Extension of the Davis-Bacon Act: The Heritage Foundation 2009 Labor Boot Camp
What Is the Davis-Bacon
- The Davis-Bacon Act requires federal construction contractors
to pay at least the wage rates prevailing on non-federal
construction projects in the same locality.
- The act was intended to prevent the purchasing power of the
federal government from driving down construction wages during the
- The act applies to contractors and subcontractors performing on
federally funded or assisted contracts in excess of $2,000 for the
construction, alteration, or repair (including painting and
decorating) of public buildings or public works.
- To calculate the wages that contractors must pay, the Wage and
Hour Division (WHD) surveys construction wages and publishes
prevailing wage determinations for each county in the United
States. Federal contractors must then pay their employees at least
the prevailing wage for each class of worker.
- In most cities, Davis-Bacon wages bear no resemblance to
prevailing market wages. In some cities, Davis-Bacon rates are more
than double market wages. In other cities, Davis-Bacon rates are
below the minimum wage.
- Davis-Bacon wages differ from actual construction wages because
fundamental flaws mar the process used to determine prevailing
- WHD uses unscientific self-selected survey samples.
- Inspector general audits found errors in 100 percent of wage
- Most prevailing wage surveys are years out of date. Some rates
in effect have not been updated since the 1970s.
- Davis-Bacon rates average 22 percent above market wages. This
needlessly inflates the cost of federal construction and wastes
- Where Davis-Bacon rates are below market wages and the federal
government is a major construction employer, the government's
purchasing power can depress wages--precisely the effect the law
was intended to prevent.
- Despite the proven flaws in Davis-Bacon, proponents of the act
continue to call for its expansion to private sector construction
projects. Private sector employers do not have the same purchasing
power as the federal government, and there is no economic
justification for extending Davis-Bacon coverage to private
- Repealing the act would save the federal government $8.6
billion on construction costs and $100 million in administrative
costs each year.
- Costs of compliance with the act for the construction industry
total nearly $190 million per year.
- The act's repeal would also result in the creation of an
estimated 31,000 new construction jobs, most of which would go to
members of minority groups.
- Davis-Bacon's requirements also make it extremely difficult for
minority, open-shop contractors to employ and train unskilled
minority workers. Given that unskilled workers must be paid the
same wage as a skilled worker, there is no incentive to hire the
- Ralph C. Thomas, executive director of the National Association
of Minority Contractors, stated that a minority contractor who
acquires a Davis-Bacon contract has "no choice but to hire skilled
tradesmen, the majority of which are of the majority. This defeats
a major purpose in the encouragement of minority enterprise
development--the creating of jobs for minorities. ... [Davis-Bacon]
closes the door in such activity in an industry most capable of
employing the largest numbers of minorities."
- Eliminating prevailing wage requirements raises minority
- Davis-Bacon Act wastes tax dollars
o Tax dollars could be used to build more for less money.
Instead, the Davis-Bacon Act builds less for more money.
Sherk is Bradley Fellow in Labor Policy in the Center for Data
Analysis at The Heritage Foundation.
Show references in this report
Daniel P. Kessler and Lawrence F. Katz, 2001.
"Prevailing Wage Laws and Construction Labor Markets,"
Industrial and Labor Relations Review, Cornell University,
Vol. 54, No. 2 (January 2000), p. 259-274.