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Why the Biden administration’s new Davis-Bacon prevailing wage proposed rule is so troubling for Americans

Americans for Prosperity’s sister organization, Americans for Prosperity Foundation, filed a public comment on May 17 with the Institute for the American Worker (i4AW) in opposition to a U.S. Department of Labor (USDOL) proposed rule to modify how Davis-Bacon prevailing wages are calculated and which workers the federal requirements apply to.

What are prevailing wages and the Davis-Bacon Act?

The Davis-Bacon Act specifically establishes prevailing wages for projects that utilize federal funding. Prevailing wages in government construction projects are the average wages earned by workers in a particular area, as determined by federal, state, and local governments—through established survey methods.

Prevailing wage laws require governments to pay workers performing government construction projects the pre-determined wages regardless of what rates contractors would be willing to accept.

More specifically, the Davis-Bacon Act of 1931 and related federal acts require “that contractors and subcontractors performing on covered contracts pay laborers and mechanics employed on the project jobsite not less than the prevailing wage rates (including fringe benefits) listed in the contract’s Davis-Bacon wage determination for corresponding classes of laborers and mechanics.”

Today’s Davis-Bacon requirements are already problematic — driving up overall federal infrastructure costs as high as 10 percent and wages over 20 percent — on top of shifting more work to union over non-union workers despite the fact that over 86 percent of construction workers are not members of a union.

This is particularly problematic as Americans are already paying over $5,200 extra per year amidst rising inflation and construction costs that saw the largest year-over-year construction cost rise in more than 50 years – over 17.5 percent from 2020 to 2021 alone.

Why the new Davis-Bacon prevailing wage proposed rule is so troubling

Unfortunately, AFPF and I4AW note that the new USDOL rule will make Davis-Bacon prevailing wages even more harmful because:

  • First, as set forth below, the proposed amendment of the test to determine the applicable prevailing wage rates for a given contract is arbitrary and will unjustifiably privilege higher union wages in a given locality, leading to higher costs and a greater burden on the taxpayers who ultimately fund government contracting.
  • Second, the NPRM’s proposal to use wage escalation data from the Bureau of Labor Statistics (“BLS”) will improperly inflate Davis-Bacon Act wage determinations because no changes to the Department’s underlying wage survey process is contemplated.
  • Third, the proposal to eliminate the distinction between urban and rural work areas when making prevailing wage determinations is unjustified by the text of the Davis-Bacon Act and will result in unnecessary inflation of construction costs.
  • Fourth, the proposal to treat certain different wage rates as functionally the same also will unjustifiably inflate construction costs by improperly privileging union wages.
  • And finally, the Department’s proposal to affect prevailing wage requirements by operation of law rather than through incorporation of appropriate clauses in covered contracts exceeds the Department’s authority and violates the express provisions of the Davis-Bacon Act.

The window for public comments closed on May 17, 2022, and now the USDOL has the option to publish the rule as is, modify, or rescind it.