Davis-Bacon, the Pork of the American Jobs Act Boondoggle

President Obama observed in his speech that “the millions of Americans who are watching at home right now, they don’t care about politics.” Obama harkened back to the days of the American Dream, where merit and hard work were enough to prosper in America. His plan to restore America’s past greatness and economic power: the American Jobs Act.

Until next week when the President’s full details and budget of the American Jobs Act are released, it is difficult to predict the consequences of the plan. However, the American Jobs Act feels a lot like yet another doomed stimulus.

Remarkably, Obama admitted to some mistakes in past legislation, commenting that the American Jobs Act would be, “No more boondoggles… We’re cutting the red tape that prevents some of these projects from getting started as quickly as possible.” This is a promising statement by the President, but looking back to the American Recovery and Reinvestment Act (ARRA), it is a long shot.

Specifically, Obama throughout his speech promised more construction projects and the government funding of these projects. No matter how troubling centralized planning and gluttonous government spending is, this is what Obama is going to bring to the table. America’s money efficiently.

If Obama truly cares about the unemployed and wants to put Americans back to work, he should read, Did stimulus dollars hire the unemployed? Answers to questions about the American Recovery and Reinvestment Act. This Mercatus Center study on the ARRA rightfully disagrees with Obama’s government spending recovery plan, but at least it gives pointers on how to spend taxpayer money more efficiently.

If construction jobs are Obama’s focus to recovery, a suspension of Davis-Bacon and prevailing wage (law effectively requires government contractors to pay above market wages or union-scale wages) laws must be enacted.  Disallowing contractors to pay market wage creates less jobs and production. As shown in the Mercatus study relating to the ARRA spending, “6 percent more workers could have been hired on Davis-Bacon projects, and more roads, could have been repaved, more houses insulated, more levees repaired if ARRA-receiving organizations could have paid market wage.”

The suspension of Davis-Bacon law for ARRA would have created 55,000 additional federally funded jobs. Obama claims to want a merit-based society (“These men and women grew up with faith in an America where hard work and responsibility paid off. They believed in a country where everyone gets a fair shake and does their fair share.”)

Then repeal Davis-Bacon. These inflated wages are not merited from hard work, but legislation and special interest.