[House Hearing, 107 Congress] [From the U.S. Government Publishing Office] REMOVING RED TAPE FROM THE DEPARTMENT OF LABOR'S APPRENTICESHIP APPROVAL PROCESS ======================================================================= HEARING before the SUBCOMMITTEE ON REGULATORY REFORM AND PAPERWORK REDUCTION of the COMMITTEE ON SMALL BUSINESS HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTH CONGRESS FIRST SESSION __________ WASHINGTON, DC, SEPTEMBER 25, 2001 __________ Serial No. 107-29 __________ Printed for the use of the Committee on Small Business U.S. GOVERNMENT PRINTING OFFICE 76-009 WASHINGTON : 2001 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001 COMMITTEE ON SMALL BUSINESS DONALD MANZULLO, Illinois, Chairman LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD, ROSCOE G. BARTLETT, Maryland California FRANK A. LoBIONDO, New Jersey DANNY K. DAVIS, Illinois SUE W. KELLY, New York BILL PASCRELL, Jr., New Jersey STEVE CHABOT, Ohio DONNA M. CHRISTENSEN, Virgin PATRICK J. TOOMEY, Pennsylvania Islands JIM DeMINT, South Carolina ROBERT A. BRADY, Pennsylvania JOHN R. THUNE, South Dakota TOM UDALL, New Mexico MICHAEL PENCE, Indiana STEPHANIE TUBBS JONES, Ohio MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas DARRELL E. ISSA, California DAVID D. PHELPS, Illinois SAM GRAVES, Missouri GRACE F. NAPOLITANO, California EDWARD L. SCHROCK, Virginia BRIAN BAIRD, Washington FELIX J. GRUCCI, Jr., New York MARK UDALL, Colorado W. TODD AKIN, Missouri JAMES R. LANGEVIN, Rhode Island SHELLEY MOORE CAPITO, West Virginia MIKE ROSS, Arkansas BILL SHUSTER, Pennsylvania BRAD CARSON, Oklahoma ANIBAL ACEVEDO-VILA, Puerto Rico Doug Thomas, Staff Director Phil Eskeland, Deputy Staff Director Michael Day, Minority Staff Director ------ SUBCOMMITTEE ON REGULATORY REFORM AND OVERSIGHT MIKE PENCE, Indiana, Chairman LARRY COMBEST, Texas ROBERT BRADY, Pennsylvania SUE KELLY, New York BILL PASCRELL, Jr., New Jersey SAM GRAVES, Missouri CHARLES GONZALEZ, Texas ROSCOE BARTLETT, Maryland DAVID D. PHELPS, Illinois TODD AKIN, Missouri JAMES R. LANGEVIN, Rhode Island PAT TOOMEY, Pennsylvania ANIBAL ACEVEDO-VILA, Puerto Rico Barry Pineles, Professional Staff Member C O N T E N T S Page Hearing held on September 25, 2001............................... 1 WITNESSES Wicker, Hon. Roger, U.S. House of Representatives................ 4 Dunham, Ken, Executive Director, Inland Northwest AGC............ 9 Bonk, John, President, M. Davis & Sons, Inc...................... 11 Herzog, John, Staff VP for Public Policy, Air Conditioning Contractor of America.......................................... 13 Krul, Robert, National Apprenticeship Coordinator, United Union of Roofers, Waterproofers and Allied Workers................... 15 APPENDIX Opening statements: Pence, Hon. Mike............................................. 28 Brady, Hon. Robert A......................................... 31 Prepared statements: Wicker, Hon. Roger........................................... 37 Dunham, Ken.................................................. 40 Bonk, John................................................... 47 Herzog, John................................................. 58 Krul, Robert................................................. 65 Additional material: Prepared statement of Mechanical Electrical Sheet Metal Alliance................................................... 69 Letter to Chairman Pence from Kathleen Garrity, Associated Builders and Contractors of Western Washington............. 76 Letter to Chairman Pence from Edward Sullivan, Building and Construction Trades Department............................. 78 REMOVING RED TAPE FROM THE DEPARTMENT OF LABOR'S APPRENTICESHIP APPROVAL PROCESS ---------- TUESDAY, SEPTEMBER 25, 2001 House of Representatives, Subcommittee on Regulatory Reform and Oversight, Committee on Small Business, Washington, DC. The Committee met, pursuant to call, at 10:00 a.m. in room 2360, Rayburn House Office Building, Hon. Mike Pence (chairman of the subcommittee) presiding. Chairman Pence. This hearing will come to order. I would like to welcome all of the participants, as well as the ranking member of the Subcommittee on Regulatory Reform and Oversight, the gentleman from Pennsylvania, Mr. Robert Brady. I want to welcome you to the hearing entitled Removing Red Tape from the Department of Labors Apprenticeship Approval Process. We have a spate of expert witnesses as well as the author of important legislation on this issue. Let me begin with a few short thoughts and then we will move immediately to my colleague's opening statement and then, of course, testimony. My expectation is that the members in the room can expect a vote between 10:30 and 11:00. In the event that there is a vote on the floor, anyone in attendance and witnesses should be advised that we will simply recess for a brief period of time and then reconvene. We will complete this subcommittee hearing today in the midst of what will probably be a busy schedule across the street. The hearing today, of course, addresses the need for reforming our regulatory procedures used to approve apprenticeship programs in the United States. I am honored to be a co-sponsor of H.R. 1950, the Apprenticeship Enhancement Act of 2001, authored by my good friend in attendance today, the gentleman from Mississippi, Mr. Wicker. I look forward to his testimony and that of other witnesses who will discuss the procedures for registering a federal apprenticeship program and the problems they face in receiving such approval. As the Secretary of Labor recently noted in her Labor Day address on the state of the workforce, America, more than ever, needs a skilled workforce. The office buildings of our cities, the shopping centers of our suburban towns, the homes of our rural counties are all built by skilled craftsmen who have mastered their art through apprenticeship programs. What concerns me and should concern every member of Congress, the Administration and businesses is whether America has the processes in place to train a new generation of skilled craftsmen. Since at least the time of the Middle Ages, young men and now young women in the modern era have learned trades at the hands of masters. The thousands-of-year-old process of training new workers continues today. During the heights of the worst economic disaster in American history, the Great Depression, Congress enacted what came to be known as the National Apprenticeship Act to ensure that employers did not take advantage of young workers' need for training and jobs. The National Apprenticeship Act requires that the Secretary of Labor promulgate standards to ensure the welfare of apprentices. The act also requires that the secretary works with the states to carry out this function. I think it is absolutely vital for the future of this country to ensure that apprentices are protected yet trained well enough that they have a mobility to move where the labor markets dictate that they are needed. The Department of Labor regulations set forth the criteria by which any employer should be able to obtain approval of an apprenticeship program. Approval is sought either from the United States Department of Labor or a state apprenticeship council given that authority by the federal government. An applicant that meets the criteria set forth by the Secretary should have the program approved with all deliberate speed without regard to who is sponsoring the apprenticeship program. If the applicant does not meet the criteria, the Department or State Apprenticeship Council should provide a written explanation of the deficiencies so the applicant can modify the program accordingly. The appropriate government agency then should meet quickly when the application is resubmitted to approve the modified program. Yet these simple procedures are not evident in the approval of apprenticeship program in America today. In certain instances, it has literally taken years and multiple lawsuits to obtain approval of a qualified apprenticeship program and this is unacceptable. Such behavior, whether at the federal or the state level, is wrong and it is our purpose in this subcommittee hearing to entertain a proposal before the Congress to address this inequity. That is one reason I have decided to co-sponsor H.R. 1950 and I believe it would provide regulatory certainty to a process fraught with unbridled discretion and endless meetings of federal and state bureaucrats. Ultimately, I think 1950's reforms will help all employers interested in providing our young men and women with training in skilled crafts that this country will need for not only the economic growth of the 21st century but also the economic dynamism that our nation may well need in the long struggle into which we entered two weeks ago today. With that, I yield to the ranking member of this subcommittee who is kind to join us today and I recognize Mr. Brady for any opening comments. [Chairman Pence's statement may be found in appendix.] Mr. Brady. Thank you. Thank you, Mr. Chairman. And for the sake of time, I am going to make some brief remarks and would ask unanimous consent to submit the rest for the record. Chairman Pence. Without objection. Mr. Brady. Thank you. As the population ages and the number of potential workers decline, we must find ways to help meet a new demand for skilled labor. One way which has been suggested is by changing the federal apprenticeship programs. Since 1937, the apprenticeship program has a record of great success: 440,000 workers are trained under apprenticeship programs held to high standards of excellence in the skilled trades. We depend upon these workers to make sure that our buildings are well built. Sometimes we take for granted how well our buildings are put together. In Japan, they build homes to last 30 years. In America, we build them to last a century. That is the result of high standards of training in skilled trades like construction, roofing, plumbing and electrical wiring. This program makes sure that when you buy a new home and turn on the faucet, you do not blow an electrical fuse. The men and women who have graduated from apprenticeship programs are the professionals who built this country. Clearly, we want the strongest apprenticeship programs possible. The proposal under consideration does nothing to strengthen the current program and, in some instances, may weaken it. Proponents of this bill see backups and lack of action on applications as the problem. I can understand and appreciate that frustration. There is a labor shortage in the skilled trades and training programs are needed. But the solution is not to waive the standards that maintain apprenticeship programs at such high quality. At best, Mr. Chairman, the proposal in this bill is only a small piece to the puzzle. I look forward to working with my colleagues in finding a sensible solution to the current skilled labor shortage, one that maintains our training standards and our apprentice programs and ensures the quality workmanship that makes America proud. I feel real, real close to this issue. I am not an expert on anything, but I am close to an expert on this. I graduated from a four-year apprenticeship program in the carpenters union. I still carry a current card there. And I am close the apprenticeship programs. I tutor on every Tuesday night that I am not here and have been for the last seven, eight years in our programs that help these young men and women get into them. We do need them. It is necessary and, again, I cannot express enough of my abilities that I can lend toward helping making this remedy the situation that we do find ourselves in. So I am pledging to work along with you and with my colleagues in trying to come up with a decent solution. Thank you. [Mr. Brady's statement may be found in appendix.] Chairman Pence. Thank you, Mr. Brady. And with that, we will recognize our first witness, the Honorable Roger Wicker of Mississippi, the author of the Apprenticeship Enhancement Act of 2001. Good morning. We will recognize the gentleman from Washington to introduce a constituent and friend before returning to Mr. Wicker. Mr. Nethercutt, welcome. Mr. Nethercutt. Thank you, Mr. Chairman, Mr. Brady, and I thank my colleague and my dear friend Mr. Wicker for yielding for a moment. I apologize for this. I am delighted to be here before the subcommittee to introduce Ken Dunham, who will testify on a panel after Mr. Wicker testifies. I have known Ken Dunham for years. He is a northwesterner. He is affiliated with the Association of General Contractors in Spokane, Washington. He has a wealth of experience, Mr. Chairman, about apprenticeship programs, about the labor force, and about the need to have a strong labor force in my region of the country. He will be a valuable witness as the subcommittee considers this bill. I appreciate your welcoming him, all of you here, and I am delighted to have a chance to say a good word about Ken Dunham. He is a fine man, a very credible citizen with respect to the issues that are facing the committee and so I am delighted to do so. And I again thank the chairman for his indulgence and I thank Mr. Wicker for his and I apologize for having to leave early. Chairman Pence. Not at all. Thank you very much. With that, the author of this legislation, the gentleman from Mississippi, Mr. Wicker, is recognized. Mr. Wicker. Thank you, Mr. Chairman. STATEMENT OF HON. ROGER F. WICKER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSISSIPPI Mr. Wicker. I do appreciate the subcommittee having this hearing and allowing me to testify and I appreciate the remarks of both gentlemen who have spoken. I am delighted to know that Mr. Brady is a graduate of an apprenticeship program and is still involved in that process and I am glad to see that both of you have spoken in support of the concept. I think that every member of Congress certainly would like to make the process better if we can do so. My remarks today and my legislation deal simply with streamlining the approval process. There may be other things that we need to discuss with regard to apprenticeship programs, but that is what H.R. 1950 deals with. Let me just say I want to talk a little more about what an apprenticeship program is and should be, why they need to be registered, why there is a need for more skilled workers and then spend a little time talking about actual experiences that I have learned from business people and contractors in my own district and then a brief discussion of my legislation. Mr. Brady mentioned 440,000 apprentices in the United States now. I had the number of approximately 400,000. But certainly while that is a large number of men and women being trained, I think we should have the goal of raising that figure to one million. Everything I hear is that we need a large increase in the number of skilled workers because these apprentices are our future electricians, carpenters, plumbers, pipe fitters and mechanics. And, as Mr. Brady said, they are more educated, they are more highly motivated, more productive, better skilled. They are more likely to become supervisors. And they are more likely to earn higher salaries and experience less unemployment. So we need more apprentices and I think we can all agree on that. Certainly the reason for registering the apprenticeship programs is that only the registered ones are permitted to pay apprenticeship wages on projects where there is federal funding. Also, many municipalities and states require that the apprenticeship program be registered in order to qualify for the apprenticeship wage. Mr. Chairman and members of the subcommittee, two years ago, contractors from my home state of Mississippi came to Washington to discuss the challenges facing the construction industry. They listed a number of items but they all agreed that the critical shortage of skilled workers was a paramount issue in the industry. One of the electrical contractors related the type of apprenticeship program horror story which discourages other potential program sponsors from even formulating an application. In seeking approval for a line erector's apprenticeship program in the State of California, this Mississippi company spent nearly $1 million and five years before the program was finally approved and then only after a successful lawsuit. It took the same company two years and $250,000 in expenses in the State of Washington not to even get an answer. It is not that the program was denied because it was a poor plan. No one ever said that. But the State Apprenticeship Council or the SAC in that state did not even give the program sponsor an answer. After these experiences, the company no longer seeks approval of their apprenticeship programs in states that are governed by State Apprenticeship Councils. During this meeting, the other contractors in the room all nodded their heads in understanding. Either they or someone they knew had similar experience. The costs in time and money to obtain approval for apprenticeship programs is a strong disincentive to sponsoring programs of their own. Therefore, there are not enough new programs that are submitted for approval and the costly and lengthy delays in the approval process are denying job training opportunities to thousands who are awaiting approval. So, members of the subcommittee, to address these concerns, I have introduced H.R. 1950, the Apprenticeship Enhancement Act. This legislation does not change the standards which are required of apprenticeship programs in any way. Those are not changed at all under this legislation. Without sacrificing standards, we can create more apprenticeship programs, thereby creating more job training opportunities. All this legislation does is remove bureaucratic roadblocks so that apprenticeship programs which meet federal standards can be approved in a timely manner, and so that potential program sponsors are not discouraged by approval processes that can cost hundreds of thousands of dollars and many years. The bill currently has 24 bipartisan cosponsors. H.R. 1950 requires that the U.S. Department of Labor Bureau of Apprenticeship Program and Training, BAT and State Apprenticeship Councils, SACS, act on applications within 90 days after an application is submitted. This should be sufficient time for these government agencies to make a decision. It should not take more than three months to determine if an apprentice application meets the 22 basic elements of an acceptable apprenticeship program. However, my legislation allows for unforeseen circumstances. If for any reason a SAC or BAT cannot render a decision within 90 days, they can notify the applicant of the status of the application and then make a decision within the next 30 days. If after the additional 30-day period there is still no verdict, the application would then be forwarded to the U.S. Department of Labor. The purpose of this provision is to eliminate the possibility of a pocket veto by either a BAT or a SAC. In addition to these reasonable time lines, H.R. 1950 also requires a written justification for disapproval of an application. With this explanation, sponsors of programs which are denied can work with the agencies to improve their programs so that they submit new and approved applications. The legislation also allows for an appeal to the Department of Labor if the applicant believes that their program was improperly denied. This legislation, I repeat, does not change standards and does not provide for unlimited appeals on the part of a program sponsor. Instead, the bill does just one thing; it asks for an answer from the government agency. I appreciate the opportunity to testify before you on the concept of streamlining the application process and I would urge the subcommittee to give favorable consideration to the legislation, Mr. Chairman. [Mr. Wicker's statement may be found in appendix.] Chairman Pence. Thank you for that testimony. I know it is not customary to ask too many questions of members, but I wondered if I might, rather than a question, ask you to elaborate on your assertion today that I think is very relevant to both sides of this subcommittee that your legislation does not change the standards which are required of apprenticeship programs in any way. In evidence today and in other discussions about your bill, there seems to be an impression that it does and I wanted to ask you, if time permits, for you to elaborate on that, however briefly. Mr. Wicker. Well, I would suggest that persons who are concerned about that particular issue simply need to read the legislation. This is a bill simply about the approval process and Ireally cannot state any stronger than that that we leave the standards the same. Perhaps the standards need to be revisited by the Congress. I do not know. Perhaps they need to be visited by the various agencies. But this bill is very narrow in its scope and it simply says that under the present standards and guidelines, changing none of the criteria whatsoever, the agency should simply give an answer: does the application qualify for approval or not? And I would submit to members of the subcommittee that 120 days is ample time in order to see if an application on its face meets the criteria. Now, perhaps once a program is up and running, I am certain there are other safeguards to make sure that they are doing what the application proposed to do and promised to do, but this legislation simply deals with the question of whether the application is sufficient in order for the program to get started. Chairman Pence. Thank you. Mr. Brady, did you have anything else? Mr. Brady. Just I would not dare question you, I just wanted to ask you for help, so to speak. You did all the work on this and I appreciate it. Is there any way we could play with the standard or try to--not play with the standard, pardon me. With the application and the way the application is looked at to speed that up? The problem that I have is the 120 days they automatically get in and I think then there is no screening process whatsoever, there is no qualification whatsoever, and the problem with that is through an accredited apprenticeship program as I know, I went through one, you have to pass every year. And if you get applicants that should not be in the program originally, they may fail and you are loading up the process with first year apprentices that do not go to the second year, do not go to the third year and, in some cases, a third year and a fourth year. I went to a four-year program, some only have two and some have three. And if you automatically let somebody in, it is like waiting in line for something, if you wait long enough, you get in automatically. Maybe we could work on the problem that they cannot get to these people in time and give them some beefing up to make sure that they do have enough manpower or whatever the problem is to review these applications in time, within the 120-day period. Just letting somebody in can cause a problem. If you have 120 people in the first apprenticeship class in the first year and 60 drop out because they should not have been there, then you are short in the second year and it is hard to get an apprentice--you do not let an apprentice in on your second year. They go in the first year and go through a four-year or two-year respectively program. That is the main problem that I have looking at this. And I would love to sit down and work with you a little further with it. Mr. Wicker. Well, I appreciate the sentiment of that question and I would be delighted to work with you on that and perhaps craft a bill that you could be a co-sponsor of. This bill is somewhat different from the legislation that I introduced during the previous Congress as a result of some conversations I had with people who had doubts about it, but let me address several of your concerns. First of all, the legislation does not provide for an automatic approval after the initial 90-day period with the 30- day extension. All it says is that after that 120-day period if an agency will not give an answer, yes or no, then it goes up to a higher authority to make the decision. After the second period, which is a 30-day period, the application is then forwarded to the United States Department of Labor. It is still then an application and there is no directive in the legislation that says the Department of Labor should automatically approve it. It just says after 120 days we need a yes or no answer or we are going to give it to somebody who can look at it. So I hope that addresses your concern in that regard. Congressman, if there is a need for additional manpower in order to actually view the applications and see if they are adequate, then I think that is a legitimate issue that might be very cost effective for this Congress to look at, if we need more people to make the approval process run more efficiently. But there is no reason--and I hope you will agree with this, Congressman, there is no excuse for year after year after year, the same application not even receiving an answer, not even receiving a status report about what the problem is, what is wrong with this application. We certainly need to fix that aspect. And that is all this legislation does. With regard to an additional point that you made, if a program that submits an effective application is then up and running and proves not to be effective there should certainly be sanctions by the government agencies to address that particular problem. Chairman Pence. The chair would welcome the gentleman from Illinois, Mr. Phelps, and provide an opportunity for any opening comments that you might have. Mr. Phelps. Thank you. Chairman Pence. With that, again, our thanks to the gentleman from Mississippi for a direct and candid exchange. We are very grateful for your leadership on this issue. Mr. Wicker. I am grateful to you also, Mr. Chairman. Chairman Pence. And we will allow you to move on to a busy day and then ask our panel of four to move to the witness table. Thank you. I would like to welcome all of our witnesses to this hearing of the Subcommittee on Regulatory Reform and Oversight of the Small Business Committee. And I know I speak on behalf of the entire subcommittee in welcoming you and expressing appreciation for your time and expertise today. The procedure that we will follow is I will give a brief introduction of each witness and then you will be individually recognized after your introduction for what will be five minutes of time. Most of you are veterans of this institution, but for those that may not, you can observe the lights and respond accordingly. The yellow does not mean step on the accelerator, it means being to slow down and then the red means to wrap up your comments. We will entertain brief remarks from each of the witnesses in the interests of time and then move into any questions that your comments have stimulated from myself, the ranking member or the gentleman from Illinois or any other member that joins us. With that, Mr. Ken Dunham is with us, already having been generously introduced by the gentleman from Washington, Congressman Nethercutt, earlier today. Ken Dunham is Executive Director of the Inland Northwest AGC, a chapter of the Associated General Contractors of America, which is a national construction industry trade association. The Spokane-based organization has a membership of nearly 560 firms, representing the highway, utility and commercial building industry subcontractors and suppliers. Prior to coming to Spokane in 1993, Mr. Dunham held a similar position from 1990 to 1993 with the Montana Contractors Association. He is a graduate of the University of Montana with a degree in radio and television journalism, which is my background as well, so we will expect a stellar presentation. A native of Troy, Montana and is recognized for five minutes. Mr. Ken Dunham. STATEMENT OF KEN DUNHAM, EXECUTIVE DIRECTOR, INLAND NORTHWEST AGC, SPOKANE, WASHINGTON, FOR THE ASSOCIATED GENERAL CONTRACTORS Mr. Dunham. Thank you very much. Good morning, Mr. Chairman and distinguished members of the committee. I am pleased to be here this morning to discuss the issue of apprenticeship training. My name is Ken Dunham. I am the Executive Director of the Inland Northwest Associated General Contractors in Spokane, Washington. The members of the AGC of America have consistently ranked the shortage of skilled construction labor among their most critical business issues. The construction industry needs more skilled workers. By encouraging the development of more registered apprenticeship programs, we will have more skilled and better trained craftspeople in all aspects of construction. We need to abandon those practices that have restricted apprenticeship registration. House Resolution 1950 will help bring some accountability to the approval process and is a great start to the process of raising both the number and the skill levels of our workers throughout construction. I hope to be able to provide the committee today with an illustration of how the approval process works in real life and impress upon you the need for reform and accountability. I have oversight of apprenticeship and training programs for the AGC chapter in Spokane. In this capacity, I serve as a trustee for the open shop/non-union carpenters' and construction equipment operators' apprentice program as well as serving as both a trustee and an apprentice committee member for an AGC Teamster's apprenticeship program. This background has allowed me to have that rare perspective of serving in both union and open shop apprenticeship programs. Until the early 1980s, most of the apprenticeship programs were administered as joint labor and management programs. Attempts to open up the process to non-union programs has met with some success in certain areas. However, patchwork acceptance of open shop programs does not help fill the need for more trained workers. We do believe that there is a place for both the union-affiliated apprenticeship programs and apprenticeship programs for the open shop segment of the industry. The Inland Northwest AGC attempted to gain approval for construction trade programs without success for ten years, beginning in 1983. The chapter applied for carpentry and construction equipment operator programs in January of 1994. In that same year, we re-submitted carpentry apprenticeship programs and operator programs for approval and were denied twice that year, despite the approval of both the SAC staff and the BAT staff in the State of Washington. Following those denials, we had no choice but to file suit against the Washington State Department of Labor and Industry, as well as each member individually of the State Apprentice Council. In January 1995, the two programs were finally approved after a council meeting that was punctuated by much shouting, threats, and the attempt of the council to go into an illegally closed meeting to discuss strategies to again deny our program. The end result was that the programs were finally approved. This action then resulted in the withdrawal of our lawsuit. The challenges to our programs continue today and include unwarranted, unreasonable and often contradictory demands for data and oversight. I have observed that that same level of oversight and interference is not present in the union program on which I serve as a trustee and a committee member. The latest issue with the State of Washington Apprenticeship Council was the July 2001 denial of approval for an open shop construction craft laborers apprentice program. The SAC rejected the program after vague, confusing and often contradictory arguments were made on the grounds that it was unnecessary because the union program was in place, that AGC jurisdiction lines did not match up with union lines and challenges were made on the professional and trade qualifications of the proposed members of the committee. None of these were valid criticisms and the programs again had garnered the support of both the SAC staff and the BAT staff. We have resubmitted the program for the next meeting in October. The AGC supports Congressman Wicker in his efforts and applauds H.R. 1950 as a step in the right direction. We welcome all attempts, legislative and regulatory, to improve a system that is so vital to the construction industry and the nation's economy. In the past, there have been efforts to improve, revamp and update the regulations governing apprenticeship. In the early 1990s, the Department of Labor developed an initiative to improve the apprentice system in the nation. I list those ideas in which we agreed with the Department of Labor in my written comments. The AGC believes that this is a good time to revisit many of these ideas and to use the legislative and regulatory processes in concert with one another to improve the apprenticeship system. Thank you for your time and interest today in this crucial matter. I am happy to answer any questions that you might have regarding my testimony. It is my hope that together we can find a positive way to address the concerns raised and help workers secure and maintain rewarding careers in the construction industry. Thank you very much. [Mr. Dunham's statement may be found in appendix.] Chairman Pence. Thank you, Mr. Dunham. And, again, we will run through the witnesses and their presentations and then hopefully have a very productive dialogue with the members present. John Bonk is also with us today. He was raised in the Wilmington area, graduated from St. Elizabeth's High School and attended Drexel University and University of Delaware, where he started working in the construction field at a very early age. He was a certified welder an still holds a long boom crane operator's license. John started with M. Davis & Sons in 1978 as a project engineer when the company had 15 employees. he is currently president and part owner of that company now, which has over 400 full-time employees and performs work both regionally and nationwide. He is also past president of the Delaware chapter of Associated Builders and Contractors and on the national board and is recognized for five minutes. Welcome, Mr. Bonk. STATEMENT OF JOHN BONK, PRESIDENT, M. DAVIS & SONS, INC., WILMINGTON, DE, FOR THE ASSOCIATED BUILDERS AND CONTRACTORS Mr. Bonk. Good morning, Mr. Chairman and members of the committee. My name is John Bonk. I am President of M. Davis & Sons, Inc., located in Wilmington, Delaware. On behalf of Associated Builders and Contractors, I would like to thank Chairman Pence and the members of the Subcommittee on Regulatory Reform and Oversight for this opportunity to address ABC's concerns regarding the hurdles and often overburdensome procedures faced by businesses when they seek approval of their apprenticeship programs. I will be summarizing my comments, but I request that my full statement be submitted for the official record. Additionally, ABC chapters from Hawaii, Washington and California will be submitting additional comments regarding this issue and we request that their statements also be included in the record. Chairman Pence. Without objection. Mr. Bonk. For over 100 years, M. Davis & Sons has offered fully integrated industrial construction. We have built our reputation through providing quality workmanship for our clients and safe, healthy work sites for our employees. We normally have 60 to 70 registered apprentices. In addition, we employ a full-time training manager and spend in excess of $300,000 per year in training. M. Davis & Sons has been a member of the Delaware Chapter of ABC for 20 years. ABC is a national trade association representing more than 2300 merit shop contractors, subcontractors, material suppliers, and construction-related firms within a network of 82 chapters throughout the United States and Guam. According to the National Bureau of Labor Statistics, merit shop contractors comprised 87 percent of the construction workforce in 1997, up from 17 percent in 1947. Our diverse membership is bound by a shared commitment to the merit shop philosophy within the construction industry. This philosophy is based on the principles of full and open competition unfettered by the government and non-discrimination based on labor affiliation in the awarding of construction contracts to the lowest responsive bidder through open and competitive bidding. This process assures that taxpayers and consumers will receive the most for their construction dollars. ABC's commitment to quality training is unquestioned. Beginning in 1960 with the establishment of ABC's first apprenticeship program in Baltimore, ABC recognized that the future of the construction industry lies in its ability to attract and retain the men and women necessary to meet the nation's construction needs. ABC provides formal apprenticeship training programs that are registered with the Department of Labor's Bureau of Apprenticeship and Training. These programs meet all federal and state requirements for formal apprenticeship and prevailing wage work, including employer- sponsored classroom instruction and on-the-job training. Upon successful completion, craft workers are recognized at the journey level in their trade and awarded their BAT certificate. The depression-era National Apprenticeship Act which serves as the basis for the voluntary national apprenticeship system is no longer responsive to needs of both employers and employees. The regulations which govern apprenticeship do not address the new and innovative training techniques that are utilized by employers and employees today. Delaware has a state-sponsored apprenticeship program. While the State Department of Labor employees who administer the program are dedicated individuals, the program is antiquated and hamstrung by bureaucracy. Because of the time and effort it would take to register ABC's apprenticeship program in Delaware, the contracting community has accepted the status quo. Over the years, Delaware has lost much of its manufacturing base and construction could fill the job void this has left. Unfortunately, numerous apprenticeship problems preclude this. It is hard to keep students in the apprenticeship training because they get bored with the outdated training methods. Lack of reciprocity with neighboring states make it economically unwise to utilize apprentices in some instances. In Delaware and nationally, we have an ever increasing need for skilled people which is going unanswered. The contracting community is willing to invest the time and money it would take to establish good apprenticeship programs, but are reluctant in the face of the government. ABC is looking to accomplish five things. The first of those is due process. Through the enactment of the Apprenticeship Enhancement Act of 2001 sponsored by Representative Roger Wicker and Ruben Hinojosa, the federal government could restore much needed balance and fairness to the approval of apprenticeship programs. Reciprocity. It is essential to require one state's apprentices to recognize those registered in other states. Apprentices should be able to work in more than one state. Portability. Registered apprentices currently in training need to have the ability to move from state to state and enter into another state's registered apprenticeship program at the same level they had attained in a prior state without penalty. Competency based training. Employees who have previously acquired skill sets should not be required to begin the apprenticeship program from the beginning. Distance learning. In order to achieve apprenticeship reform, the Department of Labor must increase their usage of technology and the Internet. There is a great need for flexibility and variable options and training methods. Thank you for this opportunity to be here today. I welcome any questions that the committee may have. [Mr. Bonk's statement may be found in appendix.] Chairman Pence. Thank you, Mr. Bonk, for your presentation. With that, we will take a brief recess while the members discharge their duty across the street and then we will return for Mr. Herzog's and Mr. Krul's presentations and then the following questions. Thank you. [Recess.] Chairman Pence. I would like to thank everyone for their patience. I am informed that the ranking member will be joining us momentarily, as other members are also returning from the House floor. I want to welcome you back to this hearing of the Subcommittee on Regulatory Reform and Oversight entitled Removing Red Tape from the Department of Labor's Apprenticeship Approval Process, where we are focusing specifically on H.R. 1950, the Apprenticeship Enhancement Act of 2001. As I mentioned before, we will complete with our testimony and then move to any questions or dialogue thereafter and we should be able to complete our work here before it is time to break for lunch. Our next witness is John Herzog, who is the Staff Vice President for Public Policy for Air Conditioning Contractors of America. John has nearly 15 years of government experience, including elective and appointed positions at the local, state and federal levels of government. In addition, he ran his own advertising and public relations business in Colorado for approximately 20 years. Prior to joining ACCA, he was vice president of a Washington, D.C. based public affairs firm where he represented the interests of small business and rural associates on Capitol Hill. In addition to his undergraduate degree from the University of Colorado, he holds an M.S. injournalism from UCLA and has taught journalism, marketing, consumer behavior, business communications and technical writing at the college level. He is, among other things, listed in the Who's Who in Politics in America. And with that, I recognize Mr. John Herzog gratefully for five minutes. STATEMENT OF JOHN HERZOG, STAFF VICE PRESIDENT FOR PUBLIC POLICY, AIR CONDITIONING CONTRACTORS OF AMERICA, ARLINGTON, VA Mr. Herzog. Thank you, Mr. Pence and Representative Brady. We appreciate the opportunity to enter in to the national dialogue on improving the recruitment and training of America's skilled workforces. Originally, as you know, Dick Stilwilll, chapter manager for the Oregon-Washington chapter of ACCA was scheduled to testify. The events of September 11th changed that. Consequently, he asked me to deliver his message and I have also spoken with several other of our chapter executives who operate apprenticeship programs, so I think you will find the information of help. As you know, ACCA is the nation's largest trade association of those who design, install and maintain heating, ventilating, commercial, residential, refrigeration and air conditioning systems, known as HVACR. We are a federation of 60 state and local affiliated organizations representing approximately 9000 contractor companies nationwide. Approximately 20 percent of our membership is union affiliated. Prior to September 11th, the number one concern of our members, union and non-union, was addressing the labor shortage in the industry. It is not an issue of union versus non-union, but one of simply putting enough qualified people on the streets to meet the needs of our community. Discounting the fallout on the economy from the terrorist attacks, the Bureau of Labor Statistics had projected that the HVACR contracting industry will face a labor shorting of 104,000 by the year 2004. The entire industry employees 600,000 to 800,000 people, so you can see this represents a significant shortfall. Part of the solution lies in the way we train technicians. To begin, we support the Apprenticeship Enhancement Act for it addresses part of the problem. However, our experience highlights other barriers to training that deserve your attention. ACCA became involved in apprenticeship training about 20 years ago through our chapters. Today, I would like to focus on specific problems that Dick had encountered in Oregon. Our Oregon chapter is often allied with another local trade association. Dick said they planned to start a SAC-approved apprenticeship program but became discouraged by what the other group experienced. Oregon has adopted a random selection pool process. This means a contractor interested in hiring someone to put through an apprenticeship program can only select the person at the top of the list. They hire sight unseen. Dick said that prior to 1999, Oregon operated on a method D selection process approved by BAT. This is the traditional hiring process. However, the addition of affirmative action stipulations, which is already addressed by BAT, changed the Oregon process. It created today's random selection pool process that has failed to meet the needs of the contractors or the students. This presents an especially sticky problem for company owners who cannot even place their children in a program with their own company unless the timing is absolutely perfect. The Oregon SAC requires applicants to have a high school diploma or equivalent with the additional requirement for HVAC only that they have a C in algebra. SAC is being driven because it is the only way one can work on public projects in Oregon, Washington, and California and meet the prevailing wage requirement for apprentices. This assumes you want to use apprentices and very few businesses, regardless of size, can afford to work with only journeyman on a job. I see that my time is running out. I have experience on Florida and Maryland. During questioning, if you would like to hear about those states, I will be happy to share that with you. Thank you. [Mr. Herzog's statement may be found in appendix.] Chairman Pence. Thank you, Mr. Herzog, and thank you especially for coming in and filling in at late notice. We appreciate your remarks and hope as you are comfortable to have some additional dialogue about some of the remarks that were capably presented. Our final witness today is Robert J. Krul. Mr. Krul is the National Apprenticeship Coordinator for the United Union of Roofers, Waterproofers and Allied Workers and has held that position since 1979. He is a 29-year member of Roofers Local 74 in Buffalo, New York, a graduate of their apprenticeship program and is proud to say he was voted the outstanding apprentice of his class. He was an instructor and coordinator in his local union as well as a journeyman roofer and waterproofer, serving in a foreman and estimator capacity for several western New York roofing companies. He has served on the Federal Committee on Apprenticeship, is currently a member of the Building and Construction Trades Department Apprenticeship Committee, is chairman of the Secretary of Labor's Advisory Committee on Construction, Safety and Health, and is also chairman of the Building and Construction Trades Department Safety and Health Committee. So it is with deep appreciation that we recognize Mr. Robert Krul for five minutes. STATEMENT OF ROBERT J. KRUL, NATIONAL APPRENTICESHIP COORDINATOR, UNITED UNION OF ROOFERS, WATERPROOFERS AND ALLIED WORKERS, WASHINGTON, DC, FOR THE BUILDING AND CONSTRUCTION TRADES AFL-CIO Mr. Krul. Thank you, Mr. Chairman, for that kind introduction and I would like to thank the members of the subcommittee for this opportunity to address an issue that the 14 affiliated unions of the Building and Construction Trades Department feel is of utmost importance and those of us who are products of this apprenticeship training system feel compelled to address. H.R. 1950, the Apprenticeship Enhancement Act, purports to streamline the process of registering apprenticeship training programs and increase the numbers of programs in this country. In this period of extreme shortages of skilled workers in all industries in this nation, and most particularly in the construction industry, the purpose of the legislation at first glance seems to address a pressing need. But no matter how noble one thinks the purpose of the bill is, the unions of the Building Trades and the organized segment of the apprenticeship community have one salient point regarding its enactment: what will be the price to the current standards of apprenticeship training that have served this country well for at least 64 years? Under the current system, the Department of Labor has issued national guidelines defining apprenticeship training criteria for numerous occupations and minimum standards governing apprenticeship training that all those making applications office review an apprenticeship program must abide by. These standards include items like affirmative action goals, health and safety training, classroom hours, curricula, wage progression for apprentices, ratios, and otheraspects of the program that ensure the welfare of the apprenticeship is protected and, most importantly, that actual training will be conducted and the apprentices will learn a trade or a craft. The system as it exists was designed to make sure that everyone who submits an application for an apprenticeship program adheres to a given set of national standards for a particular industry or trade, protected the welfare of apprentices being trained and ensured that the apprentice completed his or her training by learning a craft or a trade. H.R. 1950 will undermine the Department of Labor's Office of Apprenticeship Training, Employer and Labor Services and the State Apprenticeship Councils. Under H.R. 1950, a contractor or entity wishing to receive approval for a training program that may not meet the standards established for their particular industry or trade can play a waiting game and file continual appeals in order to receive an apprenticeship training program approval from the Secretary of Labor's office without being held to the OATELS's or SACs' high standards. Those established sets of standards have served the apprenticeship community for over six decades. Are we ready to say in this time of critical shortage of skilled workers in the construction and other industries that we are ready to lower the bar? Are we ready to say that construction workers need not be completely skilled in what they do, that they only need partial training or task training in order to work in this industry? If the answer to those questions in anyone's mind is yes, then I hold out to you that the workers who eventually rebuild our World Trade Center and the Pentagon need not be of top quality or possess utmost skills. If mediocrity in the form of so-so work that leads to future problems in building and construction is our goal, then let us lower the bar of excellence. I have never understood why it is that many in this country look down at construction work as just another occupation that requires no marketable skills or standards by which to judge those skills. Just think of the standards and skills that must be measured in a host of occupations and vocations in our everyday life. Lawyers must pass a bar exam in order to practice law. Accountants must pass a standard certification to receive their CPA license. And pilots must conform to a set of established standards in their training before being allowed to fly. And for the general public, all of us must pass tests and demonstrate proficiencies before being issued a driver's license. For each of these examples, there are always individuals who do not pass muster with the tests administered or the standards established in a particular industry, craft or profession. Is the answer to accommodate them by changing or weakening the standards or tests? Of course not. The same should be true of apprenticeship standards. Yes, the standards are tough, but they are tough for the same reasons that any industry standards are tough: to ensure that men and women who enroll in these apprenticeship and training programs will be properly trained to safely and competently perform their work. Instead of lowering the bar, we should be committed to making sure that the standards of apprenticeship that have served us so well over the last six decades are never weakened and, in fact, they should be strengthened and protected. I understand the frustration of those who come before you today and relate that they have experienced difficulty in registering what they feel is a bona fide apprenticeship training program that meets the required standards. I am not here to attempt to convince you that this system is never in need of repair or adjustment. But I would hope that conjecture, anecdotes and what seems to be a few minor administrative infractions will not be the catalyst for amending the National Apprenticeship Act of 1937. The committee should look to the Federal Committee on Registered Apprenticeship for guidance on how to address the issues raised by H.R. 1950 and its proponents. In fact, the FCRA has been working for the past two years on the very area of concern addressed by H.R. 1950. I see my time is up and I just would like to sum up by saying that I and my colleagues in the Building Trades from both labor and management urge the subcommittee to look to those experts in the apprenticeship community for any remedies that will be done so that the original purpose and intent of the Fitzgerald Act to safeguard the welfare of apprentices is the primary concern that we look at. Thank you very much for this opportunity to testify. [Mr. Krul's statement may be found in appendix.] Chairman Pence. Thank you, Mr. Krul, and thank you to all of our witnesses today. The chair will entertain a few questions to our witnesses and then we will recognize our ranking member, the gentleman from Pennsylvania and the gentleman from Illinois for any questions or comments that they might have. Beginning with Mr. Dunham, I am intrigued by the fact that you have been involved in union and non-union apprenticeship programs, which seems in some part of this to be a fault line of this debate, and you have been involved in programs that have been approved under the National Apprenticeship Act. Do you believe that union and non-union registered apprenticeship programs result in graduating skilled craftsmen as a general rule? Mr. Dunham. Yes, I do. In our case, the standards that we are using for the open shop programs are models, the mirrors, of the union programs under the requirement that the programs have to parallel each other. So the standards that we use and the education processes throughout it are the same and we have had no major objection with that. I think there should probably be some standardization. Carpenters are carpenters, operators are operators. The work processes are much the same. The difficulty we have is just simply getting the program considered by the State Apprenticeship Council in the first place and that is what we think the whole issue is with H.R. 1950. Chairman Pence. One follow-up question, Mr. Dunham. You referred in your remarks to past efforts to update the apprenticeship system with new ideas. I know Mr. Bonk laid out a few ideas and Mr. Krul also referred to the debate over how we improve the system. I wondered if you might elaborate briefly on how outside of H.R. 1950 we might consider improving the system that would raise the level and the quality of our apprenticeship workforce? Mr. Dunham. Mr. Chairman, the issues Mr. Bonk raised are certainly valid ones, perhaps maybe slightly apart from what the intent of this bill is, to simply get access to the program. We certainly agree with the issues of reciprocity, the issues of training, some of the others. We listed those in our written comments. But the major problem is simply gaining access to the process of registering a program in the first place. We do not say the system needs to be broken, it just needs to be utilized better. Chairman Pence. And to Mr. Bonk, I appreciate both you and Mr. Krul's hands-on experience, I am someone who believes that the ability to perform a trade which is far beyond my talent base is an awesome ability to observe and will probably be much in evidence at those tragic sites in Manhattan and here in Washington. With that piece of admiration expressed to both of you, let me ask you about how would you characterize the extent of this problem? We have heard a wide range of views among the testimony today, some saying this is a very acute problem with regard to the approval process. I know that some thought that non-union contractors in Delaware have chosen not even to apply for approval of apprenticeship programs. How would you characterize the depth of this problem? Are these isolated instances or is this a pattern, both in your home jurisdiction and around the country? Mr. Bonk. Having served on the national board of ABC, I was in frequent meetings with contractors all over the United States and it is a country-wide problem, that all ABC contractors are looking for is a chance to get out of the batter's box up to the plate. If they strike out, they strike out. If they get a hit, they get a hit, but we cannot even get to the batter's box right now. No one is trying to put the standards aside or minimize the standards. All we want is a chance to stand at the plate. In Delaware, we have a State Apprenticeship Council. It is comprised of members of the Department of Labor, members of the business community and members of organized labor. However, some of the members of the business community are also owners of organized labor contracting companies, so nothing ever gets through the State Apprenticeship Council in Delaware. So the curriculum is poor--and it is not to demean the people in the Department of Labor, they are well intentioned, good, hard working people--the curriculum is outdated, the teaching methods are outdated. We are using systems that were brought about 50 years ago. We are ignoring CD-ROMs, the Internet. We are ignoring the ability to bring someone in and test them. If you have someone that has been in the trade for 20 years, why not test them? Why subject that person to a first year apprenticeship program? He is not going to want to do that. Or she is not going to want to do it. Why not recognize their skill in that field? We do it at the college and university level, we let people test out of a class there. Why not do it in the apprenticeship program? But we are always at loggerheads because of these State Apprenticeship Councils. Once again, it is not meant to reduce the standards, just give us a shot at the plate. Chairman Pence. Mr. Herzog, it is my understanding that State Apprenticeship Councils are supposed to follow federal regulations. Now, I also understand that federal regulations do not permit the establishment of new apprenticeship programs even though an apprenticeship program of that nature and in that craft currently exist in the state. Is that something that we ought to address specifically in terms of--should we make federal regulations explicit that an SAC cannot prohibit the establishment of a new program simply because there is already a program in that craft? Mr. Herzog. Definitely. And this is one of the problems that they faced in Oregon. They also had that same pattern in Florida. And this is local requirements. All the state SACs have to do is meet minimum federal standards, which is very true for a lot of federal programs given to the states. The states can then build upon these as long as they are meeting the federal standards. But if you are in a situation--and, actually, there is a lawsuit in California where they had approved a program for Sacramento, and they wanted to have satellite programs for the rest of the state. California is rather a large state so they tried it, but the union came in and sued them and now there is a possibility they are going to lose everything because it is such a mess. In Washington State, there is another example. The 9th District Court ruled that the state had to provide parallel non-union programs. In effect, the SAC is undergirding that decision by creating new regulations that make it extremely difficult for the non-union programs to get started. So if you want to have enough workers, if that is the goal, you have to make these programs available so that they are fairly convenient, so apprentices do not have to travel 200 miles to get to a program, and they have to be cost effective so apprentices and employers can afford it. Chairman Pence. And, Mr. Krul, you said, I think, that the number one point has to do with maintaining the current standards among these apprenticeship programs. And I ask this very sincerely, as someone who obviously has forgotten more today about these programs than I have yet learned, how specifically in your mind does H.R. 1950 erode the standards that currently exist in the law, at least the last 20 years? How are the standards that you described eroded in any way by simply creating a time table for a yes or no decision? Mr. Krul. Well, Congressman, it is a fair question and, as I said in my remarks, we are not here to tell you that the system is not in need of repair or adjustment. We would much rather see the Federal Committee on Registered Apprenticeship make suggestions. To answer your immediate question, I would repeat what Congressman Brady had said. The way this bill is structured, it builds in an appeals process that seems to be an endless process that would allow a contractor or an entity to merely stand in line and wait for the time limitations to run out. A State Apprenticeship Council with all the stories we are hearing from the folks that are testifying at the table and Congressman Wicker, the states have the right to state if deficiencies exist in standards that are being put forward. Now, there seems to be a time table debate, that it takes too long. And if there have been years, then obviously something is wrong and it needs to be fixed, if it takes years to get an apprenticeship program looked at, or there should be at least an oversight by some other entity. And we think that back in 1990, the Bureau of Apprenticeship and Training proposed rules to address this in program registration, denials and deregistration, that it would come back through the Department of Labor. But understanding the way these State Apprenticeship Councils work, that they meet quarterly, there should not be any big reason for people to get upset that it is 90 days in between the review of the program. If that program was reviewed and denied because it did not meet standards existing for a particular industry, then those standards need to be brought up. I mean, there are non-union programs being--I hate to bring that debate up, but there are non-union programs being registered, apprenticeship programs being registered, in this country. It is not like it is--in fact, what I am looking at from those who submitted testimony, the non-union programs are registered in far greater numbers than union programs are. But the inverse relationship that exists is that the preponderance of registered apprentices who graduate from the programs come from that minority union sector. So we are looking at--if that many registered programs are in the non-union sector, could it be that the states are exercising states' rights in saying that we will not let a program come into our particular borders that is less than what is established for an industry or trade? If there are some egregious--and I am sure that we have zealots, some of them my union brothers and sisters, I am sure--then there ought to be oversight capabilities. But I do not think amending the National Apprenticeship Act is the way that the apprenticeship system ought to be looked at to have those adjustments made and repairs made to it. I think those who have equity in this system, both in the organized and unorganized sectors, sit on the Federal Committee on Registered Apprenticeship, there are folks there from the private and the public sector, and I think those experts would better be able to tell this body if legislation is needed or if it could be done through Part 29 of Title 29 of the Code of Federal Regulations, which currently exists for the regulation of apprenticeship programs. Chairman Pence. Thank you. Mr. Brady? Mr. Brady. Thank you, Mr. Chairman, and thank all of you for testifying today. We appreciate you being here. My question would be for Mr. Bonk. Your program has apprentices pay a fee of $700 to $1000 to participate in that program. Is that correct? And how do they pay that? Mr. Bonk. I am not aware of any apprentice paying for their education. Mr. Brady. I understand that to join the apprenticeship program that there is a fee for that. Mr. Bonk. That is not true. Mr. Brady. Not at all? Mr. Bonk. I am not aware of any ABC chapter or member that charges for their apprentices. They are usually borne by the company. I have registered apprentices in the State of Maryland that I pay the ABC chapter there for their training. Mr. Brady. You pay for the apprentices' training? Mr. Bonk. Yes. Mr. Brady. What happens in the second year through lack of work, an apprentice put two years in and he now longer has no work? Do they get laid off and they just go about the wayside? Do you keep track of them? I mean, do you try to bring them back a year later when there is work? Are they a member or what happens? Mr. Bonk. I do not recall the last person that I laid off. It must have been at least ten years ago, Congressman. Mr. Brady. That is good when we are booming, but right now we are not booming. And if we stop booming, what would happen? I mean, somebody had to get laid off somewhere, a single employer had to lay people off. What happens to those apprentices? Mr. Bonk. Well, part of the problem is the lack of portability. In construction, you have some training in a vo tech arena, different levels of training once you get out, and there is no portability with the thing, so that someone after two years may get lost in the backwash. What is happening now with the National Center for Construction Education and Research, as you take these programs, you actually acquire a transcript so that whether you are in Wilmington, Delaware or Spokane, Washington, you can take this transcript and once again catch up on your education. Mr. Brady. But to catch up on your education, you have to have a job with somebody, correct? Mr. Bonk. With the great demand for construction workers in this country, I do not see any construction workers looking for a job. Mr. Brady. Well, the point I am making is when there are, and we are in a boom right now, there is no question about it, but there are times when we do have a lack of work. And the difference between the programs that I see, because I have been involved in them and I have had a lack of work, is that in a union program they keep you. They keep you and they keep you for as long as you keep your card up and they will find work for you. And we have a mandate on so many employees, so many journeymen, they must have apprentices. And I am wondering whether you have that same thing. Mr. Bonk. I do not feel there is any difference in the open shop sector. January, February, March were very difficult months for my company. I came out of pocket to get work for my people. Once again, I have not laid someone off in ten years. Mr. Brady. Yes, but that is you. There are other people out there that do lay people off. Mr. Bonk. Well, I do not know that my story is that different than the rest of the industry. Mr. Brady. Well, I do. I mean, that is absolutely true, there are people that lay people off. I know people that have gotten laid off. I was just wanting to know what happens to these apprentices that put two years or three years in on a four-year program. I mean, in a union position, they have a union card that they maintain their dues which are minimal and they even make them lower when they are not working, when they are out of work, and they stay for life. I mean, you could come back 10, 15 years and go back into the trade. And I was just trying to find the distinction. Mr. Bonk. I have hired people that have completed one year, two years, three years at other companies and they have completed their apprenticeship programs within my company. Mr. Brady. Okay. Mr. Krul, how do you see this bill addressing the problems in the current shortage of the skilled workers? Mr. Krul. I hate to keep falling back on my standards crutch. I do not see this bill addressing skills. It will address skills shortage, it will address shortages in the construction industry. Will it address skilled worker shortages? I have my doubts. I have my doubts. I am listening to the laments of the folks here at the table and issues that we disagree on. Portability and reciprocity, I do not think those are the kinds of things personally that the apprenticeship system ought to entertain. However, I would defer to experts in the field. And I do think, I would like to repeat, that the question that you just asked me would be best answered by those folks sitting on the Federal Committee on Registered Apprenticeship who have dealt with these issues before and, in fact, are dealing with this very issue that H.R. 1950 addresses right now and would like to address the issue of the critical skill shortages. There are no silver bullets, no magic solutions to the skilled worker shortages in this country. But I do not believe H.R. 1950 addresses that, sir. Mr. Brady. How will the overall quality of apprenticeship programs be affected under H.R. 1950 if it is enacted? Mr. Krul. If it is enacted, the quality of those people, if substandard programs, programs that undermine the standards that are currently existing for an apprenticeship program are allowed to go into place, for instance, if wage progressions are not equal, if wages and fringe benefit levels are not equal, there is a huge bidding advantage for a contractor in the construction industry who would register a program, pay his people lesser monies than someone in the organized sector would be doing, and to come in and underbid fair contractors in a union setting. Mr. Brady. Thank you. And thank you, Mr. Chairman. Again, I thank all of you. Chairman Pence. The chair recognizes Mr. Phelps of Illinois for any questions or comments of our panel. Mr. Phelps. Thank you, Mr. Chairman. I want to thank you for calling this hearing and examining a very important piece of legislation and the panel members for testifying. Very enlightening. What protection, Mr. Bonk, do you think an apprentice worker would have under an employer-sponsored apprenticeship program if after two years they fire them, an employee, to hire another apprentice to keep the costs down, so people maybe are not being laid off, but have you hired people fired? Mr. Bonk. We have fired people, not--you know, there has to be a reason to fire someone or it will not stand up in court. We do not just arbitrarily go out and fire someone. Mr. Phelps. No, I am not indicating that. But those that--I guess if the concerns of labor are not addressed, one of the things that they evidently are concerned about would be the competition of what eventually comes to wages, which has all kinds of ramifications, what Mr. Krul says, from the competition of bids, how much skill there is involved in those because of lower costs versus those that had to pay more to get more skilled. Do we have an even playing field with everything that is proposed in H.R. 1950? Mr. Bonk. No, I do not believe we have an even playing field. I think you will find more situations where journeymen are less likely to find work in the organized labor section, in a closed shop, than in an open shop sector, because in order to get a good average wage on a job, you are going to find union contractors want a lot of apprentices to get the average wage down. However, once they reach journeyman status, I think statistically it has been proven that they are going to sit in the hall. There is not as much demand for the journeymen as there is for the apprentice because of the reduced wage. That is not the situation in the open shop arena. If I am going to spend all this time and effort on a person, I want to retain them. I think there is more of an affinity towards the company in the open shop arena. There is an allegiance there. I take care of my people. And I think you will find they are more likely to stay with me. I do not send them back to the hall, I give them the opportunity to work within other trades. The construction industry does not work in a vacuum. If I start doing shoddy work, I am not going to be out there. If my employees perform poorly, people are not going to utilize me. Architects look at our work. Engineers look at our work. License and inspections people look at our work. I cannot do shoddy work. So the idea that we can put in a poor apprenticeship program and do shoddy work to keep the costs down, I am not going to survive in a free market system. Mr. Phelps. Mr. Herzog or Krul, would you respond to that as far as the effect on the journeyman, the point he made? Do you have an opinion on that? Mr. Herzog. Fortunately, we do not have that problem. Our members cannot find enough workers to do the work that they have. And this situation has been going on for many years. Mr. Phelps. Why is that, you think? Mr. Herzog. Because there is a shortage of people that want to get into these quote blue collar trades because it is not very sexy. Students can get work in the computer industry. We have talked with the BAT people here, they have been very helpful and understand this situation. You cannot attract the kids into these programs. The high school counselors are sending them elsewhere. Our people are actually going down to the junior high level trying to convince students that this is a possible trade one can get into if you are not college bound. Mr. Phelps. So we have this factor with the 25-to-40-year olds' decreasing interest in the industry. Mr. Herzog. Getting them at 18, getting high school graduates to go into this industry. We would love to have a lot more people. Mr. Phelps. So is that--maybe you would say let the market work without too much intervention or influence from the government? Does that not mean, then, that that would have an effect on wages, trying to recruit in shortage areas? Mr. Herzog. Yes. Obviously, what wages one pays determines how competitive you are in competing against others, whether union or non-union. You can only afford to pay a certain amount of money. The market determines what the rates are, except prevailing wages where everybody pays the same. Mr. Phelps. Mr. Krul, did you have a response? Mr. Krul. I do not mean to get into colloquy here, but I could not think of a quicker way for a union contractor to go into Chapter 7 or 11 bankruptcy than to put all apprentices out on a job and not use his most skilled manpower in the form of his journeyman and top estimators. The fact is that all contractors in the organized sector, and I can only speak for the organized sector, that is where my experience is, they understand under the collective bargaining process that they are required to hire apprentices in the ratio that the standards of the program are registered under. There would certainly be no contractor who would ever consider going beyond those ratios in some quote-unquote cost saving measure because the apprentices are being paid a portion of the journeyman's rate. The skill level is not there for an apprentice. He or she is still learning. And when you are on a big outage on a power plant or if you are going through a decommissioning a nuclear plant, you are not going to put apprentices in there. You are going to have your top people doing that. Mr. Phelps. Mr. Dunham, do you have a response? Mr. Dunham. Many of the public work contracts in the State of Washington now have a requirement in them for a certain percentage of apprentices and whether it is open shop or union contractors bidding on that, that is how many apprentices will be on the job. So it is really not that much of an issue. The issue, too, for the contractor is, whether they are union or open shop, is that they want to do a quality job and be able to stay in business and continue to do work in the future and they are not going to put unskilled, untrained people on the job that would affect their ability to do that. The standards in our situation, standards that the apprentices adhere to, are virtually the same for both the union and open shop segment. Our issue is just one of simply getting the open shop programs registered in the first place. Mr. Phelps. One last question for any of you to respond or all of you. One of the main reasons expressed for the need for this bill is to streamline the application process. How do time limits on the application approval streamline the process in your opinions? Mr. Bonk. I think no matter what industry you are in, if you have a time limit you are more apt to perform. I always laugh at contractors at bid meetings, the first question is can we get an extension on the time to bid. And it does not matter how much time you have, you are going to do it at the end, so if there is some pressure at some point in time to get this done, it will get done. If there is no pressure to come up with an answer, whether it be positive or negative, it is just human nature to let it slide. Mr. Phelps. Okay. So the time table provides pressure, in your opinion, to move it right along. Mr. Bonk. In my opinion, yes. Mr. Krul. Congressman, I would just repeat what I said before. It is my understanding, and I would stand to be corrected, that most State Apprenticeship Councils, those members, serve in a voluntary capacity and meet quarterly, so any time limit, for instance, the 90 days proposed in this bill, would put pressure on. If the review happens 90 days--an apprenticeship program is submitted and it is found to be deficient and that State Apprenticeship Council will not meet again for 90 days, I do not know how this bill's time table and the time table of the State Apprenticeship Council--who is going to authorize or enforce that they meet sooner in order to accommodate that time table? Mr. Phelps. Mr. Bonk, what do you say to that? Mr. Bonk. I do not feel the 90 days is an issue. I think 20 years is an issue. Mr. Krul. I would agree. Mr. Phelps. Twenty years? I missed something. Mr. Bonk. The ABC Washington chapter waited 20 years for an answer. Mr. Phelps. Oh, I am sorry. Mr. Bonk. I feel that if we are being given due process, if someone is legitimately looking at the thing, that is fine. The 30 days, 90 days, six months, I think it is all irrelevant. I do not feel they are being given an honest---- Mr. Phelps. Except the pressure time table, you said. That is relevant. Mr. Bonk. The 90 days is relevant. I do not know that these apprentice councils only meet quarterly. I do not think that is the issue. The real issue is get someone to look at it. Let us get out of the batter's box up to the plate. If we strike out, we strike out. Mr. Herzog. We have a perfect example for you. In Florida, our chapter executive applied for a program. She was on the SAC, she knew the people, she made her application. After four to six months not hearing anything, she called the chairman of the SAC and raised Cain. She asked what is going on, why have I not heard? And immediately thereafter, the program was approved. If she did not know anybody there, if she was just out there like everyone else, she would still be waiting. And if you have a problem on the time limit, determine it based on when you start the clock. If a SAC does not meet less than quarterly, and start the clock at that first quarterly meeting. But you have to make it known to everybody applying for the program when that clock is going to start. So, if I am applying for a program and the SAC met, say, two weeks ago and then I apply, I will know ahead of time that there is not going to be any action at least for two and a half months because they are not meeting. The other problem they have in Florida is they cut their budget to $1.3 million to oversee 347 programs. They lost their specialist and now they put the program under the unemployment department. So that is another problem, the funding of these programs is probably why there is the slowdown in response. Mr. Phelps. So do you think these people are properly communicated with, with the quarter timing, to understand where they are? Mr. Herzog. It is a certainty. Yes. You have to know what the game plan is. You have to know when to expect a response so that you are not sitting on the phone and telling people who have signed up to become apprentices, yes, maybe they will hear something next week, when it could be months before you know anything. Mr. Dunham. Mr. Congressman, in the State of Washington, the staff of the SAC obviously goes to work every day and works on that and has correspondence and discussion with the council members on a very regular basis. The quarterly meetings that are conducted by the SAC in some instances are formal occasions to enroll for the public record actions taken by that group, but they obviously do not work in a vacuum, the work is done constantly, and that is why I think the 90 days is probably a reasonable way to say that you should take some positive action toward us. Any of us who have a program, if we found some deficiency in our standards, which we rarely would because they model the union programs that have been in existence for years, we could take care of that and the issue of 90 days would not be a major issue. Mr. Phelps. So if I hear you all right, even though you might differ on the time table process, you think that it is necessary to have a time table. Mr. Dunham. That is correct. Mr. Phelps. And that whether it is 90 days, you think it is irrelevant, you all think it is working as it is? Mr. Krul. I would respectfully state, as I said in my testimony, that rather than do this legislatively, I would rather see this done through the CFR. And I would, if I could, leave with your staff a copy of that 1990 proposal that never went anywhere that did give the then Bureau of Apprenticeship and Training Director within 30 days the right to review a denial of a program. Mr. Phelps. Thank you. That would be very valuable. Anybody else have anything to add? Mr. Bonk. I think one of the most basic management premises is what gets measured gets done. Right now, there is no measurement. Put some kind of measurement in and it will get done. Mr. Herzog. I might add, too, that a lot of our chapters just went with the BAT process and they said that the difference is like night and day. It has been a pleasant experience, they have been very helpful. Mr. Phelps. The BAT process? Mr. Herzog. The BAT process. They understand---- Mr. Phelps. So maybe that would be a model? Mr. Herzog. They do not have a time line. It is just that they are more efficient and maybe it is because they have more people. I do not know. Mr. Phelps. Thank you all very much. Mr. Chairman? Chairman Pence. Mr. Brady, did you have any other follow-up questions? Mr. Brady. Just an observation. The DOL does not keep statistics, I do not believe, on the amount of complaints. I think that we should probably look at that and maybe try to compile what amount of complaints there really are and how widespread it is before we consider legislation. I mean, we do not know that. And I do not know whether or not--I am not trying to be an obstructionist--I do not know whether or not we can even get that information, but I think in due diligence we should try to and find out if it is two complaints from this part of the state and maybe just three from here, maybe Mr. Bonk has a legitimate complaint from just his own area, but if we can just see where it is at instead of putting in broadbased legislation for the United States of America for apprentices, we should probably try in due diligence to get those statistics. Chairman Pence. I want to thank all of those who presented testimony today and especially thank my colleagues, the ranking member, Mr. Brady from Pennsylvania, and Mr. Phelps from Illinois for joining us. I especially want to thank the public spirited nature of all of your comments. This is an issue that affects today 440,000 some odd families. It is our hope that we could proceed in a positive way so that we could have nearly a million people to meet the market need that seems inarguable in the coming years. I just would hope that we would go forward with the idea that whatever we do that one principle would come shining out and that would be that the law that is on the books is enforced and that if we need to make changes in that law or in the way that it is interpreted through regulation, it is my hope that our subcommittee would be a part of that discussion, but I remain a strong advocate of H.R. 1950 inasmuch as it simply calls for a streamlining and application of existing standards and I also would endorse the principle that performance measured is performance enhanced. One clarification, for the record, according to my understanding, the time clock for the 90 days begins after the initial SAC meeting and so it would accommodate the quarterly schedule that many states do employ in their meeting, thereby giving as much as a six-month initial window with another 30- day extension on top of that in reality. That being said, again, thank you to our witnesses and to my colleagues. This hearing is adjourned. 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