Background: Enacted in 1931, the Davis-Bacon Act (DBA) requires contractors to pay no less than the local prevailing wage to on-site workers working on federally funded construction projects costing over $2,000. Originally passed during the Great Recession to prevent the federal government from driving down construction wages, the DBA has long outlived its purpose. The DBA wastes taxpayer dollars and decreases construction jobs.
Inaccurate Wage Rates: The prevailing wage is determined based upon the wages earned by workers on non-federal construction projects in the same locality. To calculate the prevailing wage for each locality, the Department of Labor (DOL) conducts surveys throughout the country. However, these surveys are conducted using a highly flawed and unscientific methodology. The U.S. General Accounting Office (GAO) and the Inspector General determined multiple times that DBA rates are set using unscientific self-selected survey samples. Their audits discovered that most DBA estimates are based on responses from fewer than 30 workers, are years out of date, and contain multiple errors. Because of this, DBA prevailing wages are on average, 22 percent higher than market wages.
Wasting Taxpayer Dollars: Because of the DBA, federal contractors are forced to pay their workers an average of 22 percent more than market wages. This raises the cost of federal construction projects and therefore wastes taxpayer dollars. Repealing the DBA would save taxpayers nearly $11 billion.
Favoring Unions & Reducing Employment: Congress has been unable to repeal the DBA mostly due to strong union opposition. Labor unions support the DBA because it forces contractors to pay their workers inflated wages that typically match union wage rates. As a result, non-union contractors looking to underbid unionized companies for federal contracts cannot. While this benefits labor unions, it reduces employment opportunities for non-unionized businesses.
Solution: Congress should repeal the outdated Davis-Bacon Act by passing H.R. 987 – the Davis-Bacon Repeal Act. Repealing the DBA would save taxpayer dollars and increase employment opportunities for non-union businesses.