Reprinted from
Davis-Bacon Act
Hike Public Project Labor Costs 22 Percent
ISSN 1523-5688
Page
1574
News
Volume
53 Number 2658
The use of federally mandated prevailing wages increased the
cost of labor on public construction projects by 22 percent and overall
construction costs by 9.91 percent, according to a study released May 7 by the
Beacon Hill Institute for Public Policy Research at
According
to the study of 117 projects, federal, state and local governments spend about
$300 billion annually on construction projects. Because prevailing wage laws
establish a wage floor, they raise the cost to taxpayers construction cost by
an additional $8.6 billion a year more for public construction projects
David
G. Tuerck, executive director of the Boston-based
Arguing
that the purpose of prevailing wage law was to deny employment opportunities to
workers from outside the immediate area, he said that "the best solution
would be to repeal [the] Davis-Bacon [Act] and to render unnecessary the whole
problem of divining what the prevailing wage is. Next best would be to shut
down the Labor Department's Wage and Hour Division and take the simple step of
getting the measurement of the prevailing wage right."
The
Wage and Hour Division calculates the prevailing wage under Davis-Bacon, the
study said, while the Bureau of Labor Statistics has the parallel job of
computing "impartial, timely, and accurate data relevant to the needs of
our users and to the social and economic conditions of our Nation, its workers,
and their families."
Prior
to calculating the prevailing wage rate, the survey said, "the WHD
conducts voluntary survey of the wages and fringe benefits paid to workers in
specified job classifications for comparable construction projects in specific
geographical areas."
An
examination of the WHD's methodology, according to
the study, showed:
·
untimely
wage reporting,
·
poor
survey design,
·
strong
incentives and the opportunity for unions to dominate the process of reporting
wages, and
·
ill-conceived calculation methods.
The study argued that
BLS uses a larger sample from the Occupational Employment Survey. "The WHD
could realize substantial cost savings by utilizing the raw wage data collected
by BLS, eliminating the need to conduct their own survey. Relying on the BLS
wage data would solve numerous issues mentioned earlier in the report. It would
address concerns relating to the timing of the surveys, to the population
accounted for in the sample of wage data, to the geographic areas surveyed and
to inconsistent job categories across counties."
Critics Challenge
Findings
Labor unions and union contractors
disputed both the study's findings.
Jacob
Hay, spokesman for the Laborers' International Union told BNA on Feb. 8,
"Arguments against prevailing wage are rooted in the overly simplistic
view that equates higher wages with higher construction costs. Higher wages are
usually offset by greater productivity and other economic benefits such as
worker training, safety and local economic development."
Raymond
J. Poupore, executive vice president of the National
Construction Alliance, said NCA recently commissioned a study by the
Construction Labor Research Council that proves, by utilizing data supplied by
the Federal Highway Administration, that wages paid to
a construction worker are a poor indicator of the total cost of building a
highway. He said "the [CLRC] report states that higher wage workers can
build highways with no impact upon total cost because of their superior skills.
Stan
Kolbe, director of legislation for the Sheet Metal and Air Conditioning
Contractors' National Association, called the report flawed and said that it
was based upon the assumption that all public projects have a 50 percent labor
cost component, which he said is not accurate in buildings and other
facilities. Kolbe said, "the report makes the discredited claim that support
for Davis Bacon was or is based upon racial discrimination-then admits within
the report that the claim was found meritless in
federal court.
The
By Sheila R. Cherry
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