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The Biden administration last week announced a final rule on prevailing wages for construction workers, publishing regulations that will empower union bosses at the expense of the American taxpayer.
The rule published by the Wage and Hour Division of the Department of Labor (DOL) last Tuesday overturns 40 years of precedent regarding the Davis-Bacon Act (DBA). The DBA requires that workers on federally funded construction projects receive a “prevailing wage” based on the payment typically received by workers in the same job classification in the same geographic area.
Under rules established by the Reagan administration and upheld by the D.C. Circuit Court in 1983, the prevailing wage is equal to the rate of pay that a majority of comparable workers receive. If there is no single rate of pay received by a majority of such workers, then the prevailing wage is calculated as a weighted average of the various existing pay rates. This definition of a prevailing wage is “within a common and reasonable reading of the term,” according to the D.C. Circuit.
The Biden administration’s new rule upends this traditional understanding, reducing the majority requirement such that a pay rate earned by just 30 percent of workers can be considered the prevailing wage. In other words, the Biden DOL will consider a wage to be “prevailing” for a particular job even if up to 70 percent of workers in that job earn a different rate of pay.
The rule change is an overt handout to union bosses. Identical pay rates across large swaths of workers are more common among those covered by collective bargaining agreements, and the lowering of the threshold from 50 to 30 percent of workers makes it more likely that labor unions will control the prevailing wage rate. Granting this price-fixing ability to Big Labor kills competition from non-union actors and significantly increases costs to taxpayers.
Various studies show that prevailing wage requirements already inflate the cost of federally funded construction projects by as much as 25 percent. With an even broader application of prevailing wages under the new rule, this inflated cost will only increase. Taxpayers can expect billions of dollars in inflated costs and waste across these federally funded projects.
These increased costs also mean that federal dollars cannot be stretched as far, resulting in less and lower-quality infrastructure for the same amount of spending. Federal projects have already been strained by price inflation on construction materials following Biden’s policy of blowout spending and money-printing; now these projects will face additional constraints from inflated labor costs. Ultimately, Americans will not get what they were promised from the hundreds of billions of dollars poured into infrastructure projects by the Infrastructure & Investment Jobs Act and the misnamed “Inflation Reduction Act.”
As the Department of Labor moves forward with implementation, it is likely to face legal challenges as affected groups seek to defend workers, employers, and taxpayers alike from these harmful and unlawful new regulations.