Davis Bacon Protects Local Communities
The Davis–Bacon Act establishes the requirement for paying the local prevailing wages on public works projects for construction workers throughout the United States. It applies to “contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair of public buildings or public works” projects. The Davis-Bacon Act has done more than almost any other legislation to bolster paychecks for millions of American construction workers. The U.S. Davis-Bacon Act of 1931 is a tried-and-true policy that prevents federally-funded construction projects from driving down local area wage standards. The prevailing wage is rarely as good as what SMART members or other union construction workers earn, but it does prevent federally-funded projects from driving down wages—and equally prevents artificially inflating wages. Communities and employers are protected by this law when it keeps the wage standards of low-wage areas from being imported into high-wage areas, or visa-versa. Rural and urban workers and contractors are helped along with both union and non-union employees. There have been many attempts to eliminate the Davis-Bacon Act over its long history. These attacks typically come from corporate groups seeking to drive wages below community standards in order to increase profits, all at the expense of the workers who build those projects, the taxpayers who finance them and communities which rely on them. Most elected officials—including most Republicans and independents along with all Democrats support the benefits the law provides.
- The Davis-Bacon Act prevents competition for federal construction contracts from artificially depressing local labor standards. Nonetheless, critics of Davis-Bacon argue that the government should use its bargaining power to cut local wage rates—by as much as 50 percent. Studies show, however, that such a race to the bottom does not substantially cut public construction costs, but worker skills, experience and motivation drop dramatically.
- Subverting prevailing wage laws often leads to shoddy construction and substantial cost overruns. Under prevailing wage laws, contractors are forced to compete on the basis of who can best train, best equip and best manage a construction crew…not on the basis of who can assemble the cheapest, most exploitable workforce—either locally or through importing labor from elsewhere.
- A Davis-Bacon wage usually is not a “union” wage. The Davis-Bacon prevailing wage is based upon surveys of wages and benefits actually paid to various job classifications of construction workers (e.g. Ironworkers) in the community, without regard to union membership. According to the Department of Labor, a whopping 72 percent of the prevailing wage rates issued in 2000 were based upon non-union wage rates. A union wage prevails only if the DOL survey determines that the local union wage is paid to more than 50 percent of the workers in the job classification.
- Higher wages and skills result in greater productivity and lower cost. Productivity is so much greater among high-wage, high-skill workers that projects using such workers often cost less than those using low-wage, low-skill workers due to repairs, revisions and lengthy delays. Opponents who claim that the government could save billions by eliminating Davis-Bacon protections ignore productivity, safety, community development and other economic benefits which contribute to the real cost-effectiveness of Davis-Bacon. A study of 10 states where nearly half of all highway and bridge work in the U.S. is done showed that when high-wage workers were paid double the wage of low-wage workers, they built 74.4 more miles of roadbed and 32.8 more miles of bridges for $557 million less.
- Driving wages down will not help to balance the federal budget. It is essential to account for the spin-off economic benefits of maintaining prevailing wages. When workers’ incomes go down, they have less money to spend purchasing goods and making investments. When businesses close or cut back as a result, tax revenues to the federal government decline and social expenditures rise.
- The Davis-Bacon Act improves local economies. Federal construction projects help local economies, and so do prevailing wage laws. A study done by Lionel Richman, LL.B., N.A.A. and Julius Reich, J.D. showed that in San Bernardino, California, the prevailing wage law generates benefits to the community that are 2.4 times the amount spent on the construction project. That’s because workers spend part of their income in local shops and restaurants and pay local taxes, which re-circulates throughout the economy.
- Davis-Bacon Results in Increased Productivity. Construction workers in states with prevailing wage laws are more productive. Census of Construction data show that value added per worker in states with prevailing wage laws is 13% to 15% higher than in states without prevailing wage laws.