Happy Cost of Government Day…well, yesterday. From today forward, all the money you make is actually yours!
Yesterday, the average American worker earned enough gross income to pay off his or her share of the spending and regulatory burdens imposed by government on the federal, state and local levels. There are numerous ways that government can reduce waste, obviously, but one of the most needless money pits is made possible by the Davis-Bacon Act.
The Davis-Bacon Act requires contractors on all federal construction projects to pay their workers the prevailing wage in the same locality. To its proponents, Davis-Bacon is necessary to prevent the distortion of labor markets from the government’s deep pockets and political power, fair enough. This argument is predicated on the Department of Labor ability to accurately calculate “prevailing wages.”
Current survey techniques are egregiously error-filled. A recent audit found that 100% of Davis-Bacon wage estimates contained errors and that some “prevailing wages” have not been recalculated in 25 years. Two examples of incorrect Davis-Bacon wage calculations to illustrate how the bill, in fact, facilitates market distortion. In Sumter, South Carolina, the government paid plumbers $5.15 an hour compared to the market rate of $16.96 per hour. In San Diego, California, the government paid plumbers as much as $38.36 an hour compared to the market value of $21.61.
Much to the dismay of Davis-Bacon supporters, the bill consistently misprices wages and by doing so distorts the market. Most commonly overpaying for labor, the government will waste an estimated $9 billion paying above market prices for work this year.
Someone has to receive inflated government contracts, and in most cases it is unions. Due to flaws in the survey system, union wages more often than not end up determining the “prevailing wage.” Union wages are so high that they effectively price out all competitors as no other company can afford to pay its workers as much. As mandated by Davis-Bacon, the government is forced to pay the “prevailing wage” which usually means hiring unions.
There is no point in continuing Davis-Bacon, a bill which in practice has the exact opposite effect of its intended purpose. So why is Davis-Bacon still a law? Because labor cannot fairly compete with other companies for government contracts so they continue to line the pockets of Democratic Representatives. Until it is repealed, or survey techniques overhauled, Davis-Bacon remains one of the most needless wastes of taxpayer money.