Enacted in 1931, the Davis-Bacon Act requires the payment of local prevailing wages to workers on federal construction projects. Determining local prevailing wage rates is a complicated process, one that involves the Department of Labor's Wage and Hour Division conducting surveys to collect wage and benefit information for various job classifications in a given geographic location.
Unfortunately, independent reports reveal significant challenges surrounding implementation of the Davis-Bacon Act. Most recently, a 2011 Government Accountability Office report requested by Chairman Kline revealed widespread problems with the accuracy, quality, bias, and timeliness of the surveys used to determine wage rates.
For example, of the surveys reviewed by GAO, roughly 25 percent of the final rates were based on the wages of fewer than seven workers. Forty-six percent of the prevailing wages for non-union workers were based on wages reported more than a decade ago. As the GAO concluded, "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."
Studies from years past have all echoed similar concerns. Each day problems plaguing administration of the law go unresolved is another day workers are short-changed and taxpayers are overcharged.
Despite these challenges, the current administration has done nothing to improve implementation of the Davis-Bacon Act. It appears they've accepted a broken and costly enforcement regime as the price taxpayers, contractors, and workers must pay for federal construction projects. Rather than make even modest improvements, the Obama administration has actually exacerbated the problem by expanding the scope of the law beyond its original intent.
It began in the early days of the administration with enactment of the failed stimulus law. According to GAO, the president's 2009 stimulus plan applied Davis-Bacon to 40 new programs. As a result, projects were delayed as states grappled with the law's time consuming administrative burdens.
This was not the first time the department expanded the scope of the law. More recently, the Department of Labor upended decades of policy to impose Davis-Bacon requirements on a new group of workers. Since the Kennedy administration, land surveyors have been exempt from the law because their work is a "pre-construction" activity. But last March, the department reversed this policy by reclassifying 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.
Finally, in 2011 the Wage and Hour Division determined the Davis-Bacon Act applies to the CityCenter construction project underway in our nation's capital. While the law does apply to construction contracts inside Washington D.C., the CityCenter project is being built with private dollars on land leased to a private consortium for the next 99 years. If allowed to stand, this radical decision will have a profound effect on countless construction projects. As the Wall Street Journal recently editorialized, the department's action would make "every private development a public work" subject to the Davis-Bacon Act.
At a time when millions are struggling to find work, federal debt is reaching historic levels, and economic growth remains slow, the American people deserve more than a flawed law that intrudes further and further into workplaces.
Ideas to enhance the accuracy and accountability of the Davis-Bacon Act have been put forward. Proposals to derive prevailing wage rates using Bureau of Labor Statistics data and increasing the monetary threshold on federal contracts are both intended to enhance the accuracy and timeliness of the law's administration and enforcement.
I look forward to hearing from our witnesses today about ways we can help ensure appropriate implementation of the law while also serving the best interests of workers, employers, and taxpayers.