Davis-Bacon is out of date
The Reagan administration is committed to taking all appropriate legal steps to lowering the US inflation rate. And Congress is at last moving to curb spiraling federal budget outlays. In other words, "economy" -- the closest possible scrutiny of each and every taxpayer dollar -- is the almost official byword in Washington these days.
That being the case, the administration And Congress should either sharply revise -- or better yet, repeal -- the costly and no longer economically justifiable Davis-Bacon Act. Enacted in the stark depression years of the Hoover administration, even before the New Deal, the statute requires that wages paid workers on federal construction projects should be based on "prevailing" local wages. The original intent of the legislation was to keep the massive purchasing power of the government from driving wages downward in whole regions or industries by hiring cut-rate laborers at a time when construction work was hard to come by. At that time the legislation made good sense, since there was no minimum wage and no federal law recognizing the right either to bargain or to strike.
The upshot of Davis-Bacon in the United States of the postwar period, however , has been that federal construction workers are often been paid wages far out of line with local wage scales, thus adding sharply to the costs of building projects, forcing up wages in general, and contributing to the inflation rate. The added costs are considerable, reckoned by the General Accounting Office (GAO) as more than $700 million a year, and possibly billionsm more given indirect costs.
Clearly, the US can no longer afford such wage-scale profligacy, no matter how much a continuation of that policy is sought by organized labor, which sees the retention of Davis- Bacon as one of its most important legislative battles this year.
President Reagan, while strongly critical of the act, has to date publicly resisted outright repeal. Whether he can (or in fact, wishes to) hold back business lobby groups and conservative lawmakers from overturning the legislation is unknown. The administration has been considering revisions that would have the effect of limiting the scope of the law. If such revision proves to be the only politically acceptable alternative at this time, then lawmakers should insist that wages be based on genuine prevailing wages, and not determined by such dubious statistical measurements as the "30 percent" rule under which federal officials can use the wages of 30 percent of the workers in a particular craft as the model of a local wage. The 30 percent selected for measurement, it need hardly be noted, are too often the highest paid workers in a region.
The wisest course would be to forthrightly rescind the act, as recommended by the GAO. Though it served a useful purpose five decades ago, the law is now an anomaly and a terribly costly one at that. The government should use tax dollars where they are truly needed, instead of lavishing them on already well-paid and heavily unionized construction workers on lucrative government contracts.