Davis-Bacon Confidential!
kf hears from those in the know.
By Mickey Kaus
Updated Wednesday, Oct. 12, 2005, at 8:31 PM PT
More Hot Davis-Bacon Dish! Yesterday, we heard from a federal contracts officer who said Bush suspended the Davis-Bacon Act's "prevailing wage" rules post-Katrina not to bait liberals but because "they are stupid regulations and waste time." Today, we hear from the other side of the table--the contractors' side. Here is emailer "B," a "contracts manager," who says "I work for a corporation and negotiate contracts from federal agencies, and have done construction contracts with Davis-Bacon":
A contract out for bid does that not have Davis-Bacon will have more bidders, especially from small and minority firms that don't have the administrative staff accustomed to handling the onerous paperwork that Davis-Bacon brings with it. You'll find small outfits that do a great job and can get bonding – payment and performance bond are required on construction contracts – but get overwhelmed with the paper.
For large projects, the prime contractors will have more subcontractors to choose from for the same reason. ... Whatever the size of the project or the size of the company, wages won't necessarily be lower. Whether you're big or small you've got to pay a fair wage for the worker's skills, and you've probably already got a core workforce that you have to keep happy. What Davis-Bacon brings is the need to certify the skills of each employee in the labor category he's working. You can do the work, meet the contract's milestones, and be on schedule, yet have portions of your scheduled payment withheld because of missing certifications or other paperwork foul-ups. Besides, there will be lots of work, good workers will be in demand, and their wages will reflect that.
If you're using union labor, you've got a mixed blessing – the union will provide the certifications that will stand the government's scrutiny, but you might get a fair number of idiots who can't do the job at a reasonable pace. You will also get job actions if you try to get one kind of union guy to help out another kind of union guy, like having a laborer carry paint for the painters. They call the stewards and everybody fights for an hour. And don't ever mess with the plumbers or the electricians.
Folks forget that any and all projects will have government auditors going over every piece of paper they can lay their hands on, and the audit will continue long after the work is done and paid for. Any missing paperwork will cost you money; it that sense, avoiding Davis-Bacon lowers your risk of having money taken back.
Finally, without Davis-Bacon and without unions, you'll be able to hire a lot of low skill, low productivity folks for general clean up, assistance to your high-productivity workers, etc. You'll be able to do tryouts of a sort to see how a guy works out. With Davis-Bacon you'd have to classify these kinds of folks right off the bat and pay a higher rate; you'd hire very few and would be unable to reward any stellar performers with a higher wage because they wouldn't have all the elements that would qualify them for a higher classification ... .
Emailer C., a "lawyer who represents construction companies" half-dissents:
The Act does create red tape. But the examples you cite really aren't problematic. The "prevailing wage" calculation, for example, is something that has already been determined and is published. It is always being tweaked, but the wage for a certain area is what it is, and all interested contractors need to do to "determine" that wage is ask the government contracting officer in charge of the project. As for the red tape associated with ensuring that contractors are paying the wage, this requires the contractor to provide "certified" payroll records showing that the laborers are actually receiving the prevailing wage. I've had some very small, very unsophisticated clients master this paperwork. Halliburton and the big heavies reported to be receiving the lion's share of the reconstruction work can do this paperwork in their sleep.
Even if "C" is right (and "B" would presumably dispute him), whatever red tape there is can't help speed and efficiency on the contractors' side.. Nor does there seem to be a good reason to favor the Halliburtons over smaller firms. There is plenty of work to be done on the Gulf, and that alone will presumably drive up wages, as "B" notes--unless the "low skill, low productivity folks" who get hired outside of Davis-Bacon "for general clean up" are illegals attracted to this country by the availability of Katrina jobs. The answer to that problem would seem to be to enforce the immigration laws. ...
P.S.: Jason DeParle's recent NYT piece on post-Katrina poverty policy quoted economist Jared Bernstein arguing that suspending Davis-Bacon hurts the "poor and disadvantaged." But the lower-skill workers who (according to "B") would get jobs absent Davis-Bacon's restrictions are much more likely to be "poor and disadvantaged" than the plugged-in AFL-CIO members. Since when is it the goal of liberalism to preserve the wage inequalities that the even the market doesn't support? Plus Davis-Bacon, as "B" notes, operates to exclude minority contractors. ... Better to just create lots of jobs, as fast as possible, and force employers to compete for everyone, raising wage levels generally (as happened at the end of the '90s). To this end, John Edwards has called for a "job creation" program built on the "principles that FDR and the WPA taught us." Sounds good. But FDR, remember, had to break an AFL strike over the "prevailing wage" issue to make the WPA work. ... |
