Looking back on the history of this country, a common force has hindered the arc of progress: the heavy hand of the federal government. Nowhere is the needlessness and incompetence of federal government intervention more apparent than in the Davis-Bacon Act.
President Herbert Hoover signed the Davis-Bacon Act into law on March 3, 1931, consecrating one of the most useless and inefficient fiscal policies in the history of this country. The act was drafted with the intention of protecting construction workers from wage deflation at the hands of federal infrastructure projects during the Great Depression. Considering the volume of government construction projects during the Depression, the DBA does make some sense on paper.
However, “on paper” is where the arguments for the act end.
Like most government programs, the Davis-Bacon Act has horrendous implications for the fiscal and social health of the United States. When Hoover signed the DBA, his administration did not consider these implications that make the continued existence of the Act in U.S. Code asinine.
The DBA applies to contractors and subcontractors on federally-funded projects costing in excess of $2,000. In accordance with the act, federal contractors and subcontractors must pay employees at least the prevailing wage rates for non-federal contracts in the same locality. The Department of Labor’s Wage and Hour Division determines these rates through a survey of construction wages. This survey, of course, is where the policy goes awry, even to the staunchest believers in government intervention. As is customary of a government agency, the WHD is simply terrible at its job.
It uses unscientific, self-selected survey samples based on responses from fewer than 30 workers in each locality. Moreover, inspector general audits have found errors in 100 percent of wage reports examined. Most of these reports are years or decades old, and some rates have not been updated since the 1970s.
Aside from the stark bureaucratic problems, the DBA has disastrous effects on both local markets and the American economy at large. DBA wage rates average 22 percent higher than market wages for the same work, which the Congressional Budget Office estimates costs the American taxpayer roughly $13 billion annually. Though some argue the DBA protects workers, it fails here as well. In areas in which DBA rates are below market wages, the DBA depresses worker income, the exact opposite of what the act was designed to do.
As the DBA increases the cost of federally-funded construction projects by an average of nearly 10 percent, repealing the act would allow the government to build more infrastructure and create roughly 150,000 additional construction jobs at the same cost to taxpayers.
Anyone who has passed a personal finance class can easily say the goal is to buy more with less, not less with more. Anyone familiar with the federal budget can easily say the government would not pass a personal finance class.
Beyond the DBA’s troubling economic effects, it aimed to force black laborers out of the construction industry. When Hoover signed the law, a massive influx of black workers had migrated from the Jim Crow South to the comparatively desegregated North. Because the DBA required federal contractors to pay skilled and unskilled laborers the same wages, regardless of market value, the act destroyed any incentive to hire black migrants. In fact, Ralph C. Thomas, former executive director of the National Association of Minority Contractors, made the point that under the DBA, federal contractors have “no choice but to hire skilled tradesmen, the majority of which are in the (racial) majority.” He went on to say “this defeats a major purpose in the encouragement of minority enterprise development.”
In economics, unintended consequences are known as negative externalities. The consequences of the DBA for black workers, though, are most certainly not unintentional.
At the time of the act’s passage, black workers comprised a disproportionate amount of the country’s unskilled labor force, and, with the influx of Central American immigrants in the second half of the 20th century, the racial disparity between the minority share of the country’s population and the unskilled labor force became even greater.
In 1930, Rep. Miles Clayton Allgood (D-Ala.) rationalized his support for the act, arguing that “cheap colored labor” competes with white labor nationwide. Locking minority laborers out of the workforce is not an externality, but in fact is an intended consequence of the DBA, turning it from bad fiscal policy to heinous social engineering.
My opposition to the DBA does stems from my antipathy toward government programs. From President Franklin D. Roosevelt’s New Deal to President Lyndon B. Johnson’s failed War on Poverty, the federal government does more harm than good. But the DBA does something beyond stifling business and violating constitutional norms. It knowingly and actively prevents the most vulnerable members of our society from achieving the American Dream, crushing their hopes like ants under the federal government’s mighty boot.
The DBA is not only an example of government intervention gone wrong. It was also created with outright racist intentions. It’s time for the act to be repealed, and not, as some have insisted, expanded into the private sector. If the DBA was implemented in private business, it would be the end of free enterprise as we know it, signalling a death knell for aspiring contractors and minority laborers alike. In a country in which freedom, equality and opportunity are emphasized above all else, a law like the Davis-Bacon Act has no place on the books.
Zach Kessel is a Communication freshman. He can be contacted at [email protected] If you would like to respond publicly to this op-ed, send a Letter to the Editor to [email protected] The views expressed in this piece do not necessarily reflect the views of all staff members of The Daily Northwestern.