Davis-Bacon Under Attack—
Beware of Stealth Strategies

April 2002 IBEW Journal

The Davis-Bacon Act helps to ensure the preservation of a community wage standard. Originally enacted in 1931 and amended several times since then, the federal statute requires that contractors bidding on U.S. federal construction projects exceeding $2,000 pay their employees the standard wage and benefit package that workers in the area performing similar work are earning—the "prevailing wage."

The law does not set specific wage rates that contractors must pay their workers, nor does it require contractors to pay union scale. It simply requires that all contractors who bid on a federally financed construction project base their bid on a common labor cost, and that competition focuses on matters of management, quality, timeliness and productivity rather than on wages.

The construction industry is especially vulnerable to wage-cutting competition. Job awards in this field rarely depend on project design; the structure and the materials used to build it are commonly specified in detail by the buyer. With limited opportunities to trim costs, contractors are inclined to underbid competitors by cutting wages. The federal investment in construction activity covered under Davis-Bacon significantly affects the economic and social stability of communities. Therefore, the intent of the Davis-Bacon Act of 1931 was, and is, to prevent the federal government from undercutting local area labor standards when awarding contracts for federal construction work throughout the United States or the District of Columbia.

Collective bargaining agreements may constrain wage cutting among unionized contractors, but nonunion employers conduct their business with no such restraints. They tend to cut wages as they pursue profits, regardless of the impact on the workers’ standard of living and well-being or the effect on the communities in which the workers and their families live.

Opposition to Prevailing-Wage Laws

Since the Davis-Bacon prevailing-wage law was enacted in 1931, opponents have developed many arguments against it, claiming it’s hard to administer, expensive and unnecessary. These arguments are just plain false.

The U.S. Department of Labor has been calculating the prevailing wage for each area of the United States since 1935 and hasn’t encountered any major problems yet. In fact, the Associated General Contractors (AGC) complained when the law was enacted that it did not provide for predetermination of prevailing wage rates. (The original act did not require that the Department of Labor predetermine the prevailing wage rate—the contractor decided what the rate was. Disputes over the prevailing rate were referred to the agency’s contracting officer, then ultimately to the secretary of labor for a final, binding decision.)

Paying workers a decent wage isn’t expensive; paying workers a low wage is expensive. Low-wage, low-skill workers often take longer to perform the work, are not as skilled because they usually haven’t been trained as well as higher-paid workers (work often needs to be redone) and need other government assistance because they can’t provide adequately for their families. Low-wage workers also contribute less to the enconomy of their community since they purchase less from local stores and pay less in taxes to the local and state governments.

How can a law be considered unnecessary when it requires contractors to pay their workers the wages that are prevailing in the area in which they are working? As U.S. Representative Robert L. Bacon (R-NY) stated when he proposed his first prevailing-wage bill in 1927:

"It is highly desirable, of course, that the federal building program should not tend to have the effect of upsetting labor wages and labor conditions in any community. If this bill passes, the federal government, in carrying out the building program, would have to conform to the local labor wages and conditions."

The Davis-Bacon Act fulfills the intent of Representative Bacon and Congress to protect local labor standards by helping to ensure the preservation of a community’s general wage scale.

Davis-Bacon Opponents Are Relentless

Opponents of Davis-Bacon have never stopped trying to repeal the law or at least undermine it. Some of their attempts are obvious: outright abolition or increasing the dollar threshold for project eligibility. But opponents are also developing stealth strategies to undercut the Davis-Bacon Act. Following are some examples of their attacks.

• Increase the Dollar Threshold for Davis-Bacon Eligibility

Davis-Bacon opponents perpetually introduce legislation to increase the threshold for coverage of the act to a level well above the current $2,000. One such bill, the Davis-Bacon Modernization Act (H.R. 2094), was introduced in June 2001 and has been referred to the Subcommittee on Workforce Protections of the House Committee on Education and the Workforce. A higher threshold amount ($1 million has been proposed) would virtually exempt most construction projects, and others could be split into pieces to avoid breaking the threshold.

• Restrict Davis-Bacon Advocates’ Participation in Congressional Hearings

Sometimes congressional opponents try to bully anti-Davis-Bacon legislation through by conducting hearings without having Davis-Bacon advocates give testimony. A few years ago, the Republican leadership of the (ironically named) Worker Protections Subcommittee of the House Economic and Educational Opportunities Committee did not allow the Democratic secretary of labor to testify at the only hearing the subcommittee held on a bill to repeal the Davis-Bacon Act. The subcommittee leadership then rushed the "mark-up" of the bill, conducting a vote on the measure. Fortunately, despite the brazen attempt to stifle the voice of Davis-Bacon advocates, the bill was defeated.

• Propose Legislation That Prohibits Davis-Bacon on Specific Categories of Construction Projects

In 1999 and 2000, an amendment was proposed to the Labor-HHS Appropriations bill that would have prohibited Davis-Bacon coverage on funds for disaster relief projects. This legislation would have affected thousands of IBEW construction members. The IBEW and other labor unions constructed a coalition of Democratic and moderate Republican senators to defeat the measure.

Legislation is often proposed that seeks to stimulate construction and rehabilitation of public schools. Frequently, the sponsoring legislators propose financing mechanisms (tax-exempt bonds, etc.) that combine federal and state resources, thereby calling into question Davis-Bacon applicability for these projects (for example, America’s Better Classroom Act, H.R. 1076). This financing structure would infuse federal money into state revolving funds, so that once the money is paid back from the first project, money can be lent for additional projects. This "subsequent round" use of funds puts Davis-Bacon coverage into question. The IBEW belives any legislation using federal funds to leverage state or local school modernization or construction projects must include Davis-Bacon Act coverage. Therefore, we fight for inclusion of prevailing-wage requirements on all rounds of funding.

Similarly, the Clean Water Infrastructure Financing Act of 2001 (H.R. 668 and S. 252) has also become a forum for "innovative financing" of infrastructure projects, where Davis-Bacon coverage is questionable.

Another area of attack, often a priority for the anti-union Associated Builders and Contractors (ABC), is so-called "helpers" classification legislation; such as the Helpers Job Opportunity Act (H.R. 1972). These bills endanger the jobs and wages of journey-level workers on federal and federally assisted construction projects covered by Davis-Bacon prevailing-wage requirements. The unrestricted use of helpers that this legislation would permit enables contractors on Davis-Bacon jobs to under-classify workers as so-called "helpers" and pay them wages lower than other classes of workers, even for doing the same work. The effect of this practice would be the breakdown of local labor standards, clearly contrary to the intent of the Davis-Bacon Act. We believe it also threatens formal apprenticeship training programs.

Anti-Davis-Bacon groups, such as the ABC, also try to persuade legislators to exclude Davis-Bacon coverage from many important construction project appropriations, such as recent legislation to authorize another round of cleanup and redevelopment of urban brownfields (toxically contaminated areas). Current brownfields programs require Davis-Bacon coverage; however, proposed legislation does not contain language to include prevailing-wage coverage. Davis-Bacon coverage is not automatic, but is included when a statute specifically references the law as a "related act." (One proposed bill is H.R. 2941, Brownfields Redevelopment Enhancement Act.) The IBEW is following this legislation, as well as other bills relating to Davis-Bacon, very closely.

Protect Your Right to a Fair Wage

Economic and working conditions within the construction industry remain much the same as they were when Congress originally passed the Davis-Bacon Act:

Because…government specifications are very detailed and precise, and…the price of building materials has tended…to become uniform, variations between bids submitted by competing contractors are due most frequently to different estimates of labor costs. Since the contract office is compelled by statute to award the contract to the lowest responsible bidder, a premium would be placed on cutting labor costs, unless a stringent prevailing-rate-of-wage law were in effect. (Senate Committee on Education and Labor, 1935)

Today, perhaps more than ever, U.S. construction workers need the Davis-Bacon Act to safeguard their local wage rates on federal construction projects. The IBEW continues to forge alliances within Congress to ensure that this act remains a bulwark against unfettered wage cutting. You can help by becoming aware of construction-related bills introduced not only in the U.S. Congress, but also in your state legislature. Many states have "little Davis-Bacon Acts" which apply prevailing wages to state-financed construction projects, so Davis-Bacon opponents are active at the state level also. When you become aware of legislation that could threaten the application of Davis-Bacon to a project, let your legislators know you oppose any attempts to water down or abolish your right to be paid a fair wage for your labor.

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