The Davis-Bacon Act requires contractors on all federal
construction projects to pay their workers the prevailing wage in
the same locality. However, the prevailing wages estimated by the
federal government are highly inaccurate.
In some counties, for example, Davis-Bacon wage determinations
are just one-third of market wages. In other counties, they are
more than 75 percent above prevailing market wages. In some states,
Davis-Bacon rates are actually below the minimum wage.
This failure to reflect prevailing market wages accurately hurts
both workers and taxpayers. Where Davis-Bacon rates are below
market wages, the government's purchasing power depresses
construction wages--precisely what the Davis-Bacon Act is
intended to prevent. Where Davis-Bacon rates are above market
wages, taxpayers overpay for federal construction.
Flawed Methodology. This occurs because the Wage and Hour
Division (WHD) of the Department of Labor uses a fundamentally
flawed methodology to estimate prevailing wages. The WHD estimates
suffer from three significant problems:
Davis-Bacon surveys are error-ridden. A recent audit found
errors in 100 percent of the Davis- Bacon wage reports that were
The WHD takes years to issue prevailing wage determinations
after surveying a county and years longer to update completed
surveys. Some Davis-Bacon rates in use today are based on
surveys over 25 years old.
Davis-Bacon wages are estimated using an unscientific,
self-selected sample of contractors rather than a statistically
random sample. Self-selected samples do not accurately represent
construction workers' wages and therefore produce biased
The Wage and Hour Division has spent tens of millions of dollars
to reengineer its surveys, but these efforts have not made
Davis-Bacon rates more accurate. Recent audits have found even
higher error rates in surveys after the overhaul. The WHD has no
institutional expertise in conducting scientific wage
estimates and should not be expected to conduct accurate national
Congress already spends over $500 million annually on the Bureau
of Labor Statistics (BLS), a separate agency within the Department
of Labor that specializes in estimating wages. The BLS
conducts two scientific surveys that produce highly accurate
and timely occupational wage estimates around the country.
Duplicating these surveys with a third unscientific survey
conducted by the WHD makes little sense.
What Congress Should Do. Congress should:
- Direct the WHD to stop duplicating BLS surveys and
stop using a fundamentally flawed methodology.
- Transfer the resources currently spent on WHD surveys to
the BLS. This would enable the BLS to expand the scope of the
National Compensation Survey to produce construction wage
estimates that fully meet the Davis-Bacon statutory
- Require the WHD to base Davis-Bacon wages on accurate
and scientifically valid BLS surveys.
Conclusion. The Wage and Hour Division's methods for
calculating Davis-Bacon wages are scientifically unsound. The
result, unsurprisingly, is that Davis-Bacon rates bear little
correlation to market wages. In many cities, they are below
market rates, while in other cities, they are well above
This hurts both workers and taxpayers. Furthermore, a
decade of efforts to reengineer and improve the flawed wage
determination process has failed. Rather than allowing the Wage and
Hour Division to continue duplicating the work of the Bureau of
Labor Statistics, Congress should require the WHD to use BLS wage
surveys to calculate prevailing wages.
James Sherk is Bradley
Fellow in Labor Policy in the Center for Data Analysis at The