In another anti-inflation move that is touching raw nerves within organized labor, the Carter administration is attempting to clamp down on wages paid under government contracts to private firms.
The effort came to light recently when presidential aide Robert S. Strauss disclosed to a group of construction contractors that the Davis-Bacon Act, under which the Labor Department sets wages for federally assisted construction work, is under going a "major review."
The disclosure pleased the contractors, who contend that the government too often simply rubberstamps union wages rates for its contract work, but sent shudders through the building trades unions, who have called the law the "Magna Carta" of their world.
Robert A. Georgine, head of the AFL-CIO Building and Construction Trades Department, complains that he has not been told about the review and is having trouble finding out what is involved.
"Here we have an administration elected by working people that is making decisions affecting working people and they won't even talk to those who represent the workers," said Georgine. "We thought we got these kinds of problems behind us with the Republican administration, but here we have a Democratic administration doing the same damn thing only worse."
As it turns out, the review of the 47-year-old Davis-Bacon Act is only one part of a broader effort to chip away at the $80 billion annual cost of all federal government contracts - a task undertaken earlier this summer by the office of Management and Budget as part of the administration's anti-inflation fight.
"We were told to go through the attic and look at everything to do with federal contracts," said Lester Fettig, administrator of OMB's Office of Federal, Procurement Policy. "We're trying to understand the overall impact [of contracts on inflation] and which corrective actions may be in order."
Two of the most politically sensitive targets of Fettig's review are Davis-Bacon and the more recent Service Contract Act, both of which are designed to assure that federal contractors pay fair wages to the hundreds of thousands of workers they employ on government-financed projects.
Under provisions of these laws, the secretary of labor is empowered to determine whether a contract is covered by one of the laws and set wage rates based on an evaluation of what the "prevailing" wages are for a particular trade and geographic area.
Critics contend that the laws become engines of inflation because the Labor Department, under union pressures, tends to choose the union wage rate as the prevailing rate, causing a ripple effect that drives up other wages in a community.
The effect of Davis-Bacon is particularly pervasive, they argue, because government accounts for one-fourth to one-third of all construction, and even many state and local projects are covered because of federal subsidies.
Disputing the critic's arguments, Assistant Secretary of Labor Donald E. Elisburg, who administers Davis-Bacon and related programs, said non-union rates are increasingly cranked into the equation and noted that unions have as many complaints about the designated wage rates as employers do. The AFL-CIO's Georgine agreed.
Independent studies are contradictory and inconclusive.
Fettig said there are no plans to seek repeal, modification or suspension of the laws, as then-President Nixon did in suspending the Davis-Bacon Act for a brief period during a time of soaring construction costs in 1971.