Reforming Davis-Bacon to Cut Waste and Help Workers
Friday, September 30, 2005
By: Graham McLaughlin

Wastewatcher, September 2005

It is very difficult to justify any bill that was introduced to combat “cheap colored labor,” as Rep. Clayton Allgood (D-Ala.) said in support of the Davis-Bacon Act in 1931.  The Act requires private contractors to pay the “prevailing wage” of an area to all employees on federally funded construction projects costing more than $2,000.  The U.S. Chamber of Commerce estimates that the mandate inflates the cost of applicable government projects by 15 percent and costs taxpayers more than $1 billion annually, not including the added $100 million in administrative costs.  That makes green another problematic color in association with this law.   

Initially enacted to ensure white workers would not lose jobs to blacks willing to work for less, Davis-Bacon now effectively shuts out all lower-skilled and unskilled workers because the “prevailing wage” tends to correspond to union wages, especially in urban areas.  A key word in the Davis-Bacon Act is “all” because that means every employee on the job must be paid these higher wages, regardless of their skill level.  As one contractor complained, "I've got to start out a guy at $16 per hour to find out if he knows how to dig a hole. I can't do that."  Higher paid, higher skilled union workers cash in at the expense of taxpayers while lower paid, unskilled workers are priced out of the job.

Wage inflation is implicitly admitted in the legislation because it allows the president to suspend the act during states of emergency.  President Bush recently did so following Hurricane Katrina to provide “greater assistance to these devastated communities and…permit the employment of thousands of additional individuals."  President George H.W. Bush suspended the act in the aftermath of Hurricane Andrew in 1992, as did Presidents Richard Nixon and Franklin Roosevelt under extenuating circumstances.  It makes no sense to admit a quick and cost-effective rebuilding strategy is needed in the wake of disasters, yet be content with a law requiring a wasteful and expensive contracting process during all other times.

Labor interests and other Davis-Bacon supporters argue that any short-term gains in cost-savings are easily offset by long-term losses due to poorer quality of labor.  There is without question a need for well-paid, skilled labor in construction work, but there is also the need for less-skilled workers in many areas.  It is a stretch to assume that a union worker getting paid $16.00 will sweep a floor better than a common day laborer; and it is preposterous to assume that “quality” differences will make up for the inflated expense.     

The Davis-Bacon Act effectively shuts out non-union labor from the workforce because employers will always hire skilled workers over unskilled workers if both must be paid at the same “prevailing rate.”  By combining a sliding pay scale with a minimum wage, compensation could be based on both merit and geography, resulting in a level playing field for all workers.  Productivity and quality would increase because more incentives would exist for advancement through hard work and skill development. 

The Davis-Bacon Act has been a disaster itself, and should be repealed.  With the cost of hurricane recovery pushing the national debt toward $8 trillion, federal construction policy should be focused on maximizing efficiency and economic growth, not on lining the pockets of overpaid union floor sweepers.