Should we eliminate Davis Bacon Wages

[naturegirl]

Davis/Bacon is an act where the government sets the prevailing wage for projects that are federally funded. It's only objective is to raise the cost of construction projects so the labor rates are "in-line" with Union wages.

It's a mess, time consuming and only increases costs. Every county in the state of Georgia has a different "prevailing wage", all of which are about double of the "normal wage" for similar projects.

It was enacted in 1931, I would say it has outlived it's usefulness. Davis

 

[blastoff]

Wonder where setting wage rates is covered in the enumerated powers?

 

[kiwiman127]

I think that it would be a good idea to temporary suspend Davis-Bacon in the face of this country's economic environment. But I do so with reservations.
Here is an interesting paper that discusses the effects of prevailing wage laws and the quality of construction. The author believes that A, prevailing wages don't raise the costs of the project and B, paying prevailing wages ensures the quality of the work.

Quality Construction—Strong Communities
http://www.faircontracting.org/PDFs/prevailing_wage/PreConstIowa.pdf

With his claim about prevailing wages not effecting the cost of the project, he uses the reconstruction following Katrina. I think he should have been more expansive.

Regarding the quality of work, I have to agree with the authors theory. With construction projects you need high skill levels in order to have high quality work. I believe that 100%. Here's a short story that convinced me.

My stepson is a union construction worker, he worked for a company that specialized in concrete walls. The owner of the company wanted to see more profit and also wanted to be able to win more bids so he started another company doing the same exact thing, he put the company under his wife's name and it was non-union. Soon the union company laid off all of it's workers as the non-union company got all the projects. After a couple of months, the unionized workers were called back to either repair or do over the work done by the non-union company. Now the union company is back in full force and the non-union company was basically dissolved. It cost the owner of the two companies more money to go the route of cheaper labor because the work wasn't done with high skilled construction workers and had to be re-done or repaired. Plus the deadline of the projects wasn't met, thus costing the owner

Anyway read the link I provided, it was very insightful. (It's long citing research but it can be skim-read.)

 

[Soggy in NOLA]

As long as we don't eliminate Kevin Bacon, I'm ok.

 

[Remodeling Maidiac]

Yes, it should be eliminated permanently. I've taken govt contracts before and the wages for unskilled workers is obsurdly high. 16 to 19 dollars an hour to push a broom or carry a mop is twice as high as the skill (or lack there of) deserves. Then if a corp of engineer inspector catches said employee touching something not in his job description his wage is automatically increased.

I quit taking govt contracts for this very reason. I live in the Midwest where the cost of living is low and these inflated wages are bank breaking for smaller contractors like me.

 

[Inthemiddle]

Wonder where setting wage rates is covered in the enumerated powers?

Interstate commerce.

 

[naturegirl]

I think that it would be a good idea to temporary suspend Davis-Bacon in the face of this country's economic environment. But I do so with reservations.
Here is an interesting paper that discusses the effects of prevailing wage laws and the quality of construction. The author believes that A, prevailing wages don't raise the costs of the project and B, paying prevailing wages ensures the quality of the work.

Quality Construction—Strong Communities
http://www.faircontracting.org/PDFs/prevailing_wage/PreConstIowa.pdf

With his claim about prevailing wages not effecting the cost of the project, he uses the reconstruction following Katrina. I think he should have been more expansive.

Regarding the quality of work, I have to agree with the authors theory. With construction projects you need high skill levels in order to have high quality work. I believe that 100%. Here's a short story that convinced me.

My stepson is a union construction worker, he worked for a company that specialized in concrete walls. The owner of the company wanted to see more profit and also wanted to be able to win more bids so he started another company doing the same exact thing, he put the company under his wife's name and it was non-union. Soon the union company laid off all of it's workers as the non-union company got all the projects. After a couple of months, the unionized workers were called back to either repair or do over the work done by the non-union company. Now the union company is back in full force and the non-union company was basically dissolved. It cost the owner of the two companies more money to go the route of cheaper labor because the work wasn't done with high skilled construction workers and had to be re-done or repaired. Plus the deadline of the projects wasn't met, thus costing the owner

Anyway read the link I provided, it was very insightful. (It's long citing research but it can be skim-read.)

Prevailing wages do not insure better work. We've been in business 21 years, now we couldn't have done that with inferior quality. I also disagree with the author of the link, prevailing wage on some jobs is $4-5 more than we pay our guys, some of it is $4-5 less than we pay our guys. It appears to be just randomly assigned, not sure how it's even determined what the prevailing wage is. As I said before, every county in Georgia is different. Don't believe me, just look up Davis Bacon for Cobb County Georgia and Troup County Georgia and compare the rates for the same trades.

Davis Bacon is a manipulation of Government money, it does increase the cost of jobs. BTW, we don't raise and lower employee wages based on the county they work in.

 

[Remodeling Maidiac]

Inflated wages ensure the govts cut in taxes are higher.

 

[kiwiman127]

Well Nature Girl and Grampa, you folks are in the industry, so I trust what you have to say for the most part.
I just believe you get what you pay for and I fear that some business owners would
hire less skilled workers to get the bid, cut corners and to pocket extra $$. I'm not pointing a finger at neither one of you, but I bet you know there are companies like that out there. You probably have bid on projects with companies like that in the mix.

I sympathized with you in having to deal with government bureaucracy.

 

[naturegirl]

Well Nature Girl and Grampa, you folks are in the industry, so I trust what you have to say for the most part.
I just believe you get what you pay for and I fear that some business owners would
hire less skilled workers to get the bid, cut corners and to pocket extra $$. I'm not pointing a finger at neither one of you, but I bet you know there are companies like that out there. You probably have bid on projects with companies like that in the mix.

I sympathized with you in having to deal with government bureaucracy.

Thank you, and yes there are a few that do hire less skilled workers, we've been called to fix their stuff many times. LOL Most General Contractors also know when someone comes in well below everyone else, they are probably using cheap labor and inferior products. If the GC accepts that bid I don't want to do their work anyway. All they are interested in is putting extra $$ in their pockets.

The massive amount of paperwork dealing with those government funded projects is unbelievable. We wade through it, sometimes having to come up for air but eventually we get through it. The hardest part is bonding all jobs over $100,000.00. Bonds require a personal guarantee, in other words I have to put my house and business on the line and hope a General Contractor actually knows what they are doing and don't go belly up 1/2 way through the job. It's quite scary out there right now.

ETA: Don't everyone go getting their panties in a wad on that $100,000.00 job thing. Right now our profit margins are about 5-6%, if we figured everything right from the blue prints. We tried raising our prices but were getting beat on every bid. Right now there is so little work, we're having to get in to retirement savings just to pay the mortgage.

 

[kiwiman127]

Inflated wages ensure the govts cut in taxes are higher.

There are inflated wages, fair wages and low wages. Inflated wages do adversely effect the cost of the finished project and low wages have a questionable effect on the quality of the finished product.
I'm a fair wages guy. We have seen what the longterm effect of low/flat wages have done to our economy. (See lack consumer spending and the no-recovery of the recession for Main Street America.)