REPEAL THE DAVIS-BACON ACT 

The Davis-Bacon Act of 1931 forces contractors on all federally-funded contraction projects to pay the “local prevailing wage“ -- the wage paid to the majority of the laborers or mechanics in the classification on similar projects in the area.

This law has penalized taxpayers and the most efficient companies while crushing the dreams of the most willing workers. There are efforts in Congress to repeal this old relic of an era during which people actually believed Congress could legislate prosperity.

Americans pay a huge price in lost jobs, lost opportunities and tax-boosting cost over-runs on federal construction projects every day.

Davis-Bacon artificially inflates construction costs through a series of costly work rules and requirements. For instance, under Davis-Bacon, workers who perform a variety of tasks must be paid at the highest applicable skilled journeyman rate.

Thus, a general laborer who hammers a nail must now be classified as a carpenter, and paid as much as three times the company's regular rate. As a result, unskilled workers can be employed only if the company can afford to pay the government-determined “prevailing wages” and training can be provided only through a highly regulated apprenticeship program.

Most small construction firms cannot afford to operate under Davis-Bacon's rigid job classifications or hire the staff of lawyers, accountants and human resource experts needed to fill out the extensive paperwork required to bid on a federal contract.

Because most minority-owned construction firms are small companies, Davis-Bacon keeps minority-owned firms from competing for federal construction contracts. The resulting disparities in employment create a demand for affirmative action, another big government program.

The original supporters of this law bragged about supporting Davis-Bacon was a means of keeping "cheap colored labor" out of the construction industry.

In addition to opening up new opportunities in the construction industry for smaller construction firms and their employees, repeal of Davis-Bacon would also return common sense and sound budgeting to federal contracting -- which is now rife with political favoritism and cronyism.

An audit by the Labor Department's Office of the Inspector General found that inaccurate data were frequently used in Davis-Bacon wage determination. Although the Inspector General's report found no evidence of deliberate fraud, it did uncover material errors in five states' wage determinations, causing wages or fringe benefits for certain crafts to be overstated.

The Davis-Bacon Act drives up the cost of federal construction costs by as much as 50 percent. The Congressional Budget Office has reported that repealing Davis-Bacon would save the American taxpayer almost three billion dollars in four years!

Repealing the Davis-Bacon Act will save taxpayers billions of dollars on federal construction costs, return common sense and sound budgeting to federal contracting, and open up opportunities in the construction industry to those independent contractors, and their employees, who currently cannot bid on federal projects because they cannot afford the paperwork requirements imposed by DBA.

“Prevailing wages” are supposed to be surveyed by the Bureau of Labor Statistics, (they used to come to Guam in pairs from Region IX) but Guam has not been visited by BLS in almost two decades. It is unclear where wage rates for Service Contract Act compliance originate.

Sources in the U. S. mainland tell us that the Labor Department measures prevailing wages simply by calling construction unions and asking what wage rates are contained in their contracts with area builders.

Dr. Walter Williams, who holds a bachelor’s degree from California State University, a Master’s Degree and a Doctorate from the University of California at Los Angeles, has  strong views on Davis Bacon:

“The Davis-Bacon Act is a federal law that mandates that a prevailing wage be paid on all federally financed or assisted construction projects. The secretary of labor illegally sets the 'prevailing wage' at the union wage or higher, regardless of what the average wage is in the affected locality.

"Davis-Bacon survives because of powerful interest-groups -- labor unions that lobby Congressmen, both Democrats and Republicans. The effect of the Davis-Bacon Act is that of discriminating against contractors involved in the employment of non-union and lower-skilled workers."

"Any minimum wage law tends to discriminate against the employment of low-skilled employees, and Davis-Bacon Act is simply a super-minimum wage."

"During South Africa's apartheid era, laws similar to Davis-Bacon pprotected white workers from competition with lower-skilled, lower-paid black workers."

"Of course, today's Davis-Bacon Act supporters don't have the same intentions and don't use the racist language of their predecessors. That shouldn't make any difference to us. Our concern should be the law's effects, not its intentions."

"After all, if someone is pushed off a building -- it's not the intention of the pusher that determines how the victim falls, it's the law of gravity. It's the same with economic laws. Intentions behind price-fixing are not necessarily the same as its effects."

A SAMPLE WAGE DETERMINATION

GENERAL DECISION: GU20030001 SU1 Date: June 13, 2003

General Decision Number: GU20030001 Superseded General Decision No. GU020001

State: Guam Construction Type: BUILDING HEAVY HIGHWAY RESIDENTIAL County(ies): GUAM BUILDING, RESIDENTIAL, HEAVY AND HIGHWAY PROJECTS Modification Number Publication Date 0 06/13/2003 COUNTY(ies):

GUAM 10/31/2000 Rates

BRICKLAYER 11.30

CEMENT MASON 10.83

CARPENTER 11.25

ELECTRICIAN 13.35

HEAVY EQUIPMENT MECHANIC 13.60

HEAVY EQUIPMENT OPERATORS 12.81

IRONWORKER 9.92

LABORERS 7.88

PLUMBER 11.99

PLASTERER 9.57

PAINTER 13.03

PIPEFITTER 16.15

REFRIGERATION MECHANIC 14.85

ROOFER 10.54

SHEETMETAL WORKER 13.57

TRUCK DRIVER 12.99

WELDER 13.85

Unlisted classifications needed for work not included within the scope of the classifications listed may be added after award only as provided in the labor standards contract clauses (29 CFR 5.5(a)(1)(ii)).

In the listing above, the "SU" designation means that rates listed under that identifier do not reflect collectively bargained wage and fringe benefit rates. Other designations indicate unions whose rates have been determined to be prevailing.

WAGE DETERMINATION APPEALS PROCESS

1.) Has there been an initial decision in the matter? This can be: * an existing published wage determination * a survey underlying a wage determination * a Wage and Hour Division letter setting forth a position on a wage determination matter * a conformance (additional classification and rate) ruling. On survey related matters, initial contact, including requests for summaries of surveys, should be with the Wage and Hour Regional Office for the area in which the survey was conducted because those Regional Offices have responsibility for the Davis-Bacon survey program.

If the response from this initial contact is not satisfactory, then the process described below should be followed. With regard to any other matter not yet ripe for the formal process described here, initial contact should be with the Branch of Construction Wage Determinations. Write to: Branch of Construction Wage Determinations Wage and Hour Division U. S. Department of Labor 200 Constitution Avenue, N. W. Washington, D. C. 20210 2.)

If the answer to the question in 1.) is yes, then an interested party (those affected by the action) can request review and reconsideration from the Wage and Hour Administrator). [See 29 CFR Part 1.8 and 29 CFR Part 7].

Write to: Wage and Hour Administrator U.S. Department of Labor 200 Constitution Avenue, N. W. Washington, D. C. 20210 The request should be accompanied by a full statement of the interested party's position and by any information (wage payment data, project description, area practice material, etc.) that the requestor considers relevant to the issue.

If the decision of the Administrator is not favorable, an interested party may appeal directly to the Administrative Review Board (formerly the Wage Appeals Board). Write to: Administrative Review Board U. S. Department of Labor 200 Constitution Avenue, N. W. Washington, D. C. 20210 4.) Decisions by the Administrative Review Board are final.

END GENERAL DECISION

Last October, the House Education and the Workforce Committee recommended reforming or repealing the Davis-Bacon Act as a means to help eliminate waste, fraud and abuse in federal programs. The reform or repeal of the Davis-Bacon Act would reduce artificially inflated federal construction costs by up to 38 percent.

The Employers Council has long advocated repeal of this discriminatory and antiquated law. The Davis-Bacon Act drives up costs for American taxpayers every year. This outdated and abused law should be repealed so that the free market can be allowed to work for public contracts, as it does in private construction.

Describing the Davis-Bacon Act as "costly and outdated," the Education and the Workforce Committee report said the repeal or reform of the law would "improve the efficiency and cost-effectiveness of federal contracting, and address systematic flaws contained in the statute that have led to documented fraud and abuse."

The report also cited a January 1999 General Accounting Office report that found errors in "70 percent of the wage forms used by [the Department of Labor (DOL)] to calculate prevailing wages." The department's own Inspector General concluded in 1997 that two-thirds of the wage surveys provided to DOL for use in calculating prevailing wage rates were inaccurate.

Meantime, the Department of Labor has published a final regulation effectively eliminating helpers as a classification on Davis-Bacon work. The regulation will allow the use of helpers only where:

-- (1) their duties are clearly defined and distinct from those of journey-worker and laborer classifications in the area;

-- (2) the use of helpers is an established prevailing practice in the area;

-- (3) the term “helper” is not synonymous with “trainee” in an informal training program.

When it was proposed in 1999, the rule was erroneous and arbitrary and unsupported by hard evidence. By denying recognition to a classification of workers which clearly prevails in the industry, the Department o Labor violated the mandate of the Davis-Bacon Act.

By publishing the rule, DOL chose to ignore data from pilot surveys of construction wages taken by the Bureau of Labor Statistics, surveys that indicated that up to thirteen percent of employees at surveyed construction sites were helpers.