The Davis-Bacon Act Should Be Repealed

The Davis-Bacon Act requires that each contract for the construction, alteration, or repair of public buildings in excess of $2,000, to which the United States is a party or shares the financing, must state the minimum wages to be paid to various classes of laborers and mechanics. The minimum wages are those determined by the Secretary of Labor to be prevailing for laborers employed on projects of a similar character in the area in which the work is to be performed. The act was intended to discourage nonlocal contractors from successfully bidding on government projects by hiring cheap labor from outside the project area, thus disrupting the prevailing local wage structure. In 1977, about $172.5 billion was spent on new public and private construction projects, but only $37.8 billion was for direct federal or federally assisted construction spent by state and local agencies, involving about 22 percent of the nation's 3.8 million construction workers. The remaining $134.7 billion was for privately financed projects without the prevailing wage protection of the Davis-Bacon Act.

The significant changes in the nation's economic conditions and the economic character of the construction industry since 1931, plus the passage of other wage laws, make the Davis-Bacon Act unnecessary. After nearly 50 years of administering the Davis-Bacon Act, the Department of Labor has not developed an effective system to plan, control, or manage the data collection, compilation, and wage determination functions. A review of the wage determination activities in five regions and headquarters showed continued inadequacies, problems, and obstacles in the attempt by Labor to develop and issue wage rates based on prevailing rates. The review of 30 federal or federally assisted projects, costing an estimated $25.9 million, showed that the majority of the rates issued by Labor were higher than the prevailing rates in 12 of the localities and lower in the other 18. In the 18 projects where Labor's rates were lower than those prevailing locally, local contractors were generally awarded the contracts and paid workers the prevailing rates in the community. When Labor's rates were higher than those prevailing locally, it was found that nonlocal contractors worked on most of the projects, indicating that the higher rates may have discouraged local contractors from bidding. In addition, the weekly payroll reporting requirement resulted in unnecessary contractor costs estimated at $189.1 million for 1977.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Linda G. Morra Team: General Accounting Office: Human Resources Division Phone: (202) 512-7014