Growing Broad Based Coalition Supports Davis-Bacon Reform
February 25, 2008
Dear Member of Congress,
The recently passed energy legislation, which contained eight sections that expand and broaden the reach of Davis-Bacon prevailing wage subsidies, illustrates the pressing need for complete repeal of these Depression-era wage subsidies. Now, Sen. Hillary Clinton (D-N.Y.) has introduced legislation that tightens the enforcement of the Davis-Bacon Act. Future legislation in both chambers will continue to be riddled with policies that implement flawed survey techniques and sampling bias, unless reforms are enacted which will more accurately reflect the true market wage.
Therefore, on behalf of the undersigned groups and individuals, representing millions of hard-working, rank-and-file American employees, taxpayers and business owners, we urge you to vote against all proposals that expand the Davis-Bacon Act and ask that you consider legislation that will permanently fix the flawed prevailing wage determination system.
While complete repeal of the Davis-Bacon Act should be the ultimate goal, there are appropriate measures to take which will ensure a fair and just wage determination system in the meantime.
The Davis-Bacon Act is a Depression-era wage subsidy law enacted in 1931, when the federal government was the largest construction contractor, to prevent the government’s purchasing power from driving down wages. This is no longer the case and its time has run out. In the 21st Century, especially in the new competitive global economy, it is essential to allow the free market system to determine wages. Command-and-control government regulations do not foster a free and open society.
Before laws are passed which extend Davis-Bacon coverage to private sector construction projects, as seen in the recent energy legislation, we are urging you to fix the survey problems identified by the Department of Labor, the Government Accountability Office, and the Office of Inspector General.
The Davis-Bacon survey is not a statistically random sample like the Bureau of Labor Statistics’ unemployment or wage surveys. Rather, the survey results indicate that the prevailing wage is most often equal to the union wage. This means unionized construction companies can decide the rate of any federal project. The federal government and many state governments use various voluntary surveys to determine the wage that “prevails” in the field of construction.
These voluntary surveys reflect a national wage disparity as unionized contractors and construction crews have an exceptionally high incentive to respond to those surveys. By contrast, nonunion and small, independent contractors have a lack of resources and time to respond to these voluntary surveys that determine wages.
As a result, even though only a small share of construction workers are union members, most of the contractors responding to the surveys report paying union scale, and thus union scale is determined to be the prevailing wage.
This decision-making power intrudes on the mechanisms of the free market and artificially drives up the cost of construction. Further, current Wage and Hour Division (WHD) methods raise public construction costs by $8.6 billion per year and inflate wages by an average of 22 percent.
Additionally, investigators from the Office of the Inspector General found that “one or more errors existed in 100 percent of the wage reports they reviewed.”
Furthermore, timely survey processing and other delays can result in contractors paying a prevailing wage that is several years out of date. According to the Office of Inspector General, the average time it takes the Department of Labor to issue a prevailing wage determination, prior to the completion of the survey period, is 2.3 years.
Inaccurate and out of date self-reported surveys, with an error rate of 100 percent, hardly reflect true prevailing wages. With overwhelming evidence for reform, allowing these distorting practices to continue does nothing more than skew the labor market directly in favor of Big Labor unions and against the average American worker and business owner.
According to James Sherk of the Heritage Foundation, “In almost every case, the prevailing wages do not resemble the actual market wages. Davis-Bacon wages vary from 38 percent below market wages for electricians in Tampa Bay to 73 percent above market wages for plumbers in San Francisco.” This outdated, Depression-era wage subsidy system is forcing the burden on taxpayers in one city and altering market wages in another – reform or repeal, not status quo, are the only options.
Rather than broadening the scope of the Davis-Bacon Act and prevailing wage laws, as seen in the recent energy legislation, we are asking you to consider the preceding evidence and reform or repeal the Davis-Bacon Act. We are urging you to pass legislation that requires the Department of Labor to calculate prevailing wages using data from the Bureau of Labor Statistics, which utilizes proper statistical techniques. By using larger geographical areas, rather than civil divisions, the BLS data generates valid random samples that will reflect a true market wage.
This Congress has already given enough concessions to Big Labor. In reforming the Davis-Bacon Act, you will send the message that you support the free market allocation of wages and not give specialized preference to union-labor by continuing to implement and broaden an obviously flawed and outdated wage determination system.
Sincerely,
Lori Roman
Lori Roman
Executive Director
American Legislative Exchange Council
David A. Keene
Chairman
American Conservative Union
Brian M. Johnson
Chairman
American Conservative Union
Brian M. Johnson
Director of Policy
Alliance for Worker Freedom
Timothy H. Lee, Esq.
Director of Legal and Public Affairs
Center for Individual Freedom
Ryan Ellis
Director of Legal and Public Affairs
Center for Individual Freedom
Ryan Ellis
Executive Director
American Shareholders Association
Chuck Muth
President
Citizen Outreach Project
Tim Phillips
President
Citizen Outreach Project
Tim Phillips
President
Americans for Prosperity
Richard O. Rowland
President
Grassroots Institute of Hawaii
President
Grassroots Institute of Hawaii
Grover G. Norquist
President
Americans for Tax Reform
Kevin M. Brinegar
President
Indiana Chamber of Commerce
Charles W. Baird
President
Indiana Chamber of Commerce
Charles W. Baird
Emeritus Professor of Economics
California State University, East Bay
Phil Krinkie
President
Taxpayers League of Minnesota
President
Taxpayers League of Minnesota
Greg Blankenship
President
Illinois Policy Institute
Bob Williams
President
Evergreen Freedom Foundation
Thomas Schatz
President
Evergreen Freedom Foundation
Thomas Schatz
President
Council for Citizens Against Government Waste
David Denholm
President
Public Service Research Council
President
Public Service Research Council
Derrick Hunter
Executive Director
Media Freedom Project
Adrian Moore
Vice President of Research
Reason Foundation
Duane Parde
Vice President of Research
Reason Foundation
Duane Parde
President
National Taxpayers Union
William Wilson
President
Americans for Limited Government
Matthew J. Brouillette
President
Americans for Limited Government
Matthew J. Brouillette
President
Commonwealth Foundation
Doug Bandow
Cobden Fellow in International Economics
Institute for Policy Innovation
Carl Horowitz
Cobden Fellow in International Economics
Institute for Policy Innovation
Carl Horowitz
Director
Organized Labor Accountability Project
J.R. Gaylor
President/CEO
Associated Builders and Contractors - Indiana
Andy Bloom
President/CEO
Associated Builders and Contractors - Indiana
Andy Bloom
President
Research Institute for Hawaii USA
Sam Sloam
President
Small Business Hawaii
President
Small Business Hawaii
Jim Waters
Director of Policy and Communications
Bluegrass Policy Institute for Public Policy Solutions
Jon Caldera
President
Independence Institute
cc: All Members of the United States Congress
cc: All Members of the United States Congress
