The Post's editorial "A Leaner Davis-Bacon" [May 28] made the same mistake I did when I was director of the Officer of Management and Budget.
Rather than face the politically harder, but wiser, choice of scrapping the law altogether, the editorial viewed the flaws of this 50-year-old statutory relic as capable of correction by administrative tinkering.
We tried and failed to move the bureaucracies to tighten the law. Suprisingly, this new bold president, who is attacking the budget with the fervor only former directors of OMB can fully appreciate, seems to be headed in the same direction -- toward merely cosmetic changes. This administration's position on Davis-Bacon undercuts any notion that it is serious about haulting inflation's gallop.
Davis-Bacon, lest we forget, is that 1931 statute that requires contractors for federally funded construction projects to pay the "prevailing wage." In fact, more often than not, Davis-Bacon means that workers on those many projects often are paid the lhighest wage paid anywhere in the region. And the amounts involved are not peanuts. The federal construction budget is approximately $32 billion this year.
A major thrust of The Post's editorial was the impact that repeal of Davis-Bacon could have on labor unions. But this is falling into that old familiar trap of seeing the issue only in the union versus non-union context.
Rather, Davis-Bacon should be considered in light of its economic effects as well as its objectives. Originally, the act was intended to discourage non-local contractors from successfully bidding on government-financed projects by hiring cheap labor from outside the project area, thus disrupting the prevailing local wage structure. At the time the act was passed, there were no minimum wage laws, no unemployment compensation provisions or other statutes, such as the National Labor Relations Act, which protect the compensation or terms and conditions of employment of construction workers. Since the Davis-Bacon Act was passed, Congress has enacted numerous laws, including a general minimum wage law, to protect the wages and working conditions of construction workers. In addition, Congress has subequently enacted procurement laws protecting the government from "unreliable contractors."
Studies and estimates (by the General Accounting Office, the Congressional Budget Office and the president's Council of Economic Advisers) on the unnecessary costs of Davis-Bacon abound. There is a little quarrel with the conclusion that Davis-Bacon results in unnecessary costs. The only disagreement concerns the extent of the waste.
The evidence is so compelling that for the first time in my memory The Wall Street Journal and The New York Times have editorially agreed on a major economic issue, and each has called recently for the repeal of Davis-Bacon.
The hils are full of horror stories. A recent GAO study concluded that application of Davis-Bacon unnecessarily increased the total construction cost of Washington's Metro system 6.8 percent, resulting in an added cost of about $149 million to the taxpayers. The GAO survey of Montgomery County, Md., found that the "prevailing wage" rates were higher than average rates paid on similar private construction in the same locality.
In recent oversight hearings before the Senate Labor committee, one witness testified that in Hagerstown, Md., the going rate for plumbers is about $6.40 an hour. But plumbers on a federally funded sewage treatment project will make double that because the government has somehow determine that the "prevailing wage" in that area for plumbers is $12.86 an hour.
The GAO, which issued a comprehensive report on Davis-Bacon in 1979, and urged its repeal, concluded that the act is not susceptible to practicle and effective administration. I agree. Consider the task assigned to the secretary of labor. He must be able to determine (and maintain current figures on) "prevailing wages" for more than 3,000 counties, for at least 19 trades. That's 57,000 wage determinations. Multiply that figure by the four different types of construction (building, residential, heavy and highway) and the number of potential wage determinations geometrically increases to 228,000. There is simply no cosmetic change available that would allow administrators to do "a better job of determining actually prevailing local wages," as the editorial proposed.
I am not suggesting that construction workers should be penalized simply to save federal construction dollars. What I am suggesting is that taxpayers should not be penalized by a federal agency requiring that wage rates on federal construction projects be higher than the actual rates on similar private construction in the same locality. It is also obvious that the federal wage-floor artificially increases all construction wages. That is one major reason the full inflationary impact is so difficult to determine.
From a budgetary point of view, by repealing Davis-Bacon requirements, either the government can get more construction for the $32 billion it is planning to spend in FY 82 or it can get the planned amount of construction for less money.
This is one of those categories of waste and abuse that the American people clearly want to correct. Now is the time to give a decent burial to a statute that is not only unworkable and economically harmful but also whose time has passed.