The Davis-Bacon Act, which requires that workers on federal construction be paid no less than locally prevailing wage rates, is emerging as one of the main labor issues facing the 97th Congress.
Davis-Bacon opponents are inclined to dismiss the law as a "Depression-era relic," maintaining that since prosperity has long since returned, the law should go.
This argument is contradicted by the actual legislative history of the Davis-Bacon Act. A prevailing wage statute for federal construction was first introduced in Congress in 1927. This was a year not of Depression but rather of almost unprecedented prosperity.
This legislation was motivated by problems arising on a program of federal public works begun in 1926. A few unscrupulous contractors had decided that the way to win government work was to cut wages well below the locally prevailing level in order to underbid competitors. The result was that federal projects often led to disruption of wages and working conditions within the project area.
Further, contractors paying sub-standard wages were generally unable to attract and keep skilled and experienced construction workers. This frequently caused the quality of construction to suffer, and the government found itself stuck with poorly constructed buildings and high maintenance and repair bills.
The government was particularly vulnerable to these types of operations because, by law, public projects must be awarded to the lowest bidder. While a private customer could avoid dealing with fast-buck operators who made their profit through paying low wages, the government had little choice in the matter. The solution hit upon by Davis-Bacon and others was simply to require that prevailing wages by paid for government work.
The basic principles that let to the passage of the Davis-Bacon Act are still valid today. Incentives still exist for contractors to use wage cutting as a device for winning government contracts, and persistently high unemployment still makes construction workers vulnerable to wage-cutting pressures.
A second charge which Davis-Bacon opponents constantly repeat is that the law is little more than a device to impose union wage rates on all federal construction, even in areas where these rates do not prevail. These charges are completely unfounded. In fact, a majority of all Davis-Bacon wage rates are set below union scales.
The general accuracy of Davis-Bacon wage determinations was confirmed in a 1976 study by the Council on Wage and Price Stability, which found that these wages are not typically higher than actual average wages in the communities studied.
There is also the complaint that building-trades workers are over-paid and that it is our rapidly escalating wages that are the cause of inflation in construction.
It is true that hourly wages are relatively high in construction. However, because of time between jobs, seasonal shutdowns and the periodic depressions that plague our industry, few building-trades workers are able to work year round. This high enembloyment means that average annual income in construction is below that in sectors such as manufacturing and transportation.
Anyway, it is not wages that are pushing up construction costs. Over the past five years, construction wages have risen at an average rate of 6 percent per year, while material prices and financing costs have increased by 9 percent per year, and the profits of large construction contractors have increased by 13 percent per year. Efforts at controlling construction costs should be directed at items that are causing the problem -- land costs, interest rates, material prices -- not at reducing the wages and living standards of construction workers.