New Study Takes Aim at Prevailing Wage Laws
According to a new study by our friends at the Beacon Hill Institute at Suffolk University, the inflated costs of a Davis-Bacon Act prevailing wage is costing taxpayers $8.6 billion per year. Here at the Alliance, we have argued that the way the prevailing wage is calculated is deeply flawed and should use random statistical sampling and proper sound analytical techniques - such as using data from the Bureau of Labor Statistics. Click here to see some of AWF's most recent actions on this matter and stay tuned for more from us.
In the meantime, please check out the Beacon Hill study available here and enjoy the press release posted below.
(BOSTON) - A new study released today by the Beacon Hill Institute at Suffolk University (BHI) finds that biases in the measurement of the federal “prevailing wage” add 22% to the cost of labor on public construction projects and 9.91% to overall construction costs. As a result, taxpayers pay $8.6 billion a year more for public construction projects than they would have to pay if unbiased measures were used.
The federal government, 32 states and the District of Columbia require the payment of a prevailing wage for all workers employed directly on site for government-funded construction projects over a certain dollar threshold. Adopted by Congress in 1931, the Davis-Bacon Act (DBA) enforces the prevailing wage at the federal level and serves as the basis for prevailing wages in the states.
Originally enacted to discourage poor Southern blacks from seeking construction jobs in the North, the prevailing wage law has always had the purpose of shielding local construction workers from competition from “outsiders.” However implemented, the law is therefore anticompetitive and costly to taxpayers. As currently implemented the law also, however, does not accurately measure the prevailing wage. Rather, it is biased upward to reflect what the construction trades want to impose as a wage, rather than the wage that accurately prevails for a given trade in a given metropolitan area.
This is seen in the fact that the U.S. Department of Labor, which has the job of determining the prevailing wage, does not use the unbiased and statistically accurate data published by its Bureau of Labor Statistics (BLS). Rather, it uses data published by its Wage and Hour Division (WHD), whose methods are generally unreliable and, if anything, biased upward.In its study, BHI compared the estimates reported by the WHD to the estimates reported by the BLS for a sample of nine occupational categories accounting for 59% of all construction workers across 80 metropolitan areas. More
