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Full text of "Evidence study"

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NATIONAL RECOVERY ADMINISTRATION 



DIVISION OF REVIEW 



EVIDENCE STUDY 
NO. 15 

OF 

GENERAL CONTRACTORS INDUSTRY 



Prepared by 
JOHN C. HUMPHREY 



September, 1935 



PRELIMINARY DRAFT 
(NOT FOR RELEASE: FOR USE IN DHISION 0>XT) 



TIE EVIDEKCE STTJDY SERIES 

The EVIDENCE STUDIES were originally planned as a means of gathering 
evidence "bearin-i upon various le.^^al issues which arose under the National 
Industrial Recovery Act. 

These studies have value quite aside from the use for which they were 
originally intended. Accordingly, they are now made availaole for confidential 
use within the Division of Reviev;, arid for inclusion i)i Code Histories, 

The full list of the Evidence Studies is as follcTs: 



1. Automo 1)118 Manufacturing Ind. 23. 

2. Boot and Shoe Mfg. Ind. 24. 

3. Bottled Soft Drink Ind. 25. 

4. Builders' Sup-plies Ind, 26. 

5. Chemical Mfg. Ind. 27. 

6. Cigar Mfg. Industry 28. 

7. Construction Industry 29. 

8. Cotton GarAient Industry 30. 

9. Dress Mfg. Ind. 31, 

10. Electrical Contracting Ind, 32. 

11. Electrical Mfg. Ind. 33. 

12. Pab. Metal Prod, Mfg., etc. 34. 

13. Fishery Industry 35. 

14. Purniture Mfg. Ind. 36, 

15. General Contractors Ind, 37, 

16. Graphic Arts Ind. 38. 

17. Gray Iron Foundry Ind. 3S. 

18. Hosiery Ind, 40, 

19. Infant's <£: Children's Wear Ind. 41. 

20. Iron and Steel Ind. 42. 

21. Leather 43. 

22. Lumber & Timher Prod. Ind. 



Mason Contractors Industry 

Men's Clothing Industry 

Motion Picture Industry 

Motor Bus Mfg. Industry (Dropped") 

Needlework Ind. of Puerto Rico 

Painting »■, Paperhanging & Decorating 

photo Engraving Industry 

plumbing Contracting Industry 

Retail Food (See No. 42) 

Retail Lumber Industry 

Retail Solid Fuel (Dropped) 

Retail Trade Industry 

Rubber Mfg. Ind. 

Rubber Tire Mfg. Ind. 

Silk Textile Ind, 

Structural Clay Products jnd, 

Throvring Industry 

Trucking Industry 

Waste Materials Ind. 

Wholesale & Retail Food Ind. (See No. 

Wliolesale Fresh Fruit & Veg, 31) 



In addition to the studies brought to completion, certain materials have 
been assembled for other industries. These MATERIALS are included in the series 
and are also made available for confidential use within the Division of Review 
and for inclusion in Code Histories, as follows; 



44. Wool Textile Industry 49. 

45. Automotive Parts & Equip, Ind, 50, 

46. Baking Industry 51. 

47. Canning Industry 52. 
43. Coat £ind Suit Ind. 53. 



Household C-oods & Storage, etc, (Drop- 
Motor Vehicle Retailing Trade Ind, ped) 
Retail Tire & Battery Trade Ind, 
Ship & Boat Bldg. & Repairing Ind, 
Wholesaling or Distributing Trad? 



L. C. Marshall 
Director, Division of Review 



CONTENTS 

Page 

Fo re\?ord 1 

CHAPTEE I - TIIE INDUSTRY 2 

Definition of the Industrir ...• 2 

Place of the General Contractor in the 

Construction Industry 3 

Ei s tory 4 

IJumlDer of Establisliments 5 

Capital Investment and Failures 5 

Financial Condition 6 

Total Value of Construction 8 

Ty-rje of Work 8 

Productive Capacity 9 

Competition 9 

CHAPTER II - LA30E 10 

To tal Ni.ua"ber of Watie Earners 10 

Seasonal Variation in Employment 10 

Total Annual Wages 10 

Avera,2e Hourly Earnings and Hours Per Week 10 

Employees Under 17 Years of Age 13 

CHAPTER III - MATERIALS : RAW AiCD SEMI^PROCESSED 16 

Expenditures for Raw Materials 16 

Principal Materials Used by the Industry 16 

Materials Imported 16 

Expenditure for Machinery and Equipment 17 

CHAPTER IV - PRODUCTION AND DISTRIBUTION 18 

production of C-eneral Contractors in Principal States 18 

Construction Outside Home State 18 

Advertising 18 

Suggestions for Overcoming Seasonality of Production 19 

CHAPTER V - TRADE PRACTICES 20 

Unfair Trade Practices Prior to :i;r' Go 'e 20 

Trade Practices Which, BecAuse of Abusive Use, 

Became Detrimental 2G 

CHAPTER VI - GElvlERAL Ii\iF0RMATI0N 24 

Associated General Contractors of America 24 



8665 -i- 



CONTENTS (Cont'd) 

Page 

Competitive Organizations 35 

Organizations of Later Employed by 

General Building Contractors 25 

Effect of the Code 23 

Exoerts 28 



-oOo- 



8665 -ii_ 



TABLES 

Pais:e 



TABLE I - Nvimber of General Contractors, ty 
Principal States, 1929 



TABLE II - aross and Net Income, 1929, 1931, 
and 1932 

Combined Returns for Building and 
Construction Above Ground and Gther 
Construction Underground and on 
Surface (Not Buildings) 7 

TABLE III - Value of Various Types of Construction 

Handled by General Contractors, 1929 9 

TABLE IV - Average Hourly Earnings and Hours Worked 
Per V/eek in the Building Construction 
Industry, by Months in 1934 , 11 

TABLE V - Wage Rates and Estimated Average Annua.l 
Earnings and Hours of Employment for 
Skilled Craftsmen in Areas covered by 
Regional Agreements under the Construction 
Industry Code 13 

TABLE VI - Ho'orly Wage Rates of Bricklayers and 

Hodcarriers in Various Cities, 1929, 1931, 

1933, and 1934 15 

TABLE VII - Cost of Materials used by 14,766 General 
Contractors and 750 Operative Builders 
in the "$25,000 and Over" grouT) by kind, 
1929 17 

TABLE VIII - Total Value of Construction and of Construc- 
tion Done Outside Home State by 14,382 
General Contractors by Principal States, 
1929 in the "$25,000 and over" group 18 

TABLE IX - Status of AFL and Independent Unions 
Functioning in the Construction 
Industry, 1929 and 1933 26 

-oOo- 



8665 -iii- 



-1- 

GEIJERAL CONTRACTORS INDUSTRY 
(a Division of the Constraction Industry) 

Foreword 

The statistical information in this report is "based in a large 
measure on material assembled from the Census volume entitled, Construction 
I ndustry , prepared as nart of the Fifteenth Census, 1930. Supplementary 
material has been obtained from reports of the Bureau of Internal Revenue, 
the F. ¥. Dodge Corporation, the Bureau of Labor Statistics, Associated. 
General Contractors of America (a national trade organization), En:-::ineering 
News Record and Architect aral Record (tra,de publications). The 3i\ilders 
Association of Chicago (a trade organization); the National Association of 
Real Lstate Boards' i.lerabers (a national organization of real estate 
operators); the American Federation of labor, and from transcripts of the 
public hearings before the IIRA for the Code for the Construction Industry 
as a T/hole, Census data for the most part are limited to the Census year 
1929. 

The Census data in nearly all cases represent only a sample of the 
Industry, and the tabular material consequently cannot be regarded as giving 
a complete summary of the Industry as defined by the Code. Nevertheless 
the information is believed to be useful from the standpoint of shouing 
intra- Indus try relationshros; for exarwle, the relative importance of various 
states in the Industry, a.nd seasonality of activitj?- as indicated 'by monthly 
fluctuations in the nuraber of v/age earners. 

It should also be noted that data taken from the Census are based 
on samples of varying completeness. The number of General Contractors 
su.pplying information on a particular point is therefore indicated either 
in ■^he text or in the footnotes of the tables. 

The nature of the General Contractors Industrj^ -orecluded the preparation 
of material on a number of topics called for in the Outline for the Collection 
of Evidence. For instance, the sections dealing nith the volume and value 
of products exported, the amount of goods entering interstate comr.ierce, and- 
the amounts sold to the v.'holesale and retail trades have been omitted. Lack 
of comprehensive data lias also ;orecluded any discussion of such topics as 
total number of wage earners and total annual v/ages, and state breakdowns for 
the same . 



8665 



-2- 

Chapter I 
TIE IJMDUSTRY 



Definition of the Industry 



The General Contractors Industry, a Division of the Construction Incus- 
try, was 'defined in the Code approved on February 17, 1934, as follows: 

"Section 1. A General Contractor. — The term 'general 
contractor' is herehy defined to mean without limitation any 
individual, partnership, association, trust, trustee, trustee 
in hanlcruptcy, receiver, corporation or agency which under- 
tolcesj whether by formal contract or otherwise, to direct, 
suiDorintend, coordinate and execute either directly or through 
others, the work of constructing, substantially in its entire- 
ty, any fixed structural or physical improvement, or a modifi- 
cation thereof, or an t^j.dition or repair thereto, excluding 
any such operation aggregating in its entirety less than the 
sum of $1000.00. 

"It is recognized that the function of the architect or 
professional engineer is to design or plan construction proj- 
ects and acting in his professional capacity to supervise the 
execution thereof on behalf of the owner. Such architects or 
;nrofessional engineers in the performance of their normal and 
customary functions shall not be deemed to b e included in the 
foregoing definition of a general contractor, 

"Section 2, The term 'Subdivision of the General Con- 
tractors Division of the Industry,' or 'Subdivision' shall 
mean a defined section of this division, established for ad- 
ministration purposes. Without limitation upon any additional 
subdivisions, the subdivisions which shall be established and 
defined in Sub-Chapters IIA, IIB and IIC hereto are: 

Chapter IIA — Building Contractors Subdivision, 

IIB — Heavy Construction and Railroad Con- 
tractors Subdivision, 
IIC — Midway Contractors Subdivision." 

The Census classification "General Contractor" refers to 
"one who contracts for the entire work on a given construction 
project directly with the omier, or his agent, is responsible for 
the execution of the whole and usually does some portion of the 
actual work with his own constructing forces." 1/ 

It will be noted that the two definitions are dissimilar in that the 
Code definition is a functional one and the Census a contractual one, but the 
two classifications are roughly comparable so far as coverage of the Industry 
is concerned, 

1/ Census report. Construction In dustry, 1929, p. 7. 
8665 



-3- 

Despite tlie similarity of the two definitions, there are definite limita- 
tions to tjie usefulness of the Census material. Among these is the incora- 
TDleteness of the data for contractors doing "business amounting to less tlian 
$25,000 in 1929. Qf the more than 30,000 general contractors nho fell in thir 
category, only about 6,000 supplied information on their volume of business 
and none in the group reported on the number of employees, amount of ivages 
paid, etc. Hence, much of the Census material must be qualified to the extent 
of this incompleteness. 

Place of the General Contractor in the Construction Industry 

Construction work is performed under four major systems, the distinguish- 
ing feature of each being the amount of resnonsibility assumed by the various 
parties in the construction of a structure. These systems may be described 
briefly as follows; 

(1) Under the general contract system, a single firm or general 
contractor contracts to furnish a completed structure, as 
s-iecified. He may elect to do the bulk of the work awarded 
with his own men or he may sublet any or all portions of the 
T»ork to subcontractors and retain only the general supervisory 
and coordinating functions to be T)erformed by his own help. 

It is exceptional for a general contractor to -oerforra all op- 
erations with his own employees and usually the work of one or 
more of the mechanical trades (such as steel erecting, electri- 
cal, plumbing, heating, or insulation) is let separately from 
the general contract to contractors who may have no financial 
relationship with the general contractor. 

(2) Under the separate contracts system, contracts are awarded by 
the owner or architect to several contractors. A principal 
contractor is authorized to coordinate the work of the several 
contractors with respect to the hoisting of materials, the 
provision of storage space, etc., and a superintendent gener- 
ally employed oy the architect but sometimes by one of the 
coordinate contractors, suiberintends the work of the several 
contractors and adjusts relationships with the principal con- 
tractor. 

(3) Under a third system, separate contracts are awarded for por- 
tions of the work, but the major tiart is done by forces employee 
directly by the owner. A superintendent who represents the 
owner superintends and coordinates the work. Some major in- 
dustrial vfork, speculative apartment house construction, and 
much home building is done under this system. 

(4) Under a fourth system, the owner hires day laborers to perform 
all the major construction operations. This system is ordinar- 
ily used only by public agencies and by large industrial or 
cor^jorate agencies having specialized construction crews which 
engage in maintenance, repair, and new construction operations. 
It is in general use in the construction of mine buildings, 
concentrating mills, tipi:iles, bunkers, smelting plants, etc. 



8655 



-4- 

&'■ definition, construction i7ork under all four systems is tirous-ht under 
Code provisions though, strictly speaking, general building contractors are 
involved only in the first two systems mentioned and only as principal con- 
tractors in the second system. 

According to statistics compiled hy the F. W. Dodge Corporation, apnrox- 
iraately 12 per cent of the tota.1 general building construction in 1934 was 
performed under the first tr/o systems; that is, by general contractors ajid 
principal contractors. The remainder \7as done by separate contractors or by 
owners under the last two systems listed above. 

History 

The general contract system developed in the building division of the 
Construction Industry about 1884. Prior to that time, building operations 
were performed under separate contracts signed directly with the owners and 
executed under the direction of the architect or master builder who served 
the o\7ner as designer and supervisor of the work. Because the functions of 
executing construction bore little relationship to the functions of designing, 
general contractors were developed to take charge of the construction work 
under contracts which required them to deliver a completed structure accord- 
ing to the designer's plans and specifications. 

In the heavy construction and highway divisions, ■; or. -_ r.-'.l contracting has 
had a long history. Large projects such as the construction of canals, 
railroads, postroads, major bridges, sewers, dams, and similar structures 
were built imder general contracts long before general contracting as such 
aiopea.red in the buildin- contractors division of the Industry. The earlier 
general contractors were frequently government- subsidy promoters and finan- 
cial brokers or subsidiaries of promotional and financing houses. Such firms 
were usually organized to handle specific projects and disappeared after 
their projects were completed. With the development of public ownership law 
and the financing of public projects, there developed from among engineers, 
managers, and executives of older iDromotional contracting organizations a 
considerable number of firms which specialized in general contract work for 
highway grading, bridge building, street and sewer construction, and for 
major engineering projects of all kinds in the heavy construction field. The 
growth of such firms is said to have begun in the late seventies and early 
eighties when such public projects as the Brooklyn Bridge, Eads Bridge at St, 
Louis, and other publicly financed ventures proved the economic practicabil- 
ity of constructing under general contract such large public undertakings, 

Mechanization in building construction has progressed to a certain ex- 
tent, particularly with respect to the delivering, handling, and hoisting of 
materials, in which tremendous improvements have taken place. Otherwise, 
however, the Industry is still based upon handicraft operations. The im- 
provements that have occurred in the craft processes have largely involved 
improvements in construction materials and changes in designs made possible 
by improvement in the materials. The use of structural steel frames and 
reinforced concrete have formed the basis for most of the modification and 
improvement in building construction which has occurred since the beginning 
of the twentieth century. 



8665 



Number of Establishments 

The Census report for the Construction Industry shov/ed a total of 45,104 
General Contractors in 1929, of whom 14,766 reported that they had done a 
business of more than $25,000, and 30,338 reported a business of less thcji 
$25,000 for 1929. 1/ The Code Authority for the Industi-y had 39,911 firms on 
its mailing list, as of May 22, 1935. 2/ 

The Number of General Contracting establishments located in ten of the 
leading ste.tes in 1929 is shown in Table I, below. According to this tabula^- 
tion the largest niimbers of General Contractors are located in Ohio, New 
York, anc. California. 

No figures are available on the number of companies operating establish- 
ments in more than one state. 

TABLE I 

Number of General Contractors, by principal States, 1929 





state 


Number of General Contractors 
with Volume of 


Total 




$25,000 and : Less than 
Over : $25,000 a/ 




u. 


S. Total 


14,766 ; 30,338 


45 , 104 



California 


1,393 


4,245 


5,658 


Illinois 


956 


1,355 


2,311 


Massachusetts 


605 


1,146 


1,751 


MichigaxL 


692 


1,361 


2,053 


Nev7 Jersey 


719 


1 , 324 


2,043 


New York 


1,720 


4,207 


5,927 


Ohio 


1,040 


6,9S6 


8,026 


Pennsylvania 


1,197 


2,470 


3,667 


Texas 


580 


949 


1,529 


Wisconsin 


552 


1,345 


1,897 


All Other States 


5,312 


4,950 


10,252 



Source: Census Report, Construction Industry, 1929 . figures compilec 
Tables 1 and 12 for tne various states. 
a/ Includes only those active in 1929. 

Caxiital Investment and Failures 



irom 



No data are available on these subjects. 



l_l Census report. C onstruc t ion Industry, 19 29^ pp. 20 and 155. 

2/ This list is considered incomplete and the total number of establishments 

is held to be something over 40,000. 
8665 



-6- 
Jlnfincial Condition 



'fae Industry, as has 136611 point<='d out, comp-ises more than 40,000 firms 
functioning in all partt; ox th^- United States. The constant shifting of their 
diverse financial nositicns and the di+^?erencfc in their 7-esp.vctive functions 
make it impocsihle to ma]:e an" exact stat'-.iaent in regard to the financial con- 
dition of general contractors av. a '.7hole, 

The data of the IBui^eau oi Internal Reveniie, raresented in Taole II, telo'^, 
on the combined, returns for huildin's and conctruction ahove ground and other 
construction -ondergTOund and on s-orface (nub ouildings) shorrs something of the 
financial condition of the Industry for the yee.'rs 1929, 1931, and 1932. This 
information can be used only to indicate that the volume of business, i.e., 
gross income, and likeivise the net income, have declined markedlv since 1929. 
No statement ab to the extent of the decline for the Industry as a vrhole can 
be maae for several reasons, chief of whicli are the fact that the data are not 
limited to General Contractors and the fact tha.t of the total number of con- 
striiction firms, individuals -and partnerships, only alout 13,000 were coruor- 
ations filing returns. 



8665 



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cellars, ditches, trenches, irrigation systems, etc.; laying pipe for gas and 
se^7er systems, water -orks, etc.; constructing levees, iosei-/oi.vs , laying_ 
masonrv foundations (other than for buildings) ; paving, road huildmg, m- 
cludinf' railroad teds; ouilding oil derricks; drilling wells (gas. oil, or 
water)" sinking shafts; test boring, tunneling or other mine construction 
^ork- (h) general contracting not allocahle to "Building and Construction 
Ahove Ground"- (c) Waterfront construction, including bulkheads, cofferdams, 
da^ns, dikes, drvdocks, jetties, marine rail'vays. niers, rigging lifts, wharves 
dredging, piling; (d) Related industries, such as those of cleaning or scal-^ 
ing boilers; cleaning stone buildings by sand blar.ting or otherwise; treatnen. 
of cei.ient floor to prevent dust. 

Total Value of Construction 

The census reoort on the Construction Industry nlaced the value of all 
construction business handled in 1229 at more than $7,285,000,000. Of this 
total, something over $1,507,000,000 represented the duplication involved in 
the reports of contractors ^7ho worked under subcontract for others, "hile the 
remaining $5,778,000,000 was the measure of the actual net value of construc- 
tion -ork done. 1/ The T. \h Lodge Corporation estimated the total value of 
all construction work for the United States in 1929 at $7,901,400,000. 2/ 

The above fi.=aires refer to total construction work done by all ty-ies of 
establishments. The Census figures show that the 14,766 General Contractors 
in the groun doing a business of more than $25, GOO in 1929 handled constrac- 
tion valued at $4. 217. 367, COO, or 58 ijer cent of the total $7,285,000,000. 
Information is not available as to tne total construction handled by general 
contractors who did a business of less than $25,:;00. The $4,217,367,000 
worth of construction business handled by the larger General Contractors re- 
presented more than 67 T^er cent of the work handled oy the three mam build- 
ing grouT3S, general contractors, operative builders, and subcontractors (as 
re-oorted by establishments doing a business of more than $25,000 in 1929. ) 3/ 

Type of work 

The imr-ortance of various tyoes of construction handled by general con- 
tractors is indicated in Table III below. By far the most im^Dcrtant item in 
1929 was building. Next in importance were highway construction, and street 
naving. The amounts shovm for general contractors who handled business of 
less than $25,000, it should be noted, are based on reioorts from only about 
6,000 of the 30.000 or more general contractors in this group. 



1/ Census report. Construction Industry, 1929 , p. 20. 

2/ F. W. Dodge Corp., Division of Statistics and Research. Building and En- 
gineering Volume in the United States (January 2, 1931). 

3/ Census reTDort. Construction Industry. 1929 . p. 21. Since the figures in 
this -oaragra--)h refer to "work handled" rather than "work done" (by O'-n 
forces) the duplication mentioned at the beginning of the section has not 
been allov/ed for. 



8665 



-9- 
TABLE III 
Value of VL'i-ious Types of Construction Handled by G-eneral Contractors, 1929 



Type of T^ork 



General Contractors -.vith Value- of Business 



$25,000 and Over 



Less than $55,000 £. 



Number of 
Establish- 
ments re- 
porting 



Value of 
Business 
(Thousands) 



number of 
Establish- 
ments re- 
portin;^ 



Value of 
Business 
(Thousands") 



Total 


14,766 : 


$4,217,357 . 


6,073b/ : 


$65,832 


Building 


10,131 


2,622,047 


5,464 : 


60,164 


Highv/ay 


1 , 514 ; 


443,064 . 


330 : 


4,065 


Bridge and Culvert 


475 


137,206 


85 : 


749 


Grading 


396 


47,733 . 


1 : 


16 


Street Paving 


984 


282,760 


11 : 


124 


Sev;er, Gas, IVcter, C&nduit 


494 


115,153 


117 : 


1,159 


Dam and Reservoir 


87 : 


26,483 


17 : 


211 


Waterworks 


105 


44,210 . 


1 : 


14 


Dredging, River, Harbor 


193 


104,463 


10 : 


148 


(etc.) 










Levee 


34 


5,631 


- ; 


- 


Railroad 


137 


105,302 


3 


40 


Foundation 


56 


8,2er2 


14 


140 


Central Station, Light 










and Pouer Plant 


86 


158,160 






Air Trajisport Work 


7 


2,416 






Refuse Disposfl Plant 


7 


1,721 






Oil and Nat\aral Gas Pipe 










Linc' 


22 


29,507 






Subwa^r (other Than Build- 










ings) 


: 24 


71.d]e 






All Others 


; 14 


9,411 







Source: Census report, C onstruction Industry, 1929 , pp.56 and 165. 
a/ Includes only those active in 1S29 
b/ Only 6,073 of the total 30,338 in tiiis group reported this info3aatior. 

Productive Capacity 

The productive capacity has never been reached and is limited only "hy the 
vol\ime of available labor and capital. At no time has the productive capacity 
approached the limit. Between the years 1924 and 1929 there was in some locali 
ties a scarcity of certain skilled workmen but the condition was not general 
and never really became serious. 

Competition 

There are no industries whose products compete directly with the products 
of this Industry. The F. W. Dodge CoriDoration shows that the general contract- 
ors in 193^ did 72 -oev cent of the total constr^action in the Dodge Area. (Mean- 
ing 37 States east of the Rocky Mountains.) 
S665 



-ic- 

Ciiapter H 

LAi^OH 

Total F-\m'ber of Waf;e Earners 

Lata on the total •.i.uTn''oer of wage ear.ieis einpioytd "by general contractors 
are not available. The Censua of Constn^ction reports are limited to 13,025 
of the 1-1,766 general contrrCucr?. vac cLia -'orl- valaed at $25,000 or more. 
No figures are given for general constractors in the "Less than .■^,25,000" 
class. Ij' 

Seasonal Variation in gi.'.ploymon t 

Thao r-here is a definite seasonal variation in em};lo^Ti!ent in the Indus- 
try is evi'lent from det-} in the Census ret^ort rhich shov'S Faf,'e earners hy 
months in ?.9£9, In January of tl'iat year 329,811 \-'3,ge earners wer® employed 
ty the 13,056 estatlishment b reporting. The namher increased through the 
spring tni sumner to a ;jeak o^ 574,149 in August. vYith a decline to 430,299 
in December. w'hile the Census data do not co-"er tue entire Industry, it 
is helieved. that the trend of evrrployment as indicated ly these data is 
fairly representative of the Industry as a whole for that year. 2j 

Total i'uirual Wages 

Data 01- tiie total annual wages paid hy the Indr'.stry are not availahle. 
The 14,766 general nor. tractors who did "business valaed ^t more than ;p25,C00 
in 1929 reported their total rage hills, hut there is no Census information 
on the .,Toap ^/hich did vork valued at less than $25,000. 3/ 

Avera',e Iloui-ly Earnings and Hours Per Week 

In general, average hourly earnings are cf little value in the G-eneral 
Contractors Industry since severa.1 hundred classos of lahor are employed and 
the v/ag'es for each cl.ass Vcary ajnong difterent so-.f'.ons of the cotintry a^id 
on different .jchs. 

Employees may he cl:.>ssed j-s skilled, c>eiiii-?i.;ixled, and unskilled, 
although there are no clearly defined divisions ai^or^ the three groups. Vdbh 
the increasing mechanization of operationr;, the proportion of skilled and 
semi-skilled hrs increased al-hough this is not necessarily reflected in the 
avera-ge ho"arly rates. 



■ y 



1/ Cen"sas report, C onstiuction Industry, 192D , p. 53. The total mov.t,! 

average uur.ler of wage earners employ^j. hy th°s6 13,036 &eneral C"-"-"" -' 
was 517,857 in 1929. This numter should he considered as a minimum onlj'. 
As the turnover in employment in tnLsIndustry is relatively high the 
nrconher of individuals "ho i^orked for the reporting. con<-ra< t-or^- during tne 
year v:ou.ld he somewhat higher tn;ui the above figure, 

2/ Ihid . , p. 33. 

3/ The total wages paid hy these 11-,75G Genc-'al '"'.'^r^•^T••.ctors was $91<,112,000 
in 1929. Ibid,, p. 21. 

8565 



-11- 

Since the "beginning of 1954 the Bureau of Lator Statistics has published 
each j.ionth the average hourly earnings and average hours worked per v/eek from 
ahout 10,000 firms in the Builaing Construction Industry. These figures, 
which are shown in Table IV, helGw, are based on reports received from all 
over the country, but for the most part firms reporting are located in large 
cities. It should be stressed that these figures apply to all kinds of 
building construction and not to general contractors alone. 

Hourly earnings ranged betv/een 77.2 and 83.5 cents, and average hours 
worked per week between 26.6 and 29.9 hours. 

TABLE IV 

Average Hourly Earnings and Hours Worked per Week in the Building 
Construction Industry, by Months in 1934 





Kuraber of 


Average Hourly 


Average Hours 


Month 


Firms 


Earnings 


Per Week 




Reporting 


( cents) 


Per Man 


January 


7,471 


7-^.5 


27,9 


February 


10,001 


79.2 


26.6 


March 


10,281 


79.0 


27.8 


April 


10,410 


77.4 


28.6 


liay 


10,647 


77.5 


29.6 


June 


10,727 


77.2 


29.9 


July 


10,725 


78.8 


29.7 


August 


10,479 


79.7 


29.0 


Septeiaber 


10,491 


80.1 


: 29.0 


October 


10,356 


80.1 


: 29.8 


November 


10,338 


81.9 


: 28.9 


December 


10,054 


83.5 


: 27.8 



Source: Bureau of Labor Statistics, Trend of Employment . 

Additional information on earnings for specified groups in the Industry 
is contained in Chart I and Tables V and VI. Chart I presents a compilation 
of data on wages and material costs from various indicated sources for the 
period from 1921 through 1934. The wage data are based on reports from 20 
cities. According to this chart, wage rates per hour rose steadilj'' over 
the period from 1922 to 1930 but after that showed a marked decline. The 
information in this chart also applies to building construction in general 
and not to general contractors alone. 

Table V, below, shows average hourly wage rates and estimated yearly 
earnings ajid hours worked in the years 1929 and 1933 for selected groups of 
skilled construction workers. These figures were compiled by the Division 
of Research and planning, NRA, in many cases from data furnished at public 
hearings by employers and employees within the respective listed areas. 
These figares indicate variations previously mentioned in the rates paid to 
the sarae class of workers in different cities and also the variation in 
wages paid to different crafts. In nearly all instances, hourly rates 
were lower in 1953 than in 1929. 



8665 



ttit' IOC 

110 



CSBASa I 



»tc r N m Nft 

'us 



tos 



Sf 



ao 



OS 



60 



7S 



70 




$0 



ss 



so 



Mtfa- Rates per hour Architeeturai ff0cor<t -~ ffeeognigetJ ratms. 

Wa^« ffafe^ per hour, f/jft/teer^nf Afeirs /Fecord — Mt^eragm rates. 

Coef of mater /a/e. Compafed by ffesearch and Pfannina -- N ffA. 
f^ce to eonfractorj *» less than car/oe<l /0fe defiv<ered on the Jobof retail dealers. 

Mage ffate per hour. Associated General Contractors' Members. 

patA aira/la^fe on// tar /sss (Apr/I -Sep^mberJ and Januarw, t^MS. 
(^^/tminarj report from the Cansfruefien Coda JiutMor/f/.) 

Mxoe /fate per hour. Mtt/o/ta/ ttmal £state ffoare/s' Membare. 
Data ayat/able only for July i9ms. 



Shorn ttte spread, aecordtng tb the reports of e/'ted agenctes^ between the 
vrd lotvest mage rates paid in identical communities during 
•ctf ye rears sfnce lS30- /Reports for Januarr, ^SSS from 7/u 

Construction Code Author/t/ are on a stmilar base *fithfhe^-S.C. reports 



highest and 
the respective 



■ars since iSSO- ffeports for January. ^SSS from ihe 

„, 9 Authoritf are on a stmilar base *fithfhe/9-S.C. reports 

of /*W. The preliminary report used here ts only /nd/catme of the tnand, 
Ifeports frem ttte MItS. haire not 6een reeeieed for i0S4 or ssss 



A^OY£: 



\.-- 






A. 



4f 



[nyinttring News H*cord maft data corcrinf titntjr eitifs far ifii-mf incluiiira wtrw rktaiiud from a 
pamphM »ittif/*d 'Conttruetion Cotfi ISIO-l»ii' publitlmd bjt tha C^N.K Data far lail apd l»M bf nonth* 

mere taken from the Joffuarf i. 'fStf /srue (pOfa Si) of tAo C N. If: 

/I ec, Cottjtructian Coda Autliorif^, a/itf H/t.B. mofe comfiilafions eotar flto tame tmiftf dtite at does tfie £Mtt. 



lose 



I04i 



934 



941 



Bee 



.S3i 



104 



732 



tja 



in 



SM 



JU 



.*r 



I 



ISZI 



ISZl 



I3Z3 



1924 



lazs 



19 Zt 



1327 



I9ie 



i9za 



1930 



1931 



1932 



1933 



1934 



-12- 

Sirnilar data for the years 1929, 1931, 1933, and 1934 are presented in 
Table VI, below, for bricklayers and hodcarriers in a large n-umber of cities. 
These figures indicate a decline in wage rates between 1929 and 1933, i7ith 
slight iiirprovements noticeable in 1934. 

This material at best represents fragmentary information obtained from 
a variety of sources and is not limited to employees of general contractors 
but rather a^jplies to workers in the Construction Industry as a whole. 

Employees Under 17 Years of Age 

The Census of Occupations for 1930 shows the following employees in 
the Const]raction Industrj'' as a whole between the ages of lb and 17 years. 

Architects, designers, and draftsmen's apprentices 47 

Carpenters' apprentices l,7irf5 

Electricians' apprentices 1,084 

plumbers' apprentices 1,698 

Tin and coppersmiths' apprentices 550 

Apprentices to other building and hand trades 3,922 

Total 9,005 

Under the Code the minimum age for apprentices in the various trades 
was 18 years. 



3665 



-13- 
TABLS V 
Wage Rates and Estimated Average Annual Earnings and Hours of EiTDlojTnent 
for Skilled Craftsmen in Areas covered by Regional Agreements under the 

Construction Industry Code 



Area a/ 



Louiaville, 



1929 



1933 



Hourly Earnings Hours Hourly Earnings Hours 

Rate in Year "^orked Rate in Year '-;orked 

Paid (total) in Year Paid (total) in Year 

Painters 



Philadelphia, 
Pennsylvania 


$1.05 


$ 840 


800 


50^ to 

$1.00 


$ 


335 


670 to 
335 


Cincinnati, 
Ohio 


$1.3li- 


$1,440 


1,100 


7 to 
$1.15 


$ 


420 


? to 
365 


St. Paul, 
Llirinesota 


87v to 
$.95v5 


$1,120 


1,280 
1,180 


to 60e? to 
90(* 


$ 


530 


885 to 
590 


St. Louis, 
Missouri 


$1.43^ 


$ 583 


405 


80(# to 
$1.25 


$ 


201 


250 to 
160 


Sha\Tnee County, 
Kansas 


$1.00 


$1,025 


1,025 


70rf to 


$ 


360 


515 to 
4-10 


Ceda.r Rapids, 
lor^a 


$1.00 


$ 955 


955 


25(^ to 
75?5 


$ 


311 


1,250 to 
415 


State of 
California 


62-3t to 
$1.12-^: 


$1,206 


1,95Q 
1,070 


to 72^ to 
87-?7^ 


$ 


545 


750 to 
625 


Houston, 
Te::^as 


$1.12t? 


$1,340 


1,190 


62-:<j; 


$ 


442 


71b 



Canoenters 



Kentucl 


■^r 


$1.00 


$ 912 


912 


80^ 


$ 


253 


320 


Sedg-wick 
Kansas 


Coujity, 


$1.00 


$ 975 


975 


30^ to 
75<# 


$ 


70.50 


235 to 
95 


Houston, 

Terras 




$1.12 


$1,400 


1,250 


50/ to 
75/ 


$ 


259 


520 to 
346 


Wilmingt( 
Delara: 


3n, 

re 


90^ to 
$1.00 


$1,370 


1,520 to 
1,370 


40/ to 
$1.00 


$ 


380 


950 to 
380 



Electricians 



Chicago, 
Illinois 


$1.62^? 


$1,520 


935 


$1.00 
$1.50 


to 
$ 


495 


495 to 
330 


Detroit, 
Michigan 


$1.50 


$1,880 


1,250 


$1.00 
$1.25 


to 

$ 


580 


580 to 
465 


Evansville, 
Indiana 


$1.37^ 


$1,200 


875 


7 

$1.00 


to 

$ 


408 


? to 

408 


Miami, 
Florida 


$1,50 


$1,030 


690 


? to 
$1,00 


$ 


584 


7 to 
584 



(Continued on follovring page) 



8665 



-14- 



Area a/ 



Mo.sons 



1929 



1933 



Hotirly Earnings Hours Hourly Earnin^^s Hours 
Br.te in Year v-orked Rate in Year worked 

Paid (total) in Year Paid (total) in Year 



St. Louis, 
Missouri 


$1.75 


$1,800 


1,030 


75>i- to 
$1.50 


$ 475 


635 
320 


to 


Houston, 
Te-.rs 


$1.62-1 


$1,720 


1,060 


7 to 

$1.00 


$ 290 


7 

290 


to 


Los An.^'eles, 
California 


$1.37 


$1,625 


1,190 


7 to 

$1.00 


$ 316 


7 

316 


to 


Bridgeport, 
Connecticut 


$1.62% 


$1,304 


800 


? to 
$1.37^ 


$ 165 


7 

120 


to 



Dallas, 
Texas 



Plasterers and Lathers 

$150 to 1,430 to 50(< to 700 to 

$1.62% $2,150 1.320 $1.25 $ 350 280 



State of 
California 



62-g^ to 
$1.50 



$ 937 to 1,500*0 50^ to $ 211 to 422 to 
$1,265 850 $1.25 $ 157 125 



State of 
TTashington 



$1.25 to $1,335 tol,070to $i.C0 to $ 352 to 
$1.50 $1,600 975 $1.2 5 294 



294 to 

280 



Cincinnati, 
Ohio 



Pl-'omhers 



Denver, 
Colorado 


$1.37% 


$1,702 


1,250 


$1.00 to 
$1.37% $ 400 


400 to 

290 


Garjr, 
India.na 


$1.50 


$1,420 


950 


25(* to 
$1.25 $ 400 


800 to 
320 


Buffalo, 
IJer York 


$1.37% 


$1, 630 


1,180 


7 to 

$1.00 $ 455 


7 to 
455 



$1.50 to 

$1.627T 



$2,700 



Tile Setters 

1,800 to 80;^ to 

1,650 $1.00 $ 330 



415 to 

330 



Philadelphia, 
Pennsylvania 



55->j to 



$1.50 $2,180 1,450 $1.25 $ 217 



396 to 
L75 



Source: Compiled hy WA, Division of Research and Planning, from data 
furnished at puolic hearings by employers and employees in the 
Construction Industry. 

a/ The areas here listed are designated "by the names of the respective 
major cities or counties ^-'ithin them. They frequently, honever, 
include surroundin;? territory. 



8665 



-15- 
TJOJLE VI 



Hourly TJage Rates of Bricklayers and Hodcarriers in Various Cities, 

1929, 1931, 1933, and 1934 



Compiling igency 



Year 



Average 

Hourly 

Wage Rate 



Bricklayers 



Hodcarriers 



llum"ber of Average 
Cities Hourly 
Covered Wage Rate 



Builders' Association 1929 $1,512 114 
Builders' Association 1931 1.509 121 



$0,761 
.764 



iluiaber of 
Cities 
Covered 



103 
110 



Builders* Association 1933 

Bricklayers, Masons, and 
Plasterers Internation- 
al Union of America 

Associated General 
Contractors 

National Association of 
Builders' Exchanges 



1.204 



115 



.624 



1933 


1.206 


135 


1953 


.865 


199 


1933 


1.218 


48 



96 



Builders' Association 1934 1.237 

National Association of 

Builders' Exchanges 1934 1.214 



115 



46 



,657 



107 



Source; Coi.ipiled by MA, Researcn and Planning Division, as follor/s: 

Builders' Association data — rotoprint releases published by it; 
Bricklayers, Masons, and Plasterers Union data — special tc.bular- 

tion for iJRA, Research and Planning Division; 
Associated General Contractors data — as tabulated by the Associa- 

tion from c^uestionnaires sent out by it; 
National Association of Builders' Exchanges data — as published 

in the Architectural Record. 



8665 



-16- 

Chapter III 

MA.TEIIIALS: 3A\7 AlTD SEi.il-PROCESSED 

B'roenditures for Ra\7 llaterials 

The Census data shon tloat the 14,766 general contractors nhose volw.ie of 
business amoimted to over $25,000 in 1929 reported their total cost of -mater- 
ials in that j^ear as $1,188,687,000. 1/ 

Frinci-jal Liaterials Used "oy the Indiistr^ 

An idea of the relative imports-nce of materials used, "by general contrac- 
tors i.iay he gained from Tahle VII below. These figu-res also include e:q^Dendi- 
tures of operative builders, hut it is felt that their inclusion does not 
seriously inpair the usefxilness of these figujres for shovring the proportions 
spent for different iiaterials, Tlie chief materials used are sand, gravel, etc, 
which represented over 17 per cent of the total in 1929; cenent, which repre- 
sented alnost 15 per cent; and lunber, which represented 12 per cent. Struc- 
tural and reinforced steel, brick, nillwor]:, and pipe (cast iron and drain- 
tile) are other materials used in large quantities, 

Llaterials In'oorted 

Ten materials used in this Industr^r are iijported, A small airiount of 
cement is imported from Selgiuin and Denmark, and occasionally some brick is 
imported from Germanj'' and Denr,iark as ballast. Steel is occasionally imported 
from German;-' and France and shingles and Irtmber are imported from Canada, 



1/ Censtis report, Construction Industi';'', 1929 , p,21, 
8665 



-17- 



!EA3LS VII 



Cost of I.Iaterir.ls usrd "by 14,765 G^r-er-.l Contractors 
and 750 Operative Builders in the "$25,00^ -x-if; Over" grovvo M" '-ii^:"., 1929 a/ 





Cost of 


Per Cent 


Kind of Material 


Materials 


of 




(t: 


lousnnd'^ ) 


Total 


Sand, gravel, crushed stone, slaj. 


$ 


150 , 007 


17.2 


cinders 








Brick 




52,040 


5.0 


Cut stone, granite and raartle 




21,714 


2.5 


Cement 




127,994 


14.7 


Structural steel 




64,875 


7.4 


Reinforcing steel 




4.'3,071 


4.9 


Lumber, roufjh r,nd finished 




107,049 


12.3 


Mill\7ork 




43,893 


5.0 


Hard\7S,re, rou^h and finished 




16,704 


1.9 


Heating- and ventilating equipment 








and su-pTDlies 




10 , 635 


1.2 


Electrical appliances and supplies 




15,036 


1.8 


Pipe 




43,999 


5.0 


Bittuninous paving materials, tar. 








asnhalt, end oil 




23,609 


2.7 


Machinery 




18,410 


2.1 


All other materials 




122,806 


14.1 


All Materials distributed "by kind 


$ 


873,637 


100.0 



Source: Census report, Constriiction Industry, 1 929, "p. 27. 

a/ Bases on re^iorts of 14,756 general contractors and 750 operative 

"builders whose exoenditoi'es for materials in 1929 amounted to 
$1,13&,617,201 and $22,602,226 resnert .Tely. 

Expenditure for Machinery and Equipment 

Heports submitted by 13,276 general contractoi-s in the class pith busi- 
ness over $25,000 showed expenditures of $85,452,254 for equipment purchased 
during 1929 and -olaced the total inventory value of their equi'oment at the 
end of 1929 at $326,299,107. 1/ 



Ij Cencrs re-nc"f-t, Construrction Iv ^ '^^st xY, 1939, p. 96. These ■-, ontractors 

reported the total value of their constr actii^n business as $3,865, 504,038. 



8665 



-18- 

Chapter IV 

PRODUCTION AND DISTRIBUTION 

Production of General Contractors in Principal States 

Table VIII, 'below, shov/s the total amount of construction reported in 
1929 by general contractors located in the principal states. These figures 
(Coliomn 2 in this table) do not represent the value of construction work done 
in these states but rather show the total amount of business reported by- 
general contractors located in these states. On this basis, 20 per cent of 
the total construction was reported by contractors in New York, 9,6 per cent 
in Pennsylvania, and 8,8 per cent in Illinois, 

Construction Outside Home State 

k large proportion of the construction is done by general contractors 
outside their home states. In the country as a v/hole, general contractors 
did almost 20 per cent of their work outside the state in vrhich they were 
located. For the tea states shown in Table VIII, the percentages of work done 
outside the contractor's home state ranged from 3,3 per cent in California 
to 45 per cent in Massachusetts, 

Advertising 

National advertising in this Industry is negligible in amount, and is 
generally confined to magazines and newspapers, A small amotmt of advertising 
is done locally by radio, principally hy firms specializing in modernization 
work, 

TABLE VIII 

Total Value of Construction and of ConBtruction Done Outside Home State 
by 14,382 General Contractors by Principal States, 1929 in the 
"$25,000 and over" group. 





Number of 


Total 


Per Cent 


Value of 


Per Cent 


State 


Establishments 


Value of 


of 


Construction 


Outside 




Reporting 


Construction 


Total 


Done Outside 


Is of 






Business 




Home State 


Total 






(thousands) 




(thousands) 




California 


1,354 


$ 292,111 


7,1 


$ 9,607 


3.3 


Illinois 


938 


358,918 


8,8 


68,249 


19,0 


Massachusetts 


590 


217,115 


5,3 


98,302 


45,3 


Michigan 


677 


183,233 


4,6 


7,413 


5.9 


New Jersey 


701 


195,074 


4,8 


29,212 


15.0 


New York 


1,676 


819,930 


20,0 


131,194 


16.0 


Ohio 


1,023 


275,603 


6,7 


56,758 


20.6 


Pennsylvania 


1,158 


393,813 


9.6 


104,273 


26.4 


Texas 


573 


147,676 


3.6 


10,742 


7.3 


Yfisconsin 


544 


88,360 


2.2 


8,335 


9.4 


All other States 


5,151 


1,118,885 


27,3 


281,904 


25.2 


Total in Sample 












for U,S. 


14,382 


4,r95,988 


100.0 


805,989 


19.7 


Source: Census r 


eport, Construe 


tion Industry, 


1929. Compiled from Table 3 for 



8655 the various states. 



-19- 
SUi'^g:estions for Overcoming Seasonality of Production 

Production in the Industry has "oeen hi^-hly seasonal. In recent years 
various methods have "been pro^oosed, and to some extent tried, for re^larizing 
production. It has been demonstrated, for instance, that V7inter lay-offs can 
now he largely avoided "by taking advantage ox technical changes in the art of 
building, recently invented machinery and power djiven tools, improve-aents in 
materials, and by organizing the available work better. Another method that 
has been tried with success is the coordinating cf Jobs so that less time is 
wasted in changing jobs. In this coiTnection it has been suggested that a 
central bureau be established as a clearing house for all construction pro- 
grams in a given territory, the use of which would be voluntary. All con- 
tractors in the same line of v/oriz would pool their labor and arrange to dove- 
tail their jobs insofar as possible. A continuous survey of the labor supply, 
conditions of apprenticeship, building costs, etc., would contribute to\7ard 
educating the public as to the time to plan for building and repairs. Such a 
scheme obviously '.vould require a maximum of cooperation among contractors in 
the saine line. 

Other iDroposals for elimina.ting seasonal sl-'oinps include the schedaling of 
public projects at times when private construction is normally at a lov/ level, 
spreading leasing da.tes throughout the year to prevent concentration of repair 
work, planning other repair work for "off" seasons, and offering lower bids by 
contractors for winter construction. 



8665 



-20- 
Chapter V 
TEADE PRACTICES 
Unfair Trade Practices Prior to the Code 

The folloninp; are the chief unfair trade -practices ;7hich r/ere 
prevalent -Drior to the Code: 

( 1 ) The ttirnin,- out h^'" architects or en.?ineers. in cormetition vfith 
other architects. en^:ineers or vTnhlic_qff i cials. of deficient -ola .ris_or 
s-oecifications . - Contractors vrere forced to "baso their oids on these 
•olans and s'oecifications and this resu].ted often in losses to contractors 
whose "bids/taerefore, nay have 'been inacc-urate, or in losses to OTniers. 

( 2 ) The callin.T for an excessive nuiher of alternate hid loro-posals . 
- This greatly increased the cost of preparing "oids and was sometines 
used as a device to "beat dor/n hid prices. 

(o) Bid Peddlin ,-;. - A contractor v/as considered to he "peddling" 
his oids if, after having already suhnittcd his original hid on a pro - 
ect, he learned AThat the lov; hid had ^oeen and offered hy some means or 
other to reduce his hid helOT-/ the lorz hid, or hy other devices lowered 
his original hid. Tlie result of the practice was to lower prices and 
standards in the Industry, 

(4) Bid Sho-Q-oing . - An awarding authorit-y was considered to he en- 
gaged in "hid shopping" when it rejected all original hids on a project, 
often revealing the low hid, for the piu-pose of calling for new hids at 
still lower prices, or when hy other devices it sou^^-ht to induce a low 
hidder to reduce his ririce. The effect uoon the industry was the sane 
as that of "hid peddling. " 

( 5 ) The v/itliliolding hy general contractors of payments due suh- 
contractors or material nen . - This v/as done so that such contractors 
might utilize the funds withheld to finejice other projects for which 
they were having diff iciiltj'" in ohtaining the necessary money, 

(6) Zrcessive Bac.r-Char-in": . - This practice was first used on 
large projects, TThen a suhcontractor had performed his share of a joh 
he woxild he presented with a hill from the genera.l contractor calling 

for the pajnnent of e::cessive fees for having used some of the contractor's 
equipment, such as scaffolding or hoists, 

(?) Suhstitution of Inferior I.Iaterials . - Intense competition 
giving rise to the 'oractice of hid peddling and hid shopping and res"dlt- 
ing in prices which were uireasonahly low, often forced contractors or 
suhcontractors to suhstitute inferior cheap materials in order to save 
themselves possihle losses on projects where prices had heen thus cut. 
Desire for greater profit also resulted in the suhstitution of inferior 
materials. 



3655 



-21- 

(C) Unbr.la:iced Bidding: . - This is a practice in vrhich contractors in 
hear-/ and hir-hwaj' construction s^ometines ene;aged. On r.any r,rojects, ■'oids 
were' "based on nuinerous different tuiiits, such as per cubic yard of dirt ^ or 
roc^c to be removed, or per thousand feet of lumber to be used. By talcing 
advantage of their ov;n findiji^s on the nmiber of imits and their costs, 
as against the specifications of an awarding s.uthority's engineer, contrac- 
tors 'regulated the specific aids on imits of vrorl: so that the total of 
their bids for all uiiits vroxLld be Ion and at the same tine might bring 
high orofits on certain units of the v/orl: which they suspected would be 
more nuiierous than the awarding authority's engineer had estimated. Lilre- 
TTisc, b^- quoting high "orices on units of worl: which would be completed 
early in the life of a project ajid keeping until near the end the units 
performed at low prices, a contractor was able to force an owner to bear 
a large -oortion of the financing costs thro-jugh the greater lart of the 
life of the -oroject and still keep his total bid sufficiently low. The 
unbalancing of bids, also assiimed many other forms. 

( 9 ) Reducing Wagies. Len^'^hening Uorking Hours and Debasing Other 
Conditions of fforlaien . - These practices arose from and accentuated 
de'oression conditions. They broke down the foundation uoon which the 
competitive standards, such as they \7ere, had been maintained, and helped 
plunge the Industry into the condition e::i sting in 1933, 

(10 ) Inequities Arising f r oi.i Loose Credit Practices . - Lien la^7s 
made ovrners as v;ell as contractors responsible for the pa:yment of material 
and other bills. As a result, credit sometimes was looselj'' extended to 
irresponsible contractors, who vfoi^ld finish projects and leave debts for 
materials, etc., to be paid by ovrners. The ability to employ this raethoc' 
to defraud owners naturally reculted in loose bidding by irresponsible 
contractors, who often cat bid ••irices below anticipated costs. Contract 's 
thus performing contracts at a loss v/ere enabled to thrive, e.'roecially 
during the period imviediatel3'- preceding the depression. 

(11) The Kick-3ack Backet . - To avoid the pa^naent of wage scales 
required by Union agreements or otherwise, there developed what becam'~ 
Icnown as the "kick-back racket," In order to undercut the reo^uiic^ rate, 
some contractors vrould nay the required scale to their employees in ftill. 
Thereupon, the emplo3'-ees, immediately upon the receipt of their pay checks, 
would be forced by the contractors (under the threat of losing their jobs, 
etc.) to give back, or "kick-back" a portion of their daily or weekly 
earnings, 

(12) The Lumping or Subletting of Labor . - Wlien a contractor obtained 
a contract for a project from an owiier, he might underta-ce to furnish only 
the materials for the job and let to a subcontractor or a journeyman the 
responsibility of providing the necessary labor for the job at a specified 
price. Such subcontracts, calling for the provision of labor alone were 
usually negotiated at a low price, at which the contractor who provided the 
material was safeguarded against loss, while the profit of the subcontractor 
or labor-gang foreman ordinarily depended upon his ability to hire as little 
labor and at as low wages as possible and to ercoloit the labor thus employed. 
The imposition of siich conditions upon a subcontractor or a journejonan gang 
foreman naturally resulted in the degra,dation of labor conditions and of the 
laborers thus hired. The results, of coui-se, were the debasement "crf labor 

3665 



GtancLa.^ds for whole conm-anitioG, the ■up.settliri;'; of cor.ipetitive couditionc 
and h-oj.-ried, slipsiiod vor]:, caTinia:;: dissatisfaction anonfi- project ovmers 
and inj\u-ing the reputation of the original coiitrcxtor, 

(l?) Settin,^- Bid Price ?olovi Cost '.7ith the Erroectatio}^ of_ Gij-nAJln^ 
Profits O ut of Sutcontro.Gtprr., _o r of Pro fitin.r "07 not Pavin,e: Material Bills . 
- 37 this practice a contractor suhnitted his "bid on a project helow his 
OTrn estimated cor.t, expecting to tnJce advantar^e o-;" conpetition anong sub- 
contractorc in order to rscora ::ot onlj^ tho losses: hut also perhaps to r^in 
sone profit, Bovuid uo '.vith tliii. practice ^7ere the practices of hid peddling, 
hid shopping, etc, 

(14) The riTolOT.nent of P rison Lahor . - In the Street Pavin.7 and 
Hi^hna;^ Construction Suhdivicion of the Industry,'-, in particiilar there has 
heen a tendency in rone States to suhstitrte convict lahor for free lahor. 
Contractors in Street Paving .and 'lighv/ay Construction usually have a great 
deal of capital invested in iiechcnized Dcuipnent, These contractors, in 
the states where convict lahor has novod into the field, have fo\\nd them- 
selves confronted with ruin and the less of expensive eiiuipnent, which in 
Elans'- cases lias heen put up as collateral for credit. TTith impoverished 
crev.'s of workmen, they have heon driven into states \/here convict lahor has 
not demoralized the market, and in those s^'ates they have slashed prices 
and wages in desperate attemptc to save their equipment and their husinesses. 

Trade Practices Which. "Because o f Ahusiv e Use, Became Detriment al 

Ilany of the -onfair trade "iractices in the Gonstriiction Industry are the 
outgrowths of norma-1 practices, and their \mfairnesG depends often upon the 
degree to which and the pui'-posos for v/hich the normal pra.ctices are engaged 
in, 

(1). Calling for alternate hids ma-y he justifiahle to give the hidding 
contractors a clear leewaj?" to su^-gest new and perhaps cheaper and more 
efficient designs and to provide an idea 0:^ the relative costs of designs. 
Only when an excessive numher of alternate hids are required and the purpose 
is to heat do\7n prices, does this practice hecome .::ufair, 

(2). An awarding authority may ho justified in ca.lling for ne\7 hids 
upon discovering that true conpetition has heen a.hsent or tliat the speci- 
fications upon which hids have heen received will cost more than the award- 
ing authority can afford, XTiien new hids are repea-tedly ceJled for in order 
to heat down prices, however, this hecomes an unfa«ir trade practice. 

(3), G-eneral contractors and owners have h;'" contract requirements 
always ■.7itlii''.eld 10 or 15 -ner cent of the monthly amo-unts owing for work 
performed, usually to he "oaid upon the completion of a joh or in the case 
of contractors, u"^:)on the receipt of the final payment from the owner. The 
practice hecomes unfair, however, when the amounts witMield are e::cessive 
or are vrithheld for devious ptu-poses without the consent of the creditor 
and in eiicess of ainoxints as provided in contracts, 

(4), It is considered ethical for a subcontractor of his ovm accord 
to pay reasonahle fees for the use of e. genera,! contractor's equipment, 
G-eneral contractors, hovrever, have heen icao'.vn to force suhcontractors to 

8665 



-23- 

use their eq.uipment in order to overcharge them for it. And often, although 
not "orovided in contracts, general contractors trill suhmit to subcontractors 
bills for e::cessive -oayr.ients for the use of the general contractor's equip- 
ment and general services. Under the latter conditions, the practice "be- 
comes unfair- -Jid is knonn as "excessive hacl: cliarging." 

(5). Inferior materials, if agreed to "oj the owner, may "be substituted 
justifiably on a project for the sal:e of e\-pediency, or for other reasons. 
The substitution of inferior materials without the knowledge of an 0T.7ner, 
ho\7evGr, is unfair, 

(6). Unbalanced bidding may be jiistifiable if the ovmer of a project 
is informed of it and consents because he is able to secure money more cheaply 
than the contractor. 3y unbalancing the unit price bids so that the owner, 
rather tlian the contractor, carries the heavier financing cost during most 
of the life of the project, savings may be obtained on the total costs. 
Unbalanced bidding, however, may serve as a means for contractors to tal:e 
advantage of unforeseen circumsta,nces (foreseen by the contractors but not 
by the engineers who prepared the plans and specifications upon which the 
estimates are based), by which certain units which are bid at a high price 
per unit are found upon perfoi'raance to exceed the number of units which 
were estimated, thereby enabling the contractors to profit unreasonably at 
the erroense of owners, 

(?), In a, few service trades, such as painting and decorating, the 
letting of contracts for labor services alone, when the contracts guarantee 
fair wages, etc. , maj"- be justified. There are interior decorators in many 
cities and towns, for example, who limit their activities to designing and 
advising and who maintain no forces of their own. TTlien they secure decorat- 
ing contracts involving, for instance, painting thej- go into the field and 
hire, probably tlarough a subcontractor, the necessary skilled labor, whom 
the3^ furnish with materials. Under such circumstances, the lumping or sub- 
letting of labor is justifiable. 

The development or the causes of the other unfair trade practices set 
forth in the list of T.mfair practices are debatable. There may of course 
be peculiar circumstances when some of then may be justifiable, but, as 
stated, the determination of unfair practices in the Industry' must be based 
upon the degree or the purposes of the practices as well as upon the 
practices themselves. 



3665 



-24- 

Chapter VI 
GEilERAL IIIFOEi.'IATION 
Associated general Contractors of America 

Ajnong the buildings contractors, local and regional organizations have 
existed almost from the inception of the .general contracting system. The 
necessity' for dealing v/ith labor unions which were fairly well organized 
provided a stimulus for organization. Various state and regional associa- 
tions of general contractors have an extended history in dealing with state 
legislation relating to compensation inrurance and other labor problems. 
It was not until 1918, however, that the Associated General Contractors of 
America was formed, which was an organization on a national scale composed 
exclusively of general contractors in building and other construction fields. 

In the field of highway constraction, general contractors appear to have 
been more individualistic than in the field of buildin,^. There are records 
of municipal associations of contractors engaged in street paving, sewer 
construction, and similar work, but orgenization on a broader scale took 
place only after the centralization of highway construction programs in the 
hands of state highway commissions and other state agencies and after the 
expansion of activities resulting from the development of the automobile 
and the advent of the gasoline tax. Consequently, the first important or- 
ganizations of general contractors in the highway field usually included . 
contractors over an entire state. When the Associated General Contractors 
of America was organized, state associations of highway contractors joined. 
The group activities of the highway contractors have been concerned chiefly 
with -orograias for the stajidardization of bidding procedure, specifications 
and other factors as for example the standardization of equipment in coopera- 
tion with equipment manufacturers for the pu-r^jose of avoiding heavy losses 
resulting from frequent changes in concrete mixers and other equipment which 
rendered expensive equipment obsolete after a short period of use. 

Contractors in the heavy construction field, whose activities shift 
from one -oart of the country to another, have had little to gain from local 
organizations. Hiunbors of them have felt, however, that affiliation with 
the Associated General Contractors of America, offered tiiem an opportunity 
for united efforts in furthering their interests with engineers, public 
officials, and federal and state legislators, and also enhanced their pres- 
tige in the eyes of the public. 

The membership of the Associated General Contractors of i\merica has 
varied from 1,300 to about 2,700 members, organized in local, state, and 
regional chapters which range in size from 60 to 125 members each. This is 
the only national organization composed exclusively of general contractors. 

Among the objectives of the Associated General Contractors of America, 
which have varied from time to time, are: expansion of construction volume 
and protection of the market for general contractors; improvement and 
standardization of competitive bidding practices; improvement in the proce- 
dure of surety bonding concerns; elimination of irresponsible contractors; 
reform of local building codes; elimination of governmental agencies engaged 
in construction throught the direct employment of day labor; correction of 

8665 



-25- 

loose credit -practices; permanent reforns in legislation pertaining to 
state uechrnics lien acts; and prevention of accidents. 

f 

Competitive Ori°:anizations 

Alt?io\i£h the Associated General Contractors of America is the onlj^ 
national organization, there are many local, state, and regional orgoiiizations 
which are conpetitive to and sometimes actively opposed to its po^iciee. 
Typico.l organizations of this kind are: in the building division, the Master 
Builders' Association of Wisconsin, a small proportion of \7hose menhers is 
also affiliated with A. G. C. ; in the hi.jhway field, the Anerican Road 
Builders' Association, whose raemhership also includes en^-ineers, public of- 
ficials, pud material and equipment concerns; the Georgia Hoad Builders' 
Associr.tion, and the Ke\-' England Road Builders' Association. In the heavy 
construction division there is the General Contractors" Association of 
Nev; Yorlc, a grouT) \7hich antedates the A. G. C. , and which joined the A. G. 
C. but brohe awaj^ after a year or tv/o. 

Organizations of Labor Employed by General Building Contractors 

Organized construction labor is largely confined to the building 
section of the Industry. To some extent general contractors employ nenbers 
from practically all of the organized crafts in the building field. However, 
they em-oloy only a minority of the members of a great many of these crafts 
who \7orl: for the most part for s;oecialized subcontracting groups. The 
majority of the employees of general building contractors consists of car- 
penters, bricklayers, operating engineers, and common laborers. The res- 
pective organizations of these crafts, tlierefore constitute the major uiiions 
with which general contractors engage in collective bargaining. 

The various labor organizations and their voting strength as reported 
to the American Federation of Labor at conventions in 1929 and 1935 are sho'.7n 
in Table IX below. The number of local unions existing in 1929, as reported 
in the Handbook of American Unions , published by the Bureau of Labor Statis- 
tics, is likewise shown. 



8665 



-26- 
TA3LE IX 

Status of APL and Inde-nendent Unionu ii\inctioning in the 
Construction Industry, 1929 and 1933 



Voting Strength Per Cent Decline ilvLnoer 
Uexie of Union Re^jorted a/ in Voting Strength of 

1929 1933 1929 to 1933 Local 



Unions 
1929 c/ 



2,900 


2,000 


31 


53 


s 
90,000 


45,800 


49 


906 


20,400 


10,000 


51 


149 


522,000 


205, SOO 


35 


2,061 


10,200 


10,200 


__ 


77 



Princi'oal A.FL Unions 
International Association of 

Heat and ?rost Insulators and 

Asbestos Workers 
Bricklayers, Masons and plasterers 

International Union of Araerica 
International Association of 

Bridge Structural sjtA 

Ornaiiiental Iron Workers 
United Brotherhood of Carpenters 

and Joiners of America 
International Union of Elevator 

Constructors 
International Federation of 

Technical Engineers, 

Architects and Draf ts:aen' s 

Union 
International Brotherhood of 

Electrical TTorkers 
International Union of O^^Derating 

Engineers 
National Marine Engineers 

Beneficial Association of the 

United States of America 
The Granite Cutters International 

Association of America 
International Hodcarriers' Building 

and Corxnon Laborers ' Union of 

America 
Wood, TTire and Lietal Lathers 

International Union 
International Association of 

Mar Die, Stone and Slate 

Polishers, Rabhers and Sa'-^^^ers, 

Tile and Marble Setters Heloers 

and Terrazzo Workers Helpers 6,400 6,200 3 52 

International Union of Pavers, 

Hajxiemen, Elaggers Bridge and 

Stone Curb Setters 2,000 2,000 — 82 

Brotherhood of Painters, Decorators, 

and Pa;oerhangers of Araerica b/ 108,100 59,300 45 1,170 

(Continued on ne::t page)- 
8665 



1,500 


700 


53. 


5 


17 


142,000 


94,100 


"7 "7 


5 


617 


33,000 


35,000 


■^ 6 




273 


8,500 


5,000 


41 




61 
98 


ng 










91,700 


52,100 


43 




481 


16,500 


8,100 


51 




261 



-27- 

TABLE IX (Cont'd) 

Status of AFL and Independent Unions Fiinctioning in the 
Construction Industry, 19?9 and 1933 



Name of Union 



Voting Strength Per Cent Decline lavAer 

Reported a/ in Voting Strength of 
1929 1933 1929 to 1933 Local 

Unions 
1929 c/ 



Operative Plasterers and Cement 
Finishers International Associa- 
tion of the United States and 
Canada 

United Association of Journeymen 
Plumhers and Steamfitters of 
the United States and Canada 

United Slate, Tile and Composition 
Roofers, Lamp and T7aterproof 
TJorkers Association 

Journeymen Stone Cutters Associa- 
tion of llorth America 

Sheet Hetal Workers International 
Association 

Total 



39 , 200 


22,600 


42 


449 


45,000 


45,000 


— 


656 


4,000 


4,000 


— 


94 


5,800 


5,600 


3.5 


136 


25,000 


17,500 


30 


410 


974,200 


631,000 


34 

(average) 


8,193 



Unions Tliose Memhers Occasionally Engage in Construction 



International Brotherhood of . 

Boilermal-:ers, Iron Shiphuilders 

and Helpers of America 
International Brotherhood of 

Firemen and Oilers 
International Brotherhood of 

Blacksmiths, Dro'o Forgers and 

Helpers 
Interna.tional Brotherhood of Team- 
sters, Chauffeurs, Stablemen and 

Hel-pers of America 



Total 126,700 99,700 

lIa.tiona,l Inde-pendent Unions in the Construction Field 



17,200 


14,200 


17.5 


284 


9,500 


9,200 


3 


785 


5,000 


5,000 




187 


95,000 


71 , 300 


25 


358 



Federation of Architects, 

Engineers and Chemist Technicians 
General Constniction TJorkers 

Indv-strial Union (l¥W) 
Building Construction "Jorkers 

Industrial Union (IWW) 



7,000 d/ 



1,614 



Source: 
8665 



(See folloi.7ing page) 



-28- 
TABLE IX (Cont'd) 



Source: As indicated in footnotes. 

a/ As reported at the 53rd Annual AFL Convention, October 2 to ].3, 1933, 
at Washinfjton, D. C. , and at the 54th Annual Convention, October 1 
to 12, at San Francisco, California. 

"bj Data of the KRA, Research and Pla,nning Division indicate that "both 

emr)loying a.nd self-employed contractors in many instances belong to 
local pa,inters' unions. 

c/ As ret)orted in Burea,u of Labor Statistics, Hnndboo]: of American 
Unions, (1929 Edition Bulletin #505). 

d/ 1934 membership. 

e/ Membershi-o not a::.certa.inable. 



Effect of the Code 

The operation of the Code in this Industry is believed to have diminish- 
ed to an unlcnown degree the number of members who regularly engaged in imfair 
trade practices, 

^ No data are available to determine the extent to which the Code has 
helped to maintain bid prices above costs, but it is believed that the in- 
fluence of the Code upon \7age levels in the Industry may have helped to 
maintain bid prices among the members who adliercd to the wage provisions 
of the Code. 

Wage data, presented in Cna-otcr II, indicate that the average 'jage 
rates paid to construction ^rorkers have declined since 1929 but have 
increased since 1933. 

Exroerts 

The Code Authority submits the names of the following individuals 
who, due to their training and erperience, are thoroughly familiar vdtii 
conditions in the Industry. 



Henry Ericsson 
228 IT. LaSalle St. 
Chicago, Illinois 

Thomas Thome Flagler 
158 II. Ave. 
AtloJita, Georgia 



Graduate of the StocVdiola 
Tehnik School and President of 
the Henr;'- Ericsson Company 

B. S. Degree, University of 
Pennsylvania. Mr. Flagler was 
eraijloyed from 1903 to 1910 by the 
Standard Oil Company handling con- 
struction tiiroughout the south. 
Since 1910 he has been President 
of the Flagler Company. 



8665 



-29- 



AlDert Preston C-reensf elder 
502 Merchants Laclede Bldg_. 
St, Louis, Missouri 



B. S, Degree in Civil Engineering, 
1901, Washington University. 
President, Primm-Colnon Contracting 
Company 



J. D. Taylor 

115 S. Salina St. 

Syracuse, New York 



B. S. Degree, Civil Engineering, 
University of Pennsylvania. 
President, J. D. Taylor Construction 
Company 



John W. Cowper 
Buffalo , Kevi? York 



President, The John 7/', Co\irper Co. 
Educated in T)rivate schools and 
preijaratory schools at Warrenton, Va. 



8665 - # 



N