OVERVIEW

At 90-years-old, the Davis-Bacon Act is a law that requires contractors and subcontractors that perform work on federally funded or assisted construction contracts in excess of $2,000 to pay a government-determined “prevailing” wage and benefit rate on an hourly basis to on-site workers.

Administered and enforced by the U.S. Department of Labor, the archaic Davis-Bacon Act and related regulations needlessly stifle contractor productivity, raise construction costs and discourage competition from small businesses interested in pursuing federal and federally assisted construction contracts. The practical impact of the Davis-Bacon Act is that it spends taxpayer investment in infrastructure inefficiently, resulting in fewer construction projects and quality jobs created.

ABC SUPPORTS
• Repeal of the Davis-Bacon Act.
• Legislative and regulatory efforts designed to improve federal wage determinations and limit the negative impacts of DOL’s current policy.
 
ABC OPPOSES
• Unequal access to work opportunities. Davis-Bacon prevents many qualified, small merit shop contractors from bidding on publicly funded projects.
• Waste, fraud and abuse. Determined through an unscientific and fundamentally flawed survey process administered by the U.S. DOL, the Davis-Bacon Act sets non-market, non-prevailing wages, restricting competition and resulting in billions of dollars of waste on public works projects.
• Expansion of the Davis-Bacon Act into areas of public and private projects in which it previously has not been mandated.
 
BACKGROUND
The Government Accountability Office and the DOL Office of Inspector General has repeatedly criticized DOL’s Davis-Bacon wage determination process for its lack of transparency in how the published wage rates are set, as well as its tendency to gather erroneous data through unscientific wage surveys. DOL’s inadequate responses to these and other independent government reports demonstrate that the Davis-Bacon Act is in need of regulatory overhaul and that DOL is incapable of administering a modernized and efficient Davis-Bacon Act.

Despite years of construction industry union membership hovering between 12% and 14%, DOL’s flawed wage survey process somehow mandates union wage rates more than 63% of the time. DOL wage determinations force federal contractors to use outdated and inefficient union job classifications that ignore the productive work practices successfully used in the merit shop construction industry.

According to a 2021 survey of ABC membership on government prevailing wage policies, the Davis-Bacon Act also fails to provide equal access to work opportunities because complexities and inefficiencies in the act’s implementation make it difficult for many qualified, small merit shop firms to competitively bid on publicly funded projects. These businesses are at an even greater disadvantage due to low net profit margins and high unemployment facing the industry following the COVID-19 pandemic.

DOL’s mishandling of the Davis-Bacon wage determination process is not just bad for construction—it is bad for hardworking taxpayers as well. The Congressional Budget Office has estimated that the Davis-Bacon Act will raise federal construction costs by $17.1 billion between 2021 and 2030, but the actual cost to taxpayers is likely much greater.

In addition to advocating for repeal of the Davis-Bacon Act, ABC has made numerous recommendations over the years that could have mitigated some of the act’s damage to the economy. However, despite repeated criticisms from GAO and DOL’s Office of Inspector General, the agency has implemented few, if any, meaningful reforms in its administration of the act since the early years of the Reagan administration.