House Examines Davis-Bacon Report

April 19, 2011

The House Education and Workforce Committee’s Subcommittee on Workforce Protections held a hearing to examine the Department of Labor’s (DOL) implementation of the Davis-Bacon Act, specifically concerning a recent Government Accountability Office (GAO) report that found poor data is being used to set prevailing wage rates.

The Davis-Bacon Act is the 1931 federal law that sets prevailing wage rates on public works or public building projects. Federally funded or assisted contracts over $2,000.00 must abide by the Davis-Bacon Act, which sets requirements that on-site workers get paid no-less than the local prevailing wages and benefits for a similar job. Prevailing wages are set by DOL through a complex system of wage surveys.

The GAO report found problems with timeliness, representativeness, and quality of the wage data gathered by DOL’s wage surveys. The report also notes a lack of transparency by DOL in how wages are set, which could have a negative impact on employers bidding for jobs. Additionally, the report found that one in four wage rates were based on the wages of just six or fewer workers. Forty-six percent of the prevailing wages for non-union workers were based on wages reported 10 or more years ago.

In light of the current national budget deficits, high unemployment rates, and the 2009 federal stimulus law that pumped an estimated $300 billion into federal construction projects that could be subject to Davis-Bacon requirements, the GAO report and congressional hearing were timely. The report outlines the crux of the issue as follows: “If the resultant prevailing wage rates are too high, they potentially cost the federal government and taxpayers more for publicly funded construction projects or, if too low, they cost workers in compensation.”

One witness, the Heritage Foundation’s James Sherk, noted that his research demonstrates that properly determined prevailing wage rates would reduce federal construction costs by nearly $11 billion this year and lead to an additional 155,000 jobs for construction workers.

The report recommends the following changes at DOL with respect to the Davis-Bacon Act:

  • Congress should consider legislative changes that require DOL issue wage rates by civil subdivision to allow more flexibility.
  • DOL should obtain expert advice on its survey design and methodology to improve quality and timeliness.
  • DOL should take steps to improve on its transparency.

Stay tuned to NSBA’s Web site for more information or new initiatives resulting from the report and hearing.