[Congressional Record Volume 141, Number 153 (Thursday, September 28, 1995)]
[Extensions of Remarks]
[Pages E1859-E1860]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     REPEALING THE DAVIS-BACON ACT

                                 ______


                            HON. NICK SMITH

                              of michigan

                    in the house of representatives

                      Thursday, September 28, 1995

  Mr. SMITH of Michigan. Mr. Speaker, the time has long since passed 
for the repeal of the Davis-Bacon Act. Yet, this outdated piece of 
legislation, along with all of its adverse effects, is still a bulwark 
of the United States labor law. The Davis-Bacon Act should be repealed 
for several important reasons:
  First, it violates Americans' right to contract freely with one 
another.
  Second, it has inequitable effects between people of different races.
  Third, it serves no interest other than to protect the wages of white 
unionized construction labor.
  Fourth, it adds over a billion dollars each year directly to Federal 
Government expenditures.
  The Davis-Bacon Act was passed in 1931 amidst a sharp decline in 
construction activity and falling wages and prices that characterized 
the Great Depression. Its intent was twofold; First, it aimed to halt 
the decline of wages. Second, Davis-Bacon intended to prevent blacks, 
migrant workers, and carpetbagging contractors from competing for 
contracts that had typically been awarded to local, white unionized 
labor.
  How did the act attempted to achieve these objectives? By requiring 
that construction workers on federally financed projects be paid the 
local prevailing wage rate. This prevailing wage, as determined by the 
Department of Labor is nothing more than the union wage. In other 
words, this act gives the Secretary of Labor the authority to set the 
minimum wage for construction workers at a rate greater than that 
determined by the forces of supply and demand. In effect, this 
requirement to pay an artificially high wage precludes most minority-
owned and nonunionized firms from bidding for government construction 
contracts since they cannot afford to pay union wages. Consequently, 
the Davis-Bacon Act serves to protect the jobs and inflated wages of 
predominately white unionized labor by insulating them from lower cost 
competition. It effectively grants the higher cost, unionized 
contractors their own private monopoly over federally funded 
construction projects.
  But there is another effect that follows directly from the required 
payment of prevailing wages. Since the Federal Government is prohibited 
by law from awarding contracts to lower wage, lower cost construction 
firms, it necessarily spends an excess of what it needs to in order to 
get the job done. And guess who is paying the difference. In 
fact, Davis-Bacon adds over a billion dollars each year directly to 
Federal Government expenditures, not to mention the additional billions 
added to private expenditures on projects that are partially federally 
funded. That means you and I are forced to subsidize the multitude of 
artificially and unnecessarily expensive construction projects because 
back in 1931, the Government granted a monopoly over the contracts to 
such projects to a small group of unionized construction workers.

  The claim by some of my colleagues and supporters of the act that 
Davis-Bacon simply recognizes existing wages as determined by the local 
market, and therefore, adheres to free market principles, indicates a 
serious misunderstanding of the process through which the free market 
works. A free market, with competitively determined wages and prices, 
needs neither government recognition nor enforcement in order to 
properly function. These are the prices and wages that would exist in 
the absence of the Department of Labor. The very fact that the Davis-
Bacon Act was deemed necessary to require and enforce the payment of 
prevailing wages indicates that these are not the wages that would 
prevail in the free market.
  If the only group of people whom this legislation benefits is a small 
number of predominately white, unionized labor, while imposing 
significant costs on minority and nonunion construction workers, as 
well as every taxpayer in the form of increased Federal Government 
expenditures, then you might ask, how has Davis-Bacon remained the law 
for 64 years? The act has stubbornly survived precisely because it has 
a highly unified, powerful constituency. Organized labor groups lobby 

[[Page E 1860]]
through large campaign contributions, persuasion, and the votes of 
their members to influence labor policy in their favor. On the other 
hand, opposition to laws like Davis-Bacon is diffused and unorganized, 
simply because these very real costs, which fall lightly on each 
American, go largely unnoticed.
  Finally, and perhaps most importantly, congressional mandates that 
prohibit arrangements between the buyers and sellers of labor that 
would otherwise be mutually agreeable directly interferes with freedom 
of contract. Our Founding Fathers believed that the free marketplace, 
unobstructed by government intervention, was the best source of 
progress and prosperity for all people. They believed that the role of 
government was to protect liberty by acting as an impartial umpire, not 
to manage outcomes by interfering with every play. The time has come to 
repeal legislation created for this end. The time is ripe to repeal the 
Davis-Bacon Act.

                          ____________________