Thursday, February 7, 2008
Frank Conte, Communications
study takes aim at federal prevailing wage law;
Inflated wage measures cost taxpayers $8.6 billion annually
- A new study released today by the Beacon Hill Institute
at Suffolk University (BHI) finds that biases in the measurement
of the federal prevailing wage add 22% to the
cost of labor on public construction projects and 9.91% to
overall construction costs. As a result, taxpayers pay $8.6
billion a year more for public construction projects than
they would have to pay if unbiased measures were used.
federal government, 32 states and the District of Columbia
require the payment of a prevailing wage for all workers employed
directly on site for government-funded construction projects
over a certain dollar threshold. Adopted by Congress in 1931,
the Davis-Bacon Act (DBA) enforces the prevailing wage at
the federal level and serves as the basis for prevailing wages
in the states.
enacted to discourage poor Southern blacks from seeking construction
jobs in the North, the prevailing wage law has always had
the purpose of shielding local construction workers from competition
from outsiders. However implemented, the law is
therefore anticompetitive and costly to taxpayers. As currently
implemented the law also, however, does not accurately measure
the prevailing wage. Rather, it is biased upward to reflect
what the construction trades want to impose as a wage, rather
than the wage that accurately prevails for a given trade in
a given metropolitan area.
is seen in the fact that the U.S. Department of Labor, which
has the job of determining the prevailing wage, does not use
the unbiased and statistically accurate data published by
its Bureau of Labor Statistics (BLS). Rather, it uses data
published by its Wage and Hour Division (WHD), whose methods
are generally unreliable and, if anything, biased upward.In
its study, BHI compared the estimates reported by the WHD
to the estimates reported by the BLS for a sample of nine
occupational categories accounting for 59% of all construction
workers across 80 metropolitan areas.
found that, on average the DBA prevailing wage is almost $4.43
per hour, or more than 22%, above the BLS average wage when
wages are weighted according to the number of workers in each
trade and each metropolitan area. In the Nassau-Suffolk, New
York metropolitan area, brick masons and block masons make
at least $24.17 per hour more than they would make if the
prevailing wage were calculated using BLS methods. In Poughkeepsie-Middleton,
New York, plumbers, pipe fitters and steamfitters get a premium
of $26 per hour. Steel and metal workers in Bakersfield, California
get a premium of $16.37.
on these results, David G. Tuerck, Executive Director of the
Beacon Hill Institute and a coauthor of the study, observed
that the existing way of measuring the prevailing wage
amounts to the maintenance of a costly and arcane welfare
system for construction workers.
went on to say that the whole purpose of a prevailing
wage law is to deny employment opportunities to workers from
outside the immediate area. On that basis alone, the best
solution would be to repeal Davis-Bacon and to render unnecessary
the whole problem of divining what the prevailing wage is.
Next best would be to shut down the Labor Departments
Wage and Hour Division and take the simple step of getting
the measurement of the prevailing wage right. Thats
easy enough to do, considering that the Bureau of Labor Statistics
maintains a parallel and highly reputable office for measuring
study, which also outlines the institutes methodology,
is available here.
02/07/2008 12:54 PM
© 1996-2008, Beacon Hill Institute.
All rights reserved.