Labor Act Makes No Moral Sense

One mistake Republican leaders made when reorganizing the House of Representatives was to reject the proposal for a permanent committee devoted to repealing bad laws. But now Speaker Gingrich has made partial amends by proposing a monthly “Correction Day” during which the House would “take the dumbest things the federal government is currently doing and just abolish them.” Although there is stiff competition for the title Dumbest Thing the Government is Doing, a leading candidate is the Davis-Bacon Act. This law is economically irrational and morally execrable. Enacted in 1931, it was an act of domestic protectionism, designed to protect labor, especially unionized labor, in each community from competition. It was enacted in part to impede blacks competing for federally funded construction jobs, and it continues to hinder people on the lower rungs of the ladder of social mobility.

Davis-Bacon requires contractors to pay “prevailing wages” to each of many classifications of laborers on federal construction projects - approximately 20 percent of all construction projects, involving more than 25 percent of all construction workers. The U.S. Department of Labor each year issues many thousands of “prevailing wage” determinations - for up to 300 job categories, for particular projects, and for localities such as individual counties.

Obviously so many determinations cannot be made on the basis of detailed surveys. Usually union wage scales are taken as “prevailing” wages. This is good for skilled and unionized labor. It is a problem for small and non-unionized contractors.

Why was Davis-Bacon enacted? Because in 1931, the second year of the Depression, blacks were competing successfully for jobs that whites wanted as the federal government spent money on construction projects to prime the economy’s pump.

Four years earlier, Rep. Robert Bacon, a Long Island Republican, had been distressed because the low bidder to build a veterans hospital in his district was an Alabama contractor using black labor. The Depression made federal construction money hugely important, and so the law bearing Bacon’s name was enacted.

Black laborers were willing to work for lower wages than whites could get as members of unions, most of which excluded blacks. The Davis-Bacon congressional debate was replete with references to “itinerant labor,” “cheap bootleg labor,” and “labor lured from distant places” for “competition with white labor.”

Davis-Bacon is certainly not the only reason why today minority unemployment is higher than white unemployment. However, when Davis-Bacon was enacted, the black unemployment rate was approximately that of the general population. And the black rate began to deviate partly because Davis-Bacon largely excluded blacks from an important component of the federal government’s Depression-era spending. In 1932 about 4,100 people were building Boulder Dam. Thirty were black.

Reader’s Digest reports that today electricians on Philadelphia projects covered by Davis-Bacon are paid about $38 an hour, while electricians on other projects average about $16. In Oakland, carpenters on Davis-Bacon projects get about $28 an hour, those on other projects about $15.

Repeal of Davis-Bacon would not only diminish the government’s unseemly activity as servant of the strong, it also would save taxpayers about $1 billion on construction costs and $100 million in administrative costs annually. Construction companies would save $190 million in compliance costs - the mountain of reports they file, consuming many millions of hours of employees’ time.

If Congress is dilatory about doing its duty regarding Davis-Bacon, a court may do it. The Institute for Justice, libertarian lawyers seeking judicial rulings to re-establish economic liberty as a fundamental civil right, is in court arguing that Davis-Bacon violates the Fifth Amendment guarantee of equal protection of the law. The institute argues not only that the act was motivated by racial animus, and that it had and continues to have a “disparate impact” disadvantageous to minorities. The institute says also that the act is unconstitutional because by restricting competition for work it burdens the “liberty right” of people to pursue their chosen professions.

That argument may stretch constitutional reasoning, but Congress should render the matter moot by not waiting for a court to correct the mistake Congress made 64 years ago. Repeal of Davis-Bacon would be a grand way for Congress to spend a Correction Day.