Sources: Associated Builders and Contractors, Washington, D.C.; CP staff
The Department of Labor’s flawed method of calculating “prevailing wages” under the 91-year-old Davis-Bacon Act adds at least 7.2 percent to the cost of federal and federally assisted construction projects and inflates wages by 20.2 percent compared to local market averages, according to a new report from the Beacon Hill Institute, Medway, Mass.
“The Federal Davis-Bacon Act: Mismeasuring the Prevailing Wage” examines DOL Wage and Hour Division methodology determining how much contractors are required to pay to construction workers on taxpayer-funded projects subject to Davis-Bacon Act provisions. Authors find that the methodology produces wage determinations that do not reflect local area standards and are not statistically accurate. Their findings are consistent with reports critical of prevailing wage schemes by the DOL Office of Inspector General, Government Accountability Office and think tanks published over the last 50 years.
“There is a general unawareness of the arcane statistical calculations undertaken by the Wage and Hour Division that inflate costs. Since the law is intended to reduce wage competition, the government authorities responsible for calculating the prevailing wage are under pressure to use archaic methods for calculating a wage that is biased toward requiring union-scale wages instead of an average or even true prevailing wage. In addition, the DOL occupational classifications...
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