During a hearing conducted by the House Subcommittee on Workforce Protections, Littler Shareholder Maury Baskin pointed out the many flaws with the Davis-Bacon Act and called for its repeal or significant reform in the way prevailing wages are determined. The law – which requires contractors and subcontractors working on federally-funded construction projects to pay their employees the local prevailing wage rates – relies on a “dysfunctional wage survey process” that “is grossly inaccurate, and simply not credible,” Baskin, who was testifying on behalf of the Associated Builders and Contractors, said.

Baskin testified that: “As administered by DOL, Davis-Bacon unnecessarily hinders economic growth, increases the federal deficit, and imposes an enormous paperwork burden on both contractors and the federal government.” During the hearing Baskin explained that several independent studies, including a 2011 report issued by the Government Accountability Office (GAO), have found that the Department of Labor’s methodology for determining the applicable wage rates “have repeatedly been shown to be inaccurate and unscientific.” The latest GAO survey, for example, found that “one-quarter of the final wage rates for key job classifications were based on wages reported for six or fewer workers.” Another example of the DOL’s “failed methodology,” Baskin explained, is the GAO’s finding that “only 13% of construction workers in the United States are covered by any union agreements, yet according to the latest GAO report, 63% of all DOL wage determinations reported the wages set by union agreements to be somehow ‘prevailing.’” This result, Baskin said, is “statistically impossible.” 

Baskin noted that: “By any objective measure, DOL’s wage determinations are vastly inflated above the market rates for private sector construction projects.” Baskin said in his experience, the DOL has improperly counted union workers who were paid different wage rates as if they were paid the same wages, “and has improperly imported flawed data from state government wage surveys.” He cited examples where the DOL has imported data from workers living “hundreds of miles away,” which is improper statistical sampling. Baskin said that “by any objective measure, DOL’s wage determinations are vastly inflated above the market rates for private sector construction projects.”

Subcommittee Chairman Tim Walberg (R-MI) voiced similar concerns with the Davis-Bacon Act’s implementation and enforcement, and claimed that the DOL has not only failed to remedy these issues, but has exacerbated the problems by expanding the law’s reach. He noted, for example, that President Obama’s 2009 stimulus plan applied the Davis-Bacon prevailing wage rate requirements to 40 new programs. In addition, Walberg explained that in March of this year the DOL released “a ‘guidance letter’ that overturned more than 50 years of policy to apply the Davis-Bacon Act to survey crews.” Specifically, the guidance reclassified surveyors as laborers and mechanics. “This dramatic shift in policy came without notice or an opportunity for public comment. To make matters worse, the department has failed to make a wage rate available to survey crews. The confusion and uncertainty borne by this bureaucratic overreach will affect workers and construction projects across the country.”

Curtis Sumner, Executive Director of the National Society of Professional Surveyors, similarly criticized applying the Davis-Bacon Act to survey crews. According to Sumner, the change “violates the spirit, if not the letter” of the Administrative Procedures Act, among other statutes.

In his written statement, Baskin explained that other federal laws enacted since Davis-Bacon, such as the Fair Labor Standards Act, Occupational Safety and Health Act, and the National Labor Relations Act, as well as the government’s contract procurement system, afford employees the protections that Davis-Bacon was designed to provide, obviating the need for the outdated law. Because of Davis-Bacon’s current deficiencies, Baskin advocated for a full repeal of the law, as the Davis-Bacon Repeal Act (H.R. 2013) would accomplish, or at the very least called for measures that would determine federal construction wage rates using a more scientific method, as would be established by the proposed Responsibility in Federal Contracting Act (H.R. 448).

As Baskin stated in his testimony, “ABC and others have repeatedly called on DOL to explore using alternative data to determine wage rates—such as data collected through the BLS Occupational Employment Statistics (OES) program.” Under panel questioning, Baskin stated that using Bureau of Labor Statistics (BLS) data would be the fairest and most accurate method of determining prevailing wages. Any method “should be as statistically representative as possible.” Another reason BLS data would be preferable, he said, is that the BLS – unlike the DOL’s Wage and Hour Division – “is not the enforcer.”

The Honorable Erica Groshen, Commissioner of BLS, testified about the occupational wage data available from the Bureau’s OES survey. According to Groshen, “The Bureau of Labor Statistics Occupational Employment Statistics survey produces employment and wage data at great occupational and geographic detail, and by industry.”

In addition to flaws inherent in the Davis-Bacon Act’s prevailing wage methodology, Baskin explained that the Act also imposes “rigid and arbitrary work rule assignments,” onerous paperwork obligations, and barriers to the competitive bidding process.

A complete list of panelists and their testimony and a link to the archived webcast of the hearing can be found here.

Photo credit: DigitalZombie