A U.S. Court of Appeals panel, in a ruling seen as a major defeat for organized labor, yesterday upheld most of the Reagan administration's proposed changes in the way wages are determined for billions of dollars in federal construction projects.
The administration, which sought the changes in the Davis-Bacon Act which determines wage rates in federally financed construction projects, had estimated some of the changes would result in an annual savings of nearly $700 million to the government and contractors.
The opinion, written by U.S. Court of Appeals Senior Judge Carl McGowan, upheld major changes such as how the prevailing wage in an area is determined and the increased use of semi-skilled helpers at lower wages on some projects.
In a brief statement after the ruling, Secretary of Labor Raymond J. Donovan said he was "very pleased" with the decision and said the department planned "to move as swiftly as possible to implement the regulations upheld today by the court."
Union officials, who had filed the original suit opposing the rules, also promised to move swiftly to appeal the decision either to the full appeals court or to the U.S. Supreme Court.
Robert A. Georgine, president of the 4.1 million member Building and Construction Trades Department of the AFL-CIO, said yesterday that the ruling appeared to reverse a ruling last year by a federal district court judge ruling on many of the same issues. Georgine said attorneys working with the AFL-CIO were still analyzing the decision, but "we will definitely take the next step" to overturn yesterday's panel decision.
Construction industry representatives, who have lobbied for years to either scuttle or alter the law, yesterday hailed the decision.
G. Brockwel Heylin, a spokesman for the Associated General Contractors of America, said the decision was a "great step forward for the taxpayer and the construction industry." He said the ruling "will help bring federal project wage and labor practices into accord with private- sector practices."
Under current regulations, the prevailing wage is set at the wage paid at least 30 percent of the workers doing a particular job in a locality. Contractors argued that this often allowed the government to simply use union wage scales rather than prevailing wages in determining pay levels. Under the new regulations, that rate will be set at a generally lower level of what a majority of workers or a weighted average of workers earn in an area.
A second major change approved by the panel yesterday would exclude any nearby urban counties' wage rates in determining rates for rural areas. The new regulations would allow combining and averaging rates from from nearby rural areas but exclude the generally higher rates paid in urban areas from the formula.
In addition, the court said the administration could exclude wages paid on similar projects covered by the Davis-Bacon Act from its calculations on what the prevailing wage should be. Union lawyers yesterday argued that such an exclusion would invariably lower the wage rates on new projects.
McGowan said that Congress did not require the secretary of labor to include those projects in wage determination calculations, even though all prior administrations had included them.
The administration had estimated that expanded use of helpers, rather than skilled journeymen, apprentices or trainees on projects could save the government some $363 million annually in construction costs.