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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
Industry, 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
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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 Industry, 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. Construction Industry, 1929^ 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
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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
-7-
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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
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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, Construction 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.'.ploymont
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, Constiuction 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 $1.25 294
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, 1929, "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^'^^stxY, 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 icials. 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 froi.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 Out 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 Prison 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 of Ahusive Use, Became Detrimental
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 - #
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