What is the Davis-Bacon Act and why is it important?
A leading textbook explains it this way: [U]nions often attempt to raise the price of other inputs, particularly nonunion labor. For example, the Davis-Bacon Act requires that contractors involved in publicly financed projects pay the ‘prevailing wage’ to construction workers. Not surprisingly, the prevailing wage is typically defined as the union wage, even if the contractor hires nonunion labor. This type of regulation raises the costs of switching from union labor to other inputs.[1] In other words, prevailing wage rules makes government more expensive. Davis-Bacon and its twin, the McNamara-O’Hara Service Contract Act of 1965, work to protect union labor from more competitive non-union labor, which in the Gulf Coast translates into less reconstruction for the same tax dollars, fewer homes repaired, and lower-priority projects being canceled. More fundamentally, these types of laws fall under the heading of price controls, the bricks and mortars of planned economies. Governments in
Related Questions
- Are projects required to comply with the Davis-Bacon Act with respect to construction activities undertaken prior to DOE’s issuance of a loan guarantee?
- Is the $2,000 Davis-Bacon Act threshold based on the entire amount of the contract, including equipment costs, or only on the labor costs?
- Does the Davis-Bacon Act apply to the installation of artwork in a public area?
