On May 22nd, U.S. Senator Jeff Flake (R-AZ) introduced The Opportunity in Construction Act (S. 1200), which aims to reform the way the U.S. Department of Labor (DOL) calculates prevailing wages under the 1931 Davis-Bacon Act.

Sen. Flake’s bill directs the DOL to set prevailing wages for federal and federally assisted construction projects covered by the Davis-Bacon Act and Related Acts using data collected by the Bureau of Labor Statistics (BLS).

According to a press release from Sen. Flake’s office: 

“The Davis-Bacon Act requires contractors engaging in certain federal construction projects pay workers on such projects not less than the locally prevailing wage for comparable work. Unfortunately for taxpayers, DOL has been unable to develop an effective process for determining market-rate wages, making the system vulnerable to bias and waste.

For example, a prevailing wage rate for thousands of workers in a given locale can be based on the reported wages of as few as six workers from that area. Under certain conditions, DOL will simply rely on inflated union wage rates to set a prevailing wage, making it all but impossible for smaller businesses who cannot match union pay rates to compete with those unions when bidding on projects. In fact, a Government Accountability Office (GAO) investigation found 63 percent of Davis-Bacon prevailing wage rates are union rates despite the fact that only 14 percent of the construction workforce belongs to a union.

That same GAO investigation also determined DOL cannot even verify whether its wage calculations accurately reflect local markets, and a separate DOL Inspector General investigation revealed nearly 100 percent of wage surveys reviewed by DOL contained errors.

According to a Beacon Hill Institute analysis, Davis-Bacon wage rates are on average 22 percent above market rates, driving up labor costs by more than $2 billion dollars in 2016. According to a Heritage Institute analysis, using accurate wages would create approximately 30,000 additional construction jobs annually.”

Sen. Flake’s bill will simply mandate that DOL abandon their flawed approach administered through its Wage and Hour Division and instead rely on BLS data to determine a locale’s prevailing wage. BLS already calculates wages for approximately two million federal employees.

“If the Bureau of Labor and Statistics can be trusted to set fair wages for two million federal employees, it can be trusted to do the same for workers on federal infrastructure projects while also providing much-needed relief to taxpayers,” said Sen. Flake. “The Opportunity in Federal Construction Act is a commonsense solution to a broken system that will ensure fair wages for workers, more opportunities for small businesses, and less waste for taxpayers.”

The Congressional Budget Office estimates repealing the Davis-Bacon Act will reduce federal construction costs by almost $13 billion between 2018 and 2026.

With Congress expected to tackle a potential 10 year $1 trillion infrastructure bill later this Congress, stakeholders have called on Congress to reform or suspend the Davis-Bacon Act and other regulations needlessly increasing taxpayer funded construction projects.

ABC supports full repeal of the Davis-Bacon Act, as well as any state and local prevailing wage laws that mandate wage and benefit rates that do not reflect the current construction market. In the absence of full repeal, ABC also continues to support legislative and regulatory efforts designed to mitigate the Act’s negative effects.

ABC supports Sen. Flake’s bill and other similar bills reforming or eliminating the archaic Davis-Bacon Act, including the Transportation Investment Recalibration to Equality (TIRE) Act (S. 195) and the Davis-Bacon Repeal Act (H.R. 743).

ABC opposes expansion of Davis-Bacon into areas of public and private projects in which it has not been previously mandated.