Washington, D.C. – U.S. Sen. Jeff Flake (R-Ariz.) yesterday introduced The Opportunity in Federal Construction Act. The bill will ensure workers on federal construction projects earn a fair wage, allow small businesses to better compete with unions for federal infrastructure contracts, and help federal infrastructure dollars go further. The legislation would accomplish this by mandating that the Department of Labor (DOL) use Bureau of Labor and Statistics (BLS) data to determine prevailing wages for federal construction projects under the Depression-era Davis-Bacon Act.
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 market, 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.
Flake’s bill will simply mandate that DOL abandon this flawed approach and instead rely on BLS for 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 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 Opportunity in Federal Construction Act is supported by the Americans for Tax Reform, Associated Builders and Contractors, National Home Builders Association, and National Taxpayers Union.
In January 2017, Flake introduced the Transportation Investment Recalibration to Equality (TIRE) Act. The TIRE Act aims to make federal transportation and infrastructure dollars go further by suspending the prevailing wage provisions of the Davis-Bacon Act on all federal highway construction contracts.