Washington, D.C., September 12, 2005—Last week President Bush, in order to speed the hurricane recovery efforts in the Gulf Coast, suspended labor regulations that control wages for workers employed by federal contractors. The additional flexibility will help create new jobs and speed the rebuilding process, raising the larger question of whether the rules should be reinstated even after the emergency has passed.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />
The so-called “prevailing wage” regulations which date from the 1931 Davis-Bacon Act require that federal contractors pay employees a government-determined minimum wage. Historically, the prevailing wage was often pegged to the local union wage, making it virtually impossible for non-union workers to compete for jobs. In addition, the initial motivation for the rules came largely from all-white unions attempting to exclude African-American workers from the labor market.
“President Bush has done the right thing by suspending Davis-Bacon in the stricken areas,” said Competitive Enterprise Institute Editorial Director Ivan Osorio. “But since this move recognizes that the Act hinders job creation, we should ask: If scuttling Davis-Bacon is a good idea for the <?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Gulf Coast, why isn’t it a good idea for the rest of the country? The law’s effects and ugly history suggest it is time for its repeal.”
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