78-08-B7
- Main Page \ Reagan Radio Commentaries \ 1978
| << Previous Broadcast | Next Broadcast >> |
Davis-Bacon Act[edit]
Transcript[edit]If someone proposed a law that raised the cost of building school building$, city halls, sewer projects and other civic works, you'd probably say he was crazy. What would you say if such a law also raised construction costs for housing, increased federal taxes, added to the bureaucracy, dumped a load of excess paper work on business and industry and had the effect of limiting job opportunities for minority workers? You'd probably say I was putting you on, but I'm not. There is such a law on the books -- the Davis-Bacon act. According to the United States General Accounting office, it results in increased costs in public construction of some one to three billion dollars a year. The Davis-Bacon act requires employees on all federally-assisted construction projects to be paid what are known as "prevailing wages". This amounts to a sort of "super-minimum wage". When it was passed in 1931 the Act was meant to discourage migrant contractors from undercutting wage rates in higher-wage areas. Today, with migrant contractors a thing of the past, the Davis-Bacon act has the opposite effect from what was intended. Because the "prevailing wage" determinations are based mostly on union wage scales in large urban areas, the act tends to "import" those high rates into rural areas where wages -- and the cost of living -- are lower. This insures that construction costs in rural areas will be higher than they otherwise would have been and local contractors are often excluded. Let's look at an example. Let's say Small Town, Minnesota decides to build an addition to its library with the he1p of a few dollars it gets from federal revenue sharing. The federal government tells the. town officials that they may not do business with any contractor who does not pay his employees wage rates which have been set by the Labor department. Typically, the Labor department will look to collective bargaining contracts made in Minneapolis, several hundred miles away from the library project. If bricklayers and carpenters are being paid $13 an hour in Minneapolis, this will be the wage set for Small Town's library, even though the normal going rate there is $10 an hour. In a stroke, wage competition is outlawed and the town's taxpayers pay more than they normally would for the library addition. And, the local contractor may not even bid on the job, for he doesn't want to tell half his work force that they'll receive $10 an hour for. private projects while the other half receives $13 for working on the federally-assisted project. Even in large metropolitan areas, the Davis-Bacon act poses problems where volunteer and neighborhood groups want to restore and upgrade substandard housing. These groups, which often want to provide jobs for minority workers, find themselves unable to pay the wages mandated by Washington. I used that Minnesota example because one of its Congressman, Tom Hagedorn, has called the Davis-Bacon act "a perfect example of regulatory legislation that has outlived its time" and he's introduced comprehensive legislation to reform it. If the President is serious about reforming federal regulation, he should take a good look at this new "Federal Construction Costs Reduction act". This is Ronald Reagan. Thanks for listening. |
Details[edit]
| |||||||||||
Added Notes[edit] |
