Forcing federally funded public works projects to pay the so-called prevailing wage is a classic case of robbing Peter to pay Paul. The intention behind the Davis-Bacon Wage Act, which requires any federal project to use prevailing wages, is to boost worker pay. The practical effect is to substantially drive up the cost of those projects.
Those costs are ultimately paid for with taxpayer dollars, so it is ordinary citizens shouldering the higher costs. Instead, the government should institute a genuinely competitive bidding process, which would save taxpayers money.
The Davis-Bacon Act was passed in 1931 and was initially meant to counter a Depression-era practice of literally busing in workers from a lower-paying region so employers didn’t have to hire local workers who would not work for the wages being offered. This practice benefitted many workers, frequently African-Americans, who lived in poor regions with little work.
Busing in unskilled labor is rarely a factor with the law, as most federal projects involve skilled labor. The present-day purpose behind the Davis-Bacon Act is to boost unions. The Labor Department’s Wage and Hour Division is the entity that surveys businesses and determines the prevailing wage for these types of projects. This wage mirrors what companies with collective bargaining contracts — union wages — pay their workers.
Unions that drive up their members’ wages are thus protected from the economic consequences of doing that if their business involves federal contracts because non-unionized businesses will have to pay the same wages and, therefore lose any wage-price advantage. The AFL-CIO is one of the main boosters of the law, unsurprisingly.
Read the full article on DC Journal.