices total, and

subtracted from the journeyworkers total. The BAT apprentice total was

similarly subtracted from the OES journeyman/apprentice combination,

and established as the OES apprentice total, both unadjusted and

adjusted.

Then, 1996 Davis-Bacon employment for the number of journeyworkers,

laborers, apprentices, and helpers is obtained. (Note that these on-

site construction workers are the only occupations likely to be

impacted by any helper regulation.) This is accomplished for each

occupational group by multiplying their corresponding adjusted CPS/OES

proportions times total Davis-Bacon construction employment. However,

since procedures in effect in 1996 prohibited the use of helpers on

Davis-Bacon work, the number of helpers computed must be allocated

(added) to the number of Davis-Bacon journeyworkers, laborers, and

apprentices. This allocation is made in

[[Page 17453]]

proportion to each occupational group's composition of covered

employment, in order to obtain final estimates of total Davis-Bacon

employment for the selected occupational groups. (As indicated under

Assumption 2, had this employment been distributed based upon closeness

of occupational wage, helper savings would have been significantly

reduced.)

DB Journeyworker Employment =

CPS: 894,568 x 0.42409 = 379,377

OES: 543,100 x 0.36443 = 197,922

AdjOES: 543,100 x 0.36443 = 197,922

DB Laborer Employment =

CPS: 894,568 x 0.10586 = 94,699

OES: 543,100 x 0.04629 = 25,140

AdjOES: 543,100 x 0.10003 = 54,326

DB Apprentice Employment =

CPS: 894,568 x 0.02057 = 18,401

OES: 543,100 x 0.03389 = 18,406

AdjOES: 543,100 x 0.03389 = 18,406

DB Helper Employment =

CPS: 894,568 x 0.01329 = 11,889

OES: 543,100 x 0.08747 = 47,505

AdjOES: 543,100 x 0.03373 = 18,319

Subtotals:

CPS: 504,366

OES: 288,973

AdjOES: 288,973

Table 4.--Data for ``No Helper'' Helper Adjustment

----------------------------------------------------------------------------------------------------------------

AdjOES

Occupation CPS No. CPS % OES No. OES % No. AdjOES %

----------------------------------------------------------------------------------------------------------------

Journeyworker................................. 379,377 0.77034 197,922 0.81966 197,922 0.73127

Laborer....................................... 94,699 0.19229 25,140 0.10411 54,326 0.20072

Apprentice.................................... 18,401 0.03736 18,406 0.07623 18,406 0.06801

-----------------------------------------------------------------

Total..................................... 492,477 0.99999 241,468 1.00000 270,654 1.00000

----------------------------------------------------------------------------------------------------------------

Helper Adjustment

DB Journeyworkers =

CPS: 379,377 + (11,889 x 0.77034 = 388,536

OES: 197,922 + (47,505 x 0.81966) = 236,860

AdjOES: 197,922 + (18,319 x 0.73127) = 211,318

DB Laborers =

CPS: 94,699 + (11,889 x 0.19229) = 96,985

OES: 25,140 + (47,505 x 0.10411) = 30,086

AdjOES: 54,326 + (18,319 x 0.20072) = 58,003

DB Apprentices =

CPS: 18,401 + (11,889 x 0.03736) = 18,845

OES: 18,406 + (47,505 x 0.07623) = 22,027

AdjOES: 18,406 + (18,319 x 0.06801) = 19,652

Step 3: Occupational Employment (52 FR 31368). Determine Davis-

Bacon employment for the number of journeyworkers, laborers,

apprentices, and helpers likely to be employed if the Regulations

published in 52 FR 31368 were in effect throughout 1996. For the

employment half in which helpers do not prevail for any classes, Step 2

proportions are utilized; for the half in which helpers do prevail for

a limited number of classes, proportions reflect average national

employment of helpers.

Employment of DB Journeyworkers (CPS: 0.77034; OES: 0.81996; AdjOES:

.73127) + Laborers (CPS: 0.19229; OES: 0.10411; AdjOES: .20072) +

Apprentices (CPS: 0.03736; OES: 0.07623; AdjOES: .06801) =

CPS: 504,366

OES: 288,973

AdjOES: 288,973

Half DB Selected Occupation Employment (CPS: 252,183; OES: 144,487;

AdjOES: 144,487)

Where Helpers Are Not Likely To Prevail:

Journeyworkers =

CPS: 252,183 x 0.77034 = 194,267

OES: 144,487 x 0.81966 = 118,430

AdjOES: 144,487 x 0.73127 = 105,659

Laborers =

CPS: 252,183 x 0.19229 = 48,492

OES: 144,487 x 0.10411 = 15,043

AdjOES: 144,487 x 0.20072 = 29,001

Apprentices =

CPS: 252,183 x 0.03736 = 9,422

OES: 144,487 x 0.07623 = 11,014

AdjOES: 144,487 x 0.06801 = 9,827

Half DB Selected Employment (CPS: 252,183; OES: 144,487; AdjOES:

144,487) Where Helpers Are Likely To Prevail for Some Occupations

Table 5.--Data for Helper Adjustment, Including Helpers

----------------------------------------------------------------------------------------------------------------

AdjOES

Occupation CPS No. CPS % OES No. OES % No. AdjOES %

----------------------------------------------------------------------------------------------------------------

Journey-worker................................ 379,377 0.75219 197,922 0.68492 197,922 0.68492

Laborer....................................... 94,699 0.18776 25,140 0.08700 54,326 0.18800

Apprentice.................................... 18,401 0.03648 18,406 0.06369 18,406 0.06369

Helper........................................ 11,889 0.02357 47,505 0.16439 18,319 0.06339

-----------------------------------------------------------------

Total..................................... 504,366 1.00000 288,973 1.00000 288,973 1.00000

----------------------------------------------------------------------------------------------------------------

Journeyworkers =

CPS: 252,183 x 0.75219 = 189,690

OES: 144,487 x 0.68492 = 98,962

AdjOES: 144,487 x 0.68492 = 98,962

Laborers =

CPS: 252,183 x 0.18776 = 47,350

OES: 144,487 x 0.08700 = 12,570

AdjOES: 144,487 x 0.18800 = 27,164

Apprentices =

CPS: 252,183 x 0.03648 = 9,200

OES: 144,487 x 0.06369 = 9,202

AdjOES: 144,487 x 0.06369 = 9,202

Helpers =

CPS: 252,183 x 0.02357 = 5,944

OES: 144,487 x 0.16439 = 23,752

AdjOES: 144,487 x 0.06339 = 9,159

Total:

Journeyworkers =

CPS: 194,267 + 189,690 = 383,957

OES: 118,430 + 98,962 = 217,392

AdjOES: 105,659 + 98,962 = 204,621

Laborers =

CPS: 48,492 + 47,350 = 95,842

OES: 15,043 + 12,570 = 27,613

AdjOES: 29,001 + 27,164 = 56,165

Apprentices =

CPS: 9,422 + 9,200 = 18,622

OES: 11,014 + 9,202 = 20,216

AdjOES: 9,827 + 9,202 = 19,029

Helpers =

CPS: 5,944

OES: 23,752

[[Page 17454]]

AdjOES: 9,159

Step 4: Alternative Wage Bills. Since half of Davis-Bacon

employment is estimated to be in areas in which helpers would not be

found to prevail for any classification, such employment would not have

been affected by the proposed regulation change. For the remaining

half, the occupational group totals--both before and after a possible

regulation change--are multiplied by the corresponding annual

salaries.20

---------------------------------------------------------------------------

\20\ Note that this methodology counts each additional helper

towards potential cost savings. However, results of relevant Davis-

Bacon wage surveys indicate that only a small proportion of helpers

would be in classifications in which helpers prevail, thereby

substantially reducing savings realized.

---------------------------------------------------------------------------

Alternative Wage Bills (1996)

CPS: (388,536 x 23,007) + (96,985 x 15,907) + (18,845 x 12,564) =

8,939,047,752 + 1,542,740,395 + 236,768,580 = 10,718,556,727

OES: (236,860 x 23,007) + (30,086 x 15,907) + (22,027 x 12,564) =

5,449,438,020 + 478,578,002 + 276,747,228 = 6,204,763,250

AdjOES: (211,318 x 23,007) + (58,003 x 15,907) + (19,652 x

12,564) = 4,861,793,226 + 922,653,721 + 246,907,728 = 6,031,354,675

Suspended Regulation

CPS: (383,957 x 23,007) + (95,842 x 15,907) + (18,622 x 12,564) +

(5,944 x 9,008) = 8,833,698,699 + 1,524,558,694 + 233,966,808 +

53,543,552 = 10,645,767,753

OES: (217,392 x 23,007) + (27,613 x 15,907) + (20,216 x 12,564) +

(23,752 x 9008) = 5,001,537,744 + 439,239,991 + 253,993,824 +

213,958,016 = 5,908,729,575

AdjOES: (204,621 x 23,007) + (56,165 x 15,907) + (19,029 x

12,564) + (9,159 x 9008) = 4,707,715,347 + 893,416,655 + 239,080,356

+ 82,504,272 = 5,922,716,630

Step 5: Estimated Annual Savings. Subtract the Davis-Bacon wage

bill computed assuming helper employment from the comparable wage bill

with no helpers employed. The difference is an estimate of potential

1996 savings. Divide that total by the value of Davis-Bacon

construction to obtain savings as a percent of 1996 Davis-Bacon-covered

construction starts.

Short-term Annual Savings:

CPS: 10,718,556,727 - 10,645,767,753 = $72,788,974

OES: 6,204,763,250 - 5,908,729,575 = $296,033,675

AdjOES: 6,031,354,675 - 5,922,716,630 = $108,638,045

Savings as a Proportion of the Value of 1996 Davis-Bacon

Construction Starts =

CPS: $72,788,974/$30,838,062,810 = 0.00236 or 0.236 percent;

OES: 296,033,675/$30,838,062,810 = 0.00960 or 0.960 percent;

AdjOES: $108,638,045/$30,838,062,810 = 0.00352 or 0.352 percent.

D. Findings

Given the above assumptions, data, process, and computations,

several key findings are established concerning the economic impact of

the suspended regulation:

1. Davis-Bacon Employment. The workforce on construction projects

covered by the Davis-Bacon and Related Acts is estimated to be under 1

million workers (CPS: 894,568; OES: 543,100; AdjOES: 543,100).

Occupational Employment (No Helpers). Davis-Bacon employment for

relevant occupations was estimated without the employment of helpers.

Under this scenario, employment for those occupations impacted directly

by the helper regulation was as follows:

Journeyworkers--CPS: 388,536; OES: 236,860; AdjOES: 211,318;

Laborers--CPS: 96,985; OES: 30,086; AdjOES: 58,003; and Apprentices--

CPS: 18,845; OES: 22,027; AdjOES: 19,652.

Occupational Employment (Helpers). In this case, Davis-Bacon

occupational employment in areas where it is assumed helpers would

prevail for at least one classification was as follows:

Journeyworkers:

CPS: 383,957

OES: 217,392

AdjOES: 204,621

Laborers:

CPS: 95,842

OES: 27,613

AdjOES: 56,165

Apprentices:

CPS: 18,622

OES: 20,216

AdjOES: 19,029

Helpers:

CPS: 5,944

OES: 23,752

AdjOES: 9,159

Wage Bills and Savings. Total earnings for each of the two

employment patterns described above were estimated as follows:

Without helpers:

CPS: $10,718,556,727

OES: $6,204,763,250

AdjOES: $6,031,354,675;

With helpers:

CPS: $10,645,767,753

OES: $ 5,908,729,575

AdjOES: $ 5,922,716,630

Therefore, possible savings are estimated to range from $72.8

million (CPS) or 0.236 percent of the value of 1996 Davis-Bacon

construction starts, to $108.6 million (AdjOES) or 0.352 percent, to

296.0 million (OES) or .960 percent. However, it should be noted that

these short-term savings realized through increased use of helpers

could be partially offset in the long run by higher journeyworkers'

wage rates.

This follows from the fact that helper use has been most extensive

among contractors who traditionally do not sponsor formal

apprenticeship and training programs. As increased helper use on Davis-

Bacon contracts might lead to contract gains for such employers,

reduced use of apprenticeship programs might lead to a somewhat smaller

supply of journeyworkers. This could cause a modest increase in

journeyworkers' wage rates, in the long run.

These findings indicate that previous Department of Labor estimates

of savings that could be attributed to the expanded use of helpers have

been greatly overstated. For example, while the current analysis places

possible annual savings from $72.8 to $108.6 to $296.0 million, earlier

estimates (1982 and 1989) placed such savings at $687.1 million and

$760.5 million (all 1996 dollars). While the current estimates' ratios

of savings to the value of Davis-Bacon construction starts are only

0.00236 to 0.00352 to 0.00960, estimates of the comparable 1982 and

1989 savings ratios would have been over twice what today's data

indicate. In addition, some State laws restrict the use of helpers on

public construction, thereby further reducing potential savings from

those estimated for Federal regulations that expand the use of helpers.

Several factors appear to be responsible for the wide variation in

savings estimates:

The value of construction covered by the Davis-Bacon and

Related Acts, as a proportion of total construction value, about 9.6

percent, is significantly less than was previously assumed. Earlier

estimates of 18 percent and higher appear to have been based upon the

assumption that all non-Federal public construction is covered.

However, examination of available information does not confirm that

assumption. For example, experience working with F.W. Dodge information

indicates that the majority of city, county, and State-owned

construction has no Federal assistance. Specifically, by identifying

non-Federal public construction projects through F.W. Dodge reports,

and then determining their Davis-Bacon coverage through completed wage

survey forms for those projects, it

[[Page 17455]]

becomes clear that the majority of such construction is not covered.

The previously utilized assumption that helpers would

prevail for 67 percent to 100 percent of the trades (and on projects

representing 67 to 100 percent of the Davis-Bacon employment) is not

confirmed by survey experience under the previously proposed

regulations or by other relevant information. For the 78 wage surveys

conducted under the new regulations, rates were recommended for helpers

in one or more classifications in just 35 of these data collection

efforts. Although all 12 open shop areas surveyed found one or more

helper classifications to prevail, they prevailed for only 20 percent

of the classes represented. For the 64 mixed area surveys, helpers were

found to prevail in 30 surveys, but for only 6 percent of the classes.

No helpers were found to prevail in the two area surveys that found all

prevailing rates to be union. Furthermore, 30 percent of the helper

classifications that were found to prevail were union helpers--

especially elevator constructor helpers, a classification negotiated

nationwide in that trade. Therefore, the assumption in this analysis

that one or more helper classifications prevail in areas that represent

half of Davis-Bacon covered employment is probably inflated in terms of

estimating the actual prevalence of helpers.

Previous estimates of the proportion that helper

employment is of total construction employment appears to have

overstated that classification's workforce standing. For example, the

1976-77 compensation study, upon which many of the early helper savings

estimates were based, found that helpers comprised just 3.2 percent of

the survey universe. Because of the survey's concentration in

metropolitan/union areas and the fact that enough helper data were

found to publish for only four construction trades, that proportion was

doubled and tripled when developing alternative savings estimates.

Later estimates of helper employment proportions assumed that 15

percent of total construction employment fell into that classification.

As noted above, CPS, AdjOES, and OES estimates are approximately 1.3,

3.4, and 8.7 percent, respectively.

The assumption that helpers will replace journeyworkers

exclusively was not supported by experience during implementation of

the suspended regulation. For example, personnel who processed helper

conformance actions have indicated that often construction contractors

surveyed reported that workers meeting the definition of helper in the

regulations were classified by the contractors as laborers. Similarly,

the low wage rates paid helpers are indicative of their lower skill

level, increasing the likelihood of substitution for laborers.

Recognizing helpers may perform work of laborers and apprentices, as

well as journeyworkers, narrows the differential between the wage bills

incurred before and after helper expansion. In fact, in the short run,

helpers may disproportionately assume work of laborers and apprentices.

In the longer run, supply problems in obtaining quality skilled

journeyworkers may well appear, as helpers displace apprentices, and

subsequently, apprentice-trained journeyworkers.

E. Possible Economic Impact of Helper Alternatives

A number of different approaches were considered in developing the

proposed regulation to define the circumstances in which helpers may be

used on Davis-Bacon projects. In addition to the proposal that helpers

only be permitted where the prevailing practice is to use helpers with

duties that do not overlap with those of a journeyworker or laborer,

Wage and Hour considered four other alternatives: (1) Add a ratio

requirement to the suspended helper definition; (2) change the helper

definition to emphasize the semi-skilled nature of the classification;

(3) define helpers in accordance with the OES definition which focuses

on unskilled duties; and (4) delineate the semi-skilled tasks performed

by each helper classification.

Section D of this Impact Analysis estimated helper use under the

suspended rule in areas where helpers would prevail. Alternatives 1-4

involved changing the helpers definition or their use. Each alternative

would likely result in greater use of helpers than under the proposed

rule, but less than under the suspended rule. Similarly, the economic

impact of the alternatives would presumably yield some portion but not

all, of the savings anticipated under the suspended rule.

Given that each alternative encompassed many possible variations

and outcomes, and that there is no data source that would provide

appropriate information on these variations and outcomes, it is not

possible to provide detailed estimates of the economic impacts of the

four alternatives. However, discussed below are the factors likely to

affect the economic impact of the alternatives.

Proposed Rule--Helpers Used in Accordance With Current Practice

The proposed rule would reflect the longstanding, and current,

practice of recognizing helpers only where helper duties are separate

and distinct from those of journeyworkers and laborers. As it would

continue a practice that has been in effect for many years, the

proposed rule is expected to have no economic impact.

Alternative 1--Add a Helper to Journeyworker Ratio Requirement to the

Suspended Rule

Adding a ratio, whether one ratio that applies nationally or a

number of local ratios, to the suspended rule would have the effect of

limiting the number of helpers allowed on Davis-Bacon sites, as

compared to the number that could be utilized under the suspended rule

alone. Where the practice of employers under the suspended rule without

a ratio would result in the use of more helpers than allowed under a

ratio cap, the economic impact would be lower savings with the cap than

without it. On the other hand, allowing helpers to be used under a rule

that combined the suspended rule with a ratio would allow greater

helper use than exists currently and would likely result in savings.

The amount of savings to be achieved would depend on the ratio chosen.

Alternative 2--Emphasize Semi-Skilled Nature of the Helper

Classification

Changing the suspended rule to emphasize the ``semi-skilled''

nature of the helper classification would likely result in less use of

helpers than there would be under the suspended rule, but more than

under the rule currently in effect. The extent of helper use would

depend on the scope of duties allowed under such a helper

classification. Thus, some savings would be achieved, but less than

would be expected under the suspended rule. The amount of savings would

also be impacted by how such a definition affected the relative

substitution of helpers for laborers and journeyworkers. As it could be

expected that emphasizing the semi-skilled nature of the helper

classification would result in little or no substitution for laborers,

the decrease in savings as compared to the suspended rule would be less

dramatic.

Alternative 3--Emphasize Unskilled Duties

As with Alternative 2, defining helpers by limiting their duties to

unskilled duties would also result in less use of helpers than there

would be under the suspended rule, but more than under the rule

currently in effect.

[[Page 17456]]

While some savings would be achieved, this amount would be less than

expected under the suspended rule. Again, the effect of the rule on the

substitution of helpers for laborers versus journeyworkers would impact

the degree of savings. Under this alternative, it could be expected

that few, if any, helpers would replace journeyworkers, resulting in

greater savings than would be expected under Alternative 2.

Alternative 4--Delineate Semi-Skilled Tasks for Each Helper

Classification

The extent of savings, as compared to current practice, under this

alternative would depend on the scope of the tasks allowed to be

performed by helpers assisting in each craft. Again, savings would be

expected relative to current practice, but in an amount less than would

be achieved under the suspended rule. As in Alternative 2, limiting

helpers to semi-skilled duties would likely result in less substitution

for laborers, and the decrease in savings as compared to the suspended

rule would be less dramatic.

F. Benefits

Wage and Hour originally believed that the primary benefits to be

gained from promulgation of the suspended helper regulation would be a

construction workforce on Federal construction projects that more

closely mirrored the private construction workforce's widespread use of

helpers, and significant cost savings in Federal construction costs. As

is more fully explained previously in this document, Wage and Hour now

believes that the use of helpers is less widespread than originally

thought and that the cost savings would be a small fraction of the

amount originally computed.

On the other hand, this proposal would allow Wage and Hour to

arrive at a definition of helper that would be capable of effective

administration and enforcement consistent with the purpose of the

Davis-Bacon Act. The alternatives considered would lessen the overlap

with other classifications, and would also provide a more objective

means by which both government agencies and contractors can distinguish

between helpers and other classifications, consistent with the

underlying purpose of the Davis-Bacon Act. All of the alternatives

would to varying degrees ameliorate the potential for misclassification

and abuse of helper classifications, thereby providing fairer

competitive bidding on Federal and federally-assisted construction

projects. Finally, Wage and Hour believes that this proposal could help

preserve effective training in the construction industry. A discussion

of the possible benefits provided by each of the specific proposed

alternatives immediately follows.

The proposed rule would continue the current practice which

requires that helper duties be separate and distinct from those of the

journeyworker and laborer. By retaining the traditional duties-based

classification distinction, it would provide clear criteria that can be

objectively administered and enforced, and that facilitate contractor

compliance. Because classifications would not have overlapping duties

under this alternative, there would be less opportunity for contractor

misclassification and abuse. Wage and Hour also believes that this

approach would encourage contractors to establish or participate in

structured training programs that would aid workers in achieving

journeylevel status.

Alternative 1, which would provide use of a national ratio, or a

number of local ratios, would reduce to some extent the potential for

abuse of the helper classification by contractors seeking to gain an

unfair competitive advantage, whether implemented in conjunction with

the suspended helper definition or with one of the other proposed

alternatives.

Alternative 2 would change the helper definition to emphasize the

semi-skilled nature of the classification by modifying the suspended

definition to emphasize semi-skilled duties. The modified definition

under this alternative might possibly aid in differentiating the helper

from journeyworker and laborer classifications by emphasizing the

``semi-skilled'' nature of the work performed by helpers, the

supervisory relationship between journeyworkers and helpers, and the

craft-specific assistance provided by the helper. This definition would

also expressly limit the unskilled work the helper may perform in an

attempt to distinguish helpers from laborers.

Alternative 3, which would utilize the OES definition of helper,

would provide a more objective definition of helper than the suspended

definition. By focusing on unskilled duties and the helper's

interaction with journeylevel craft workers, this alternative could

provide a more practical basis for distinguishing helpers from

journeyworkers.

Alternative 4, which would in essence adopt the ``job family''

concept currently utilized under the McNamara-O'Hara Service Contract

Act, would allow for the expanded use of helpers, with differentiation

based on the skill and knowledge required to perform various duties.

This would result in clearer definitions of helper classifications on a

craft-by-craft basis, which would facilitate administration and

enforcement.

VI. Regulatory Flexibility Act

Under the Regulatory Flexibility Act, Public Law 96-354 (94 Stat.

1164; 5 U.S.C. 601 et seq.), Federal agencies are required to prepare

and make available for public comment an initial regulatory flexibility

analysis that describes the anticipated impact of proposed rules that

would have a significant economic impact on small entities. Wage and

Hour is of the view that a Regulatory Flexibility Analysis is not

necessary for the proposed rule because the proposed regulation would

not result in any changes in requirements for small businesses.

Furthermore, if Wage and Hour were to propose implementing the

suspended rule or any of the alternatives considered, it would not be

more costly than current regulatory requirements and therefore would

not have a significant economic impact on a substantial number of small

entities. Furthermore, Wage and Hour is of the view, as discussed in

the preamble, that neither the suspended rule nor any of the

alternatives considered would accomplish the objectives of the statute.

Notwithstanding, because of widespread interest in the rule, Wage and

Hour has prepared the following Regulatory Flexibility Analysis, which

compares the proposed rule to the suspended rule and should be

considered in conjunction with the analysis set forth in the preamble

and the analysis under Executive Order 12866.

(1) Reasons Why Action Is Being Considered

In 1982, over fifteen years ago, Wage and Hour published final

regulations which, among other things, would have allowed contractors

to use ``semi-skilled'' helpers on Davis-Bacon covered projects at

wages lower than those paid to skilled journeyworkers. These rules

represented a sharp departure from Wage and Hour's longstanding

practice of not allowing overlap of duties between job classifications.

To protect against possible abuse, a provision was included limiting

the number of helpers which could be used on a covered project to a

maximum of two helpers for every three journeyworkers. This ratio

provision was subsequently invalidated by the U.S. Court of Appeals for

the District of Columbia.

As discussed in greater detail above, during its existence, the

helper rule has been the subject of considerable

[[Page 17457]]

litigation and Congressional attention. The rule has been enjoined by

the district court and modified on two occasions as a result of court

of appeals decisions. It has twice been implemented for short periods

of time. It has also been suspended on two occasions as the result of

Congressional action prohibiting Wage and Hour from spending any funds

to implement or administer the helper rule. On December 30, 1996, the

suspension was continued pending completion of this rulemaking.

The helper rule was originally proposed and adopted because it was

believed that it would result in a construction workforce on Federal

construction projects that more closely mirrored the private

construction's ``widespread'' use of helpers and, at the same time,

effect significant cost savings in federal construction costs. It was

also believed that the expanded definition would provide additional job

and training opportunities for unskilled workers, in particular women

and minorities. The Department's subsequent efforts to develop

enforcement guidelines led it to conclude that administration of the

revised helper rule would be much more difficult than anticipated,

especially in light of the court's invalidation of the ratio provision.

Moreover, new data, including the Department's experience implementing

the helper regulations, indicated that the use of helpers is not as

widespread as previously thought. Wage and Hour is also concerned about

the possible negative effect of the helper regulations on formal

apprenticeship and training programs. These factors, and the obvious

controversy evidenced by the rule's long history of litigation and by

Congressional actions prohibiting implementation of the rule, led Wage

and Hour to reexamine the helper rule and consider several alternative

approaches to govern employment of helpers on DBRA-covered projects.

(2) Objectives of and Legal Basis for Rule

These regulations are issued under the authority of the Davis-Bacon

Act, 40 U.S.C. 276a, et seq., Reorganization Plan No. 14 of 1950, 5

U.S.C. Appendix, and the Copeland Act, 40 U.S.C. 276c. The objective of

these regulations is to establish the most appropriate approach to

governing employment of helpers on DBRA-covered projects. Wage and Hour

believes the proposed rule is the only alternative considered that is

both consistent with the purposes of the Davis-Bacon Act and capable of

practical and efficient administration, enforcement, and compliance.

(3) Number of Small Entities Covered Under the Rule

Size standards for the construction industry are established by the

Small Business Administration (SBA), and are expressed in millions of

dollars of annual receipts for affected entities, i.e., Major Group 15,

Building Construction--General Contractors and Operative Builders, $17

million; Major Group 16, Heavy Construction (non-building), $17

million; and Major Group 17, Special Trade Contractors, $7 million. The

overwhelming majority of construction establishments would have annual

receipts under these levels. According to the Census, 98.7 percent of

these establishments have annual receipts under $10 million. Therefore,

for the purpose of this analysis, it is assumed that virtually all

establishments potentially affected by this rule would meet the

applicable criteria used by the SBA to define small businesses in the

construction industry.

As explained above, however, the proposed rule would cause no

impact on small entities since it does not propose to make any changes

in requirements applicable to small businesses. Implementation of the

suspended rule or any of the alternatives considered would expand the

use of helpers and could result in some savings. The impact would

depend upon the specifications of the alternative relative to current

practice. Even relative to unlimited use, however, possible savings

would be very modest, ranging from 0.239 percent of the value of Davis-

Bacon annual construction starts (CPS), to 0.359 (adjusted OES), and

0.958 (unadjusted OES) percent.

(4) Reporting, Recordkeeping and Other Compliance Requirements of the

Rule

There are no reporting or recording requirements for contractors

under the proposed rule. Nor would there be any such requirements under

the suspended rule or any of the alternatives considered. The

compliance requirements under any rule regarding helpers would merely

require contractors who use helpers to do so in accordance with a

chosen definition and pay helpers at least the appropriate prevailing

wages for helpers as set by the Department.

(5) Relevant Federal Rules Duplicating, Overlapping or Conflicting With

the Rule

There are currently no Federal rules that duplicate, overlap or

conflict with this proposed rule.

(6) Differing Compliance or Reporting Requirements for Small Entities

The proposed rule contains no reporting, recordkeeping, or other

compliance requirements specifically applicable to small businesses or

that differ from such requirements applicable to the Davis-Bacon

contracting industry as a whole. Such different treatment would not

seem feasible since virtually all employers in the industry are small

businesses.

(7) Clarification, Consolidation, and Simplification of Compliance and

Reporting Requirements

The compliance and reporting requirements of the proposed rule, the

suspended rule, and each of the alternatives considered, as well as the

advantages and disadvantages of each, are described in the preamble

above, which discusses issues such as ease of compliance for

contractors.

(8) Use of Other Standards

The Davis-Bacon Act requires the Secretary to determine the

prevailing wages and fringe benefits to be paid to the classes of

workers to be employed on a project. Therefore compliance by

contractors can only be achieved through design standards. The proposed

rule, the suspended rule, and the alternative approaches to employing

helpers on DBRA-covered projects are discussed in the preamble above

and are not repeated here.

(9) Exemption From Coverage for Small Entities

Exemption from coverage under this rule for small entities would

not be appropriate given the statutory mandate of the Davis-Bacon Act

that all contractors (large and small) performing on DBRA-covered

contracts must pay its workers prevailing wages and fringe benefits as

determined by the Secretary of Labor. Further, exclusion of such small

businesses from data collected to determine prevailing wages and fringe

benefits for helpers would be impractical and would distort such

determinations, possibly to the detriment of small businesses.

VII. Document Preparation

This document was prepared under the direction and control of John

R. Fraser, Deputy Administrator, Wage and Hour Division, Employment

Standards Administration, U.S. Department of Labor.

[[Page 17458]]

Signed at Washington, D.C., this 1st day of April, 1999.

Bernard E. Anderson,

Assistant Secretary for Employment Standards.

[FR Doc. 99-8566 Filed 4-7-99; 8:45 am]

BILLING CODE 4510-27-P