[Congressional Record Volume 145, Number 78 (Thursday, May 27, 1999)]
[Senate]
[Pages S6310-S6311]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SMITH of New Hampshire (for himself, Mr. Inhofe, Mr. 
        Thurmond, Mr. Nickles, Mr. Helms, and Mr. Cochran):
  S. 1157. A bill to repeal the Davis-Bacon Act and the Copeland Act; 
to the Committee on Health, Education, Labor, and Pensions.


                     davis-bacon repeal act of 1999

  Mr. SMITH of New Hampshire. Mr. President, I rise today to introduce 
the Davis-Bacon Repeal Act of 1999. This legislation would repeal the 
Davis-Bacon Act of 1931, which guarantees high wages for workers on 
Federal construction projects, and the Copeland Act, which imposes 
weekly payroll reporting requirements.
  Davis-Bacon requires contractors on Federal construction projects 
costing over $2,000 to pay their workers no less than the ``prevailing 
wage'' for comparable work in their local area. The U.S. Department of 
Labor has the final say on what the term ``prevailing wage'' means, but 
the prevailing wage usually is based on union-negotiated wages.
  My bill would allow free market forces, rather than bureaucrats at 
the Labor Department in Washington, DC., to determine the amount of 
construction wages. There is simply no need to have the Labor 
Department dictating wage rates for workers on Federal construction 
projects in every locality in the United States.
  The Department of Labor's Office of the Inspector General recently 
issues a devastating report showing that inaccurate information had 
been used in Davis-Bacon wage determinations in several states. The 
errors caused wages or fringe benefits to be overstated by as much as 
$1.00 per hour, in some cases. If Davis-Bacon were repealed, American 
taxpayers would save more than $3 billion over a 5-year period, 
according to the Congressional Budget Office.
  Davis-Bacon also stifles competition in Federal bidding for 
construction projects, especially with respect to small businesses. 
Small construction companies are not knowledgeable about Federal 
contracting procedures; and they simply cannot afford to hire the staff 
needed to comply with Davis-Bacon's complex work rules and reporting 
requirements.
  Congress passed Davis-Bacon during the Great Depression, a period in 
which work was scarce. In those days, construction workers were willing 
to take what jobs they could find, regardless of the wage rate; most 
construction was publicly financed; and there were no other Federal 
worker protections on the books.
  Conditions in the construction industry have changed a lot since 
then, however. Today, unemployment rates are low, and public works 
construction makes up only about 20 percent of the construction 
industry's activity. Also, we now have many Federal laws on the books 
to protect workers. Such laws include the Fair Labor Standards Act of 
1938, which imposes a general minimum wage, the Occupational Safety and 
Health Act of 1970, the Miller Act of 1935, the Contract Work House and 
Safety Standards Act of 1962, and the Social Security Act.
  Yet the construction industry still has to operate under Davis-
Bacon's inflexible 1930s work requirements and play by its payroll 
reporting rules. Under the law's craft-by-craft requirements, for 
example, contractors must pay Davis-Bacon wages for individuals 
who perform a given craft's work. In many cases, that means a 
contractor either must pay a high wage to an unskilled worker for 
performing menial tasks, or he must pay a high wage to an experienced 
worker for these menial tasks. These requirements reduce productivity.

  A related problem with Davis-Bacon is that it reduces entry-level 
jobs and training opportunities for the disadvantaged. Because the law 
makes it costly for contractors to hire lower-skilled workers on 
construction projects, the statute creates a disincentive to hire 
entry-level workers and provide on-the-job training.
  The Congressional Budget Office raised this issue in its analysis, 
``Modifying the Davis-Bacon Act: Implications for the Labor Market and 
the Federal Budget.'' As stated in that 1983 study:

       Although the effect of Davis-Bacon on wages receives the 
     most attention, the Act's largest potential cost impact may 
     derive from its effect on the use of labor. For one thing, 
     DOL wage determinations require that, if an employee does the 
     work of a particular craft, the wage paid should be for the 
     craft.
       For example, carpentry work must be paid for at carpenters' 
     wages, even if performed by a general laborer, helper or 
     member of another craft.

  Moreover, the General Accounting Office has maintained that the 
Davis-Bacon Act is no longer needed. GAO began to openly question 
Davis-Bacon in the 1960s; and in 1979, it issued a report calling for 
the Act's repeal. Titled ``The Davis-Bacon Act Should Be Repealed,'' 
the report states: ``[o]ther wage legislation and changes in economic 
conditions and in the construction industry since the law was passed 
make the law obsolete; and the law is inflationary.''
  To those who remain unconvinced that Davis-Bacon is bad public 
policy, I urge a review of the Act's legislative history. Some early 
supporters of Davis-Bacon advocated its passage as a means to 
discriminate against minorities. For instance, Clayton Allgood, a 
member of the 71st Congress, argued on the House floor that Davis-Bacon 
would keep contractors from employing ``cheap colored labor'' on 
construction projects. As stated by Congressman Allgood on February 28, 
1931, ``it is labor of that sort that is in competition with white 
labor throughout the country.'' Unfortunately, Davis-Bacon still has 
the effect of keeping minority-owned construction firms from competing 
for Federal construction contract, because many such firms are small 
businesses.
  Early supporters of Davis-Bacon also believed that the law would 
prevent outside contractors from undermining local firms in the Federal 
bidding process. In practice, however, Davis-Bacon wages hurt local 
businesses and make it more likely that outside contractors will win 
bids for Federal projects.

[[Page S6311]]

  Mr. President, for all of the above reasons, I believe that the 
Davis-Bacon Act should be repealed. I urge my colleagues to support the 
Davis-Bacon Repeal Act of 1999.
  Mr. President, I ask unanimous consent that the text of my bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1157

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. DAVIS-BACON ACT.

       (a) Repeal.--The Act of March 3, 1931 (40 U.S.C. 276a et 
     seq.) (commonly referred to as the Davis-Bacon Act) is 
     repealed.
       (b) References.--Any reference in any law to a wage 
     requirement of the Act of March 3, 1931, shall after the date 
     of the enactment of this Act be null and void.

     SEC. 2. COPELAND ACT.

       Section 2 of the Act of June 13, 1934 (40 U.S.C. 276c) 
     (commonly referred to as the ``Copeland Act'') is repealed.

     SEC. 3. EFFECTIVE DATE.

       The amendments made by sections 1 and 2 shall take effect 
     30 days after the date of the enactment of this Act but shall 
     not affect any contract in existence on such date of 
     enactment or made pursuant to invitation for bids outstanding 
     on such date of enactment.

  Mr. NICKLES. Mr. President, I am happy to join Senator Bob Smith as a 
cosponsor of the Davis-Bacon Repeal Act of 1999.
  I believe Davis-Bacon repeal is long overdue. This 68-year-old 
legislation requires contractors to pay workers on federally-subsidized 
projects what the Labor Department determines is the local prevailing 
wage. What Davis-Bacon actually does is cost the Federal Government 
billions of dollars, divert funds out of vitally important projects, 
and limit opportunities for employment.
  In my own State of Oklahoma, it has been proven that many 
``prevailing wages'' have been calculated using fictitious projects, 
ghost workers, and companies established to pay artificially high 
wages. Oklahoma officials have reported that many of the wage survey 
forms submitted to the U.S. Department of Labor to calculate Federal 
wage rates in Oklahoma were wrong or fraudulent.
  Records showed that an underground storage tank was built using 20 
plumbers and pipefitters paid $21.05 an hour but no such tank was ever 
built. In another case, several asphalt machine operators were reported 
to have been employed at $15 an hour to build a parking lot but the lot 
was made of concrete, there were no asphalt operators, and the actual 
Davis-Bacon wage should have been $8 an hour. Ultimately, the Oklahoma 
Secretary of Labor established that at least two of the inflated 
Oklahoma reports were filled out by union officials.
  The Davis-Bacon Act also diverts urgently needed Federal funds. After 
the 1995 bombing of the Murrah Federal building in Oklahoma City, Mayor 
Ron Norick of Oklahoma City estimated that the city could have saved 
$15 million in construction costs had the President waived the Davis-
Bacon Act.
  This money could have been used to provided additional assistance to 
those impacted by the bombing and to further rebuild the area around 
the Murrah site. The Federal role in disaster situations should be to 
empower communities and foster flexibility so that rebuilding efforts 
can proceed in the best manner possible.
  The Congress should repeal a law that discourages, rather than 
encourages, the employment of lower skilled or non-skilled workers.
  Davis-Bacon began as a way to keep small and minority businesses out 
of the government pie, and today it still does, reaching even further. 
Repeal of the act will take wage setting out of the hands of 
bureaucrats and return the determination of labor costs on construction 
projects to the efficiencies of the competitive marketplace. This would 
result in a more sound fiscal policy through payment of actual market-
based local wage rates; more entry-level jobs in construction industry 
for youth, minorities, and women; and more small businesses bidding on 
Federal contracts.
  The Davis-Bacon Repeal Act will provide increased job opportunities 
for those who might not ordinarily have the chance to enter the 
workforce, the opportunity to learn a trade, and the opportunity to 
climb the economic ladder.
  I applaud Senator Smith for his efforts and appreciate the chance to 
cosponsor this bill.
                                 ______