The Obama Watch

Mr. President, Suspend Davis-Bacon

Otherwise, your infrastructure projects are DOA.

By 2.7.14

The president once again is calling for a massive investment in infrastructure projects. In his State of the Union address, he argued that money saved by simplifying the tax code could then be invested in repairing and building bridges, roads, ports, and other key infrastructure.

Regrettably, all these proposed public works projects would be covered by the Davis-Bacon Act of 1931 (D-B), an outdated, anachronistic federal statute that mandates the payment of “prevailing wages” (read "union scale") for all workers on federally funded construction projects.

D-B unnecessarily inflates construction costs, imposes wasteful bureaucratic paperwork requirements on contractors, and allocates employment opportunities unfairly. It would seriously undermine this latest phase of the president's proposed infrastructure program. But, of course, the statute is the sacred cow of labor unions.

In his speech, the president also vowed to use executive action when necessary to move his agenda. He stated that he would use his executive authority to streamline the bureaucratic process in approving his proposed public works projects. If he is true to his pledge (and has the political courage to stand up to organized labor, significant “ifs”), he should use this power to suspend Davis-Bacon for the duration of the infrastructure program.

The Davis–Bacon Act expressly provides for suspension by the President. The exercise of this executive power is not unprecedented. The authority has been used four times since passage by Republican and Democrat presidents alike: FDR in 1934 to introduce the New Deal; Nixon as an anti-inflationary measure in 1971; Bush I in 1992 for hurricane Andrew recovery; and Bush II for recovery from hurricane Katrina in 2005.

Suspension of Davis-Bacon for the duration of the president’s proposed infrastructure cornucopia would save taxpayers untold billions and ensure true equal opportunity for the thousands of new jobs that will be created.

The better answer would be to repeal the regressive statute in its entirety. But, since repeal is a pipe-dream in the current political environment, the president should use his executive power to suspend Davis-Bacon indefinitely to facilitate the creation of the new jobs his program promises. As he vowed in his speech, “Wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.” Unions will fight this executive action tooth and nail, but suspension of D-B is a sure way to reduce those persistently high unemployment figures that have plagued his administration. So, Mr. Obama should order an indefinite suspension of D-B posthaste. 

The origins of the Davis-Bacon Act are a distasteful and embarrassing episode of American labor history. The bill was introduced after African-American workers from Alabama were hired by a contractor to help build a VA hospital in Representative Bacon’s New York district (he was co-sponsor of the bill and its namesake). The law was passed by Congress and ironically signed into law by President Hoover to “preserve jobs for local workers” (no matter what the additional cost to taxpayers).

There are myriad reasons why D-B should be suspended for the duration of Obama’s proposed infrastructure project. First, the law is totally outdated. It was enacted out of fear and racism, and continues to discriminate against minorities and others who should be job eligible. For example, just one year after its passage, due to the impact of Davis-Bacon, only 30 out of 4,100 workers on the federally funded Boulder Dam built in 1932 were African-American.

Second, D-B has cost American taxpayers at least an estimated $1.5 billion per year in inflated construction costs on public works projects. Those additional costs are a mere fraction of the excess costs that lie ahead under the expansion of federal construction projects proposed by the Obama administration. The suspension of D-B would save tens of billions of dollars, depending on the ultimate scope and duration of the program. To say we can't afford that kind of careless waste is an understatement of monumental proportions.

Third, D-B imposes unnecessary and wastefully expensive regulatory burdens on contractors. D-B requires the strict assignment of workers and payrolls on a craft-by-craft basis, thus undercutting the types of staffing flexibility that yield the enhanced productivity, efficiency, and cost savings that are virtually routine in today’s workplace. 

Finally, D-B is a dinosaur labor law that needlessly and unfairly favors unions and union workers to the disadvantage of all others. The “prevailing wage” language of the statute might as well read “UNION SCALE”. Application of the statute to federal construction projects gives union workers an unjustifiable preference and discriminates against other capable workers. The statute allows unions to unfairly monopolize public works projects and grossly escalates the cost to taxpayers.

President Obama has pledged to ensure that his infrastructure program will be run efficiently and that taxpayers will get the best “bang for their buck.” Early in his administration, to much fanfare, he appointed Chief Performance Officer Jeffrey Zients, to ensure that the federal dollars are carefully and wisely spent and that there would be full accountability. 

If CPO Zients carefully assesses the cost and efficiency implications of Davis-Bacon Act on the president’s proposed public works infrastructure program, he should report back to the president that enormous cost savings will be realized by a suspension of that antiquated law. Moreover, freeing the proposed infrastructure projects from the bureaucratic shackles of D-B’s statutory wage scale and allowing the free labor market to operate will result in a massive increase in expected job creation and spur economic growth.

The 83-year-old Davis-Bacon Act is discriminatory, wasteful, and anathema to the efficient operation of government at a time when reduction of our federal deficits is a compelling national priority.

The statute has outlived its usefulness (assuming it was ever useful at all, except for unions). The outmoded federal law should be suspended by the president for the duration of his infrastructure program. And, ideally, one fine day, it will be repealed in its entirety.

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About the Author

Gerald D. Skoning is a Chicago lawyer who specializes in labor and employment law.