Want a tremendous deal on infrastructure spending? Suspend Davis-Bacon

by Mark Mix, opinion contributor - 04/26/17 7:00 PM ET

As the Trump administration and Congress prepare for what could be a trillion dollar infrastructure program, President Trump has within his powers a way to ensure American taxpayers can get the best bang for their buck with a stroke of his pen.

Currently, these infrastructure projects would be covered under the Davis-Bacon Act which was originally enacted in 1931, primarily to protect white union workers and companies from competition from nonunion black workers. While no longer explicitly racially-motivated today, Davis-Bacon serves a similarly discriminatory function, limiting federal projects to politically-connected unionized firms at the expense of the 86 percent of American construction workers who choose not to affiliate with a union.

{mosads}This outdated and wasteful law puts independent contractors and sub-contractors at a disadvantage in submitting proposals for federal projects – effectively barring nonunion workers from working on government-funded projects. By forcing bidding to follow union-dictated job classifications, work rules, compliance requirements and cherry-picked union pay scales, Davis-Bacon enables Big Labor to feed at the taxpayers’ trough on federal construction projects.

Congress should address this problem by eliminating the outdated law, but with infrastructure near the top of his agenda, the president needn’t wait. Using clearly granted executive authority, Trump could suspend Davis-Bacon with the stroke of a pen.

The Davis-Bacon Act expressly provides for suspension by the president in times of “emergency.” Officials in Washington declare almost every day that infrastructure repair is an emergency – in fact it was a point of agreement between Trump and Hillary Clinton during last year’s campaign. In one campaign article Secretary Clinton declared: “The state of our infrastructure is an emergency.”

Such a suspension would hardly be unprecedented. Davis-Bacon rules have been suspended in such a way four times since the law’s passage, by both Republican and Democrat presidents for all types of emergencies, including for purely economic reasons.

Franklin Delano Roosevelt suspended Davis-Bacon in 1934 to help usher in the New Deal, Nixon suspended it in 1971 as an anti-inflationary measure and both Bush presidents suspended Davis-Bacon for hurricane recovery operations.

Suspending Davis-Bacon by executive order for the duration of Trump Presidency could save the American taxpayer hundreds of billions of dollars, and stop billions of taxpayer dollars from being diverted into union coffers in the form of mandatory union dues and fees.

Estimating the full costs to taxpayers of Davis-Bacon is impossible but economists agree it is significant. Even conservative estimates suggest the laws’ mandates artificially increase taxpayer costs 15 to 20 percent, which quickly results in tens or hundreds of billions in savings against an infrastructure bill that could be hundreds of billions of dollars or more.

Other studies suggest the cost – and thus the savings if it were suspended – are far higher. One study that compared federal projects to similar private projects estimated Davis-Bacon increased the costs over 26 percent. A 2005 Congressional Research Service report on suspending Davis-Bacon cited estimates that the law can “raise total construction costs by up to 38 percent.” Thirty-eight percent of one trillion dollars, you do the math.

Even the way Davis-Bacon is implemented drives up the cost to taxpayers. One study by economist James Sherk – currently a White House labor policy advisor – estimated that just by using more reliable Bureau of Labor Statistics data, as opposed to the current non-scientific survey system to determine Davis-Bacon wage rates would save taxpayers ten percent and create 30,000 construction jobs annually.

The huge volume of paperwork and other compliance costs foisted on employers under Davis-Bacon deter countless smaller, typically nonunion firms from even submitting bids on federally funded construction projects. Meanwhile, big unionized firms “comply” with Davis-Bacon’s wage requirements only on paper utilizing legally-questionable union “job targeting funds” that kickback a portion of workers’ wages to the company, so they can make bids that would never be viable absent such a subsidy. Non-union contractors would blatantly violate federal wage laws for such a kickback scheme even though the effective take home pay of the workers might be identical.

Politically-connected construction firms and union officials reap the benefits while taxpayers are hit with the costs of wasteful work rules, union featherbedding and increased bureaucracy, causing delays in work completion.

The president ran on putting Americans back to work, rebuilding America’s infrastructure and getting taxpayers the best deal possible. A powerful tool towards achieving all three is already on president Trump’s desk: a pen to suspend Davis-Bacon, and with it eliminate the red tape and rigged rules that discriminate against over eight in ten American construction workers.

Mark Mix is president of the National Right to Work Committee, a 2.8 million member organization dedicated to the principle that all Americans must have the right to join a union if they choose to, but none should ever be forced to affiliate with a union in order to get or keep a job.

The views expressed by contributors are their own and are not the views of The Hill.

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