ESA Proposed Rules

Procedures for Predetermination of Wage Rates; Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction and to Certain Nonconstruction Contracts   [4/9/1999]
[PDF]

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Part II

Department of Labor

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Employment Standards Administration, Wage and Hour Division

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29 CFR Parts 1 and 5

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

[[Page 17442]]

DEPARTMENT OF LABOR

Employment Standards Administration, Wage and Hour Division
Office of the Secretary

29 CFR Parts 1 and 5

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

AGENCY: Wage and Hour Division, Employment Standards Administration, 
Labor.

ACTION: Proposed rule.

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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:
    <bullet> 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.)
    <bullet> 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.
    <bullet> A provision limiting the number of helpers to two for 
every three journeyworkers. 29 CFR 5.5(a)(4)(iv), 47 FR 23670.
    <bullet> 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.<SUP>1</SUP>
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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.<SUP>2</SUP> 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.<SUP>3</SUP>
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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).<SUP>4</SUP> 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,<SUP>5</SUP> 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.<SUP>6</SUP> 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.<SUP>7</SUP>
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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.<SUP>8</SUP>
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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,<SUP>9</SUP> (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,<SUP>10</SUP> 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; <SUP>11</SUP> (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.<SUP>12</SUP>
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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.<SUP>13</SUP> 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.
---------------------------------------------------------------------------

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.<SUP>14</SUP> 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:
    <bullet> Estimates of apprentice employment, based upon information 
provided by the Bureau of Apprenticeship and Training (BAT) from its 
Apprentice Information System (AIMS).
    <bullet> F.W. Dodge construction reports.
    <bullet> Detailed published occupational information and 
unpublished Bureau of Labor Statistics (BLS) tabulations from the 
Current Population Survey (CPS).
    <bullet> 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).<SUP>15</SUP> 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).
---------------------------------------------------------------------------

    \15\ Source: 1996 BLS/CPS.
---------------------------------------------------------------------------

    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.<SUP>16</SUP>
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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:
    <bullet> The BAT AIMS Reporting System (number of apprentices).
    <bullet> The BLS/Bureau of the Census CPS (total construction 
industry employment, distribution of employment by selected occupation, 
and total annual earnings by occupation).
    <bullet> The BLS OES Program (total construction industry 
employment and distribution of employment for selected occupational 
combinations).
    <bullet> F.W. Dodge Construction Reports (construction value by 
ownership).
    <bullet> Wage and Hour Division Regional Survey Planning Reports 
(RSPR) (public construction value by wage determinations reflecting 
union, open shop, and mixed wage rates).
    <bullet> 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:
    <bullet> 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.
    <bullet> The CPS provides separate employment totals for helper, 
apprentice, laborer, and journeyworker classes, all of which are needed 
to conduct this impact analysis.
    <bullet> 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:
    <bullet> 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.<SUP>17</SUP>
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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.
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    <bullet> The CPS data on annual earnings include wages earned 
outside construction, although construction is the industry of longest 
employment for each worker.
    <bullet> 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.
    <bullet> 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:
    <bullet> The OES Program utilizes standard occupational 
definitions, describing those workers who should be reported in each.
    <bullet> 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.
    <bullet> 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:
    <bullet> 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.
    <bullet> 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.
    <bullet> 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.
    <bullet> 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.
    <bullet> 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).<SUP>18</SUP>
---------------------------------------------------------------------------

    \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.<SUP>19</SUP>
---------------------------------------------------------------------------

    \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.<SUP>20</SUP>
---------------------------------------------------------------------------

    \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:
    <bullet> 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.
    <bullet> 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.
    <bullet> 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.
    <bullet> 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