Last week, Congressman Paul Gosar, introduced H.R. 924, the Responsibility in Federal Contracting Act, which would require the calculation of wages for public works projects be based on actual statistics calculated by the Bureau of Labor Statistics (BLS).
The current process which determines these rates based on fundamentally flawed surveys within the Wage and Hour Division. A 2008 Department of Labor Inspector General report found that “one or more errors existed in 100% of the wage reports.”
H.R. 924 would substitute the current wage determination with statistically sampled information from the BLS. Research conducted by the non-partisan Congressional Budget Office estimates that upwards of $13 billion could be wasted over 10 years if Davis-Bacon is left unreformed. Analysis by the Beacon Hill Institute at Suffolk University puts the savings at even greater, indicating that the Congressman’s bill would save $8.6 billion annually. This legislation allows these savings to be used on additional worthwhile infrastructure projects around the country.
A state-level study which examined the effect of Davis-Bacon on Arizona’s highway construction costs revealed that the Act resulted in an overall cost increase of 13%.
The prevailing wage is so difficult to determine under the current system that the GAO has repeatedly called for its repeal since 1979. In some cities, the WHD determined wages are 75% higher than the actual prevailing wage. In other areas throughout the country they are below minimum wage and only 33% of the actual prevailing wage. Some figures have not even been updated since the 1970s.
According to the IG for the Department of Labor, federal contract wages were commonly reported to be inflated as well as understated compared to the actual prevailing wage. Overall, these wage rates average 22% above market wages—inflating the cost of federal construction projects, keeping employers from hiring more workers, and locking low-skilled workers out of many construction jobs for which they could otherwise be hired.
“For far too long, wages for public works projects have been determined by an outdated and flawed formula that sacrifices accuracy, jobs and billions of federal tax dollars. The current calculation dates back to the 1931 Davis-Bacon Act and is riddled with fraud and abuse as evidenced by multiple Inspector General (IG) and Government Accountability Office (GAO) reports,” said Gosar in the statement released Friday.
“The Bureau of Labor Statistics has proven time and time again that they are the only department capable of accurately determining these wages. Requiring the BLS to calculate these wages will save nearly $9 billion every year. We owe it to the American taxpayer to spend federal dollars in a more efficient manner, allowing for more jobs and worthwhile projects in the process,” continued Gosar.
“The Responsibility in Federal Contracting Act is about competition, equality, accuracy and transparency for everyone.” Gosar concluded, “My commonsense legislation will cut waste, create jobs and save billions. This bill will restore a fair wage for a fair job that is fair to the American taxpayer.”