Davis-Bacon Act/Prevailing Wage
The Davis-Bacon Act is an 80-year-old wage subsidy law administered and enforced by the U.S. Department of Labor (DOL) that mandates so-called “prevailing” wages for work performed on federally financed construction projects. Davis-Bacon hinders economic growth, increases the federal deficit, imposes enormous burdens that stifle contractor productivity, ignores skill differences for different jobs, and imposes rigid craft work rules.
• Repeal of the Davis-Bacon Act.
• Legislative and regulatory efforts designed to improve federal wage determinations and limit the negative impacts of DOL’s current policy.
• Unequal access to work opportunities. Davis-Bacon prevents many qualified small merit shop contractors from bidding on publicly funded projects.
• Waste, fraud and abuse. Davis-Bacon sets artificial wages and restricts competition, resulting in billions of dollars being unnecessarily added to the cost of public works projects.
• Expansion of the Davis-Bacon Act into areas of public and private projects in which it previously has not been mandated.
The Government Accountability Office (GAO) has repeatedly criticized DOL’s Davis-Bacon wage determination process for its lack of transparency in how the published wage rates are set, as well as its tendency to gather erroneous data through unscientific wage surveys. DOL’s responses to these and other independent government reports have been dismissive at best, and demonstrate that the agency is incapable of administering and enforcing the Davis-Bacon Act in a fair and reasonable manner.
Despite years of low union density in the construction industry, DOL’s flawed wage survey process somehow mandates union wage rates more than 60 percent of the time. These wage determinations force federal contractors to use outdated and inefficient union job classifications that ignore the productive work practices successfully used in the merit shop construction industry.
Davis-Bacon also 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 are at an even greater disadvantage due to low net profit margins and high unemployment facing the industry.
DOL’s mishandling 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 10 years.
In addition to advocating for repeal of the Davis-Bacon Act, ABC 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 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.
2014 Issue Brief: Davis-Bacon Act/Prevailing Wage