A number of times since it’s passage, the Davis Bacon and Related Acts have been suspended by executive order. In a paper posted back in January on the Heritage Foundation’s website, Senior Policy Analyst James Sherk suggested that the current economic crisis warranted another suspension of the Davis Bacon Act, and that doing so would actually create a net increase of over 160,000 new jobs as a direct result of lower prevailing wage rates on Federally funded projects. Which brings up two responses – the first being, “duh” and the second being, “well, yeah, but…”

According to Sherk’s argument, a suspension of the Davis Bacon Act and the utilization of, in his words, unnecessarily inflated federal Davis Bacon wage rates-would lead to lower costs for public works projects. As every contractor knows, and every laborer is grateful for, prevailing wage laws result in higher wages for some employees (or, at least, employees working on some projects) than others. His argument that a suspension of the federal Davis Bacon Act would result in lower overall bid costs, thereby enabling the government to fund a larger number of projects, seems entirely logical. And, the resulting increase in public works projects open to competitive bidding not subject to an inflated prevailing wage rate would mean more contractors securing bids and more construction workers getting employment. Which, of course, sounds pretty good. And makes perfect sense.

However, while he points to Stephen Fuller’s congressional testimony regarding the job creation potential of federal transportation project spending, Sherk neglects the overall economic impact of the high wages that result from prevailing wage laws. In other words, Sherk only theorizes on the potential net increase in construction jobs that comes from the suspension of  the Davis Bacon Act without taking into consideration the collateral damage that would ensue should construction workers currently receiving high prevailing wages suddenly face a sharp decrease in pay.

In addition, Sherk neglects to provide any information on how a construction worker redistributes his or her income. In an economy driven by consumer spending, would the overall economy see any net increase in jobs as a result of suspending the Davis Bacon Act (and lowering construction worker pay), or would it just see a reapportioning of where that money goes? How many secondary (and tertiary, etc) jobs are created for each federal prevailing wage dollar currently spent and how many of those jobs would disappear as a result of suspending prevailing wage rate determination requirements? Stated another way, how many fewer iPods and HD TV’s and dinners out would Joe the Plumber (or Susie the drywaller) buy if they were NOT getting high prevailing wages, and how many jobs in all of those other industries would thus be affected?

Then there’s the issue of the states. Sherk also doesn’t address what happens to the mini-Davis Bacons. What would happen when federal grants are used to offset the costs of a state prevailing wage project, but where state prevailing wage laws apply? Certainly, at least here in California, there are plenty of projects that are California prevailing wage projects paid-for with federal money which subjects them, also, to Davis Bacon prevailing wage rate requirements. What happens there? Would the federal government attempt to insist California state prevailing wage laws be suspended as well? Can you imagine the States-rights uproar that would ensue if the federal government tried to impose a Davis Bacon prevailing wage rate suspension on the state of California or other states for that matter?! Sounds like a hornets’ nest of problems to us…

And, finally, here is one other thing to consider – given the inefficiencies inherit in government, would the suspension of prevailing wage laws actually result in lower costs? Ever hear of the $700 hammer the Pentagon bought?!

Which brings us back to the central question – would suspending the Davis Bacon Act result in a net increase in new jobs? What do you think?