The Davis-Bacon Act is an 80-year-old wage subsidy law administered by the U.S. Department of Labor (DOL) that mandates so-called “prevailing” wages for employees of contractors and subcontractors performing work on federally financed construction projects. The Davis-Bacon Act, as administered by DOL, unnecessarily hinders economic growth, increases the federal deficit, and imposes an enormous paperwork burden on both contractors and the federal government. It stifles contractor productivity by raising costs, ignores skill differences for different jobs, and imposes rigid craft work rules. The inefficient wage survey process used by DOL to calculate Davis-Bacon wages often results in union wages being deemed “prevailing,” even though only 13.2 percent of the construction industry is unionized. As a result, Davis-Bacon frequently mandates union wages and requires contractors to use outdated and inefficient union job classifications that ignore the productive work practices successfully used by merit shop contractors. In addition, Davis-Bacon fails to provide equal access to work opportunities because complexities and inefficiencies in the act’s implementation make it nearly impossible for many qualified, small merit shop firms to competitively bid on publicly funded projects. These businesses—and construction in general—are at an even greater disadvantage due to low net profit margins and double-digit unemployment facing the industry. DOL’s handling of the Davis-Bacon wage determination process is not just bad for construction—it’s bad for taxpayers as well. The Congressional Budget Office has estimated that the Davis-Bacon Act will raise federal construction costs by $15.7 billion over the next ten years. Although Advocacy groups have long advocated for repeal of the Davis-Bacon Act, it also has made numerous recommendations over the years that could have mitigated some of the act’s damage to the economy. However, despite repeated criticisms from the Government Accountability Office (GAO) and DOL’s Office of Inspector General, the agency has implemented few, if any, meaningful reforms in its administration of the act since the early years of the Reagan administration. A 2011 GAO report found the Davis-Bacon wage survey process suffers from a lack of transparency in how the published wage rates are set, as well as contains data errors regarding the number of employees and hourly and fringe benefit rates. This report makes it clear that DOL is simply incapable of implementing the Davis-Bacon Act’s provisions in a fair and common-sense manner.
Posted on: Wed, 19 Jun 2013 03:03:10 +0000