CAGW Issues Spending Cut Alert on the Davis-Bacon Act

WASHINGTON--(BUSINESS WIRE)--Today, Citizens Against Government Waste (CAGW) issued its weekly spending cut alert aimed at the Davis-Bacon Act, which should be repealed. Davis-Bacon requires that contractors pay their employees the “prevailing wage” on federal projects costing more than $2,000. The mandate raises the cost of government projects by 15 percent and costs taxpayers more than $1 billion annually, not including $100 million in administrative costs.

“that contractor [who] has cheap colored labor which he transports … and it is labor of that sort that is in competition with white labor throughout the country.”

Since its passage in 1931, Davis-Bacon has been touted by labor unions and politicians as essential to ensuring fair compensation on government jobs. In reality, the “prevailing wage” tends to correspond to union wages, especially in urban areas. This effect is no accident. Davis-Bacon was passed as part of an effort by high-skilled, high-wage, mostly white workers to keep out lower-paid, non-union, minority competition. In 1931, Rep. Miles Allgood (D-Ala.), arguing for the act’s passage, complained of “that contractor [who] has cheap colored labor which he transports … and it is labor of that sort that is in competition with white labor throughout the country.”

Backers of Davis-Bacon have argued that hiring low-wage workers on federal jobs would result in shoddy work. But the federal government is aware of Davis-Bacon’s inefficiencies. The law was suspended in the aftermath of Hurricanes Andrew and Katrina to facilitate reconstruction, and the Government Accountability Office stated that many stimulus projects were delayed for months because of onerous Davis-Bacon requirements. A 2010 Heritage Foundation study found that suspension of Davis-Bacon under the stimulus “would allow the government to build more and hire 160,000 new workers without increasing the deficit.”

Repealing Davis-Bacon has long been advocated in CAGW’s Prime Cuts, a compendium of 763 waste-cutting recommendations that would save taxpayers $350 billion in the first year and $2.2 trillion over five years.

“The Davis-Bacon Act is predicated on the bizarre assertion that all construction workers create equal value per hour on federally-funded sites. The result is discrimination against workers whose only advantage is a willingness to accept lower wages, and billions of dollars wasted over the last 80 years,” said CAGW President Tom Schatz. “Federal construction jobs should be competitively-priced and economical, not extensions of the welfare state.”

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government. The Spending Cut of the Week calls attention to a federal program that is wasteful or duplicative.