We Support H.R. 2900: Full Repeal of the Davis-Bacon Act
July 28, 2009
The Honorable Steve King The Honorable Connie Mack
U.S. House of Representatives U.S. House of Representatives
1131 Longworth Office Building 115 Cannon House Office Building
Washington, D.C. 20515 Washington, D.C. 20515
Dear Congressmen King and Mack,
On behalf of the National Federation of Independent Business (NFIB), thank you for introducing H.R. 2900, a bill that would fully repeal the Davis-Bacon Act. NFIB believes that the Davis-Bacon Act hinders small businesses in competition for contracts, and our members are overwhelmingly in favor of full repeal.
The Davis-Bacon Act, a Depression-era wage subsidy law, requires that each public works contract over $2,000 contain a clause that establishes the minimum wages to be paid. Contractors and subcontractors are to pay workers a minimum wage based on the local "prevailing wage." However, these wages rarely resemble local market conditions because they are based on union recommendations. The Davis-Bacon wage scale has overwhelmingly favored large, urban and unionized contractors. Small and minority-owned businesses are discouraged from bidding on public projects by the complex and archaic rules set forth by the Act. The inflated Davis-Bacon wage scale requirements shut small employers out of the federal construction market. In addition, the costs of public construction projects are inflated.
The Davis-Bacon Act is also a paperwork burden for those small business owners who are successful in competing for federal construction projects. According to the Associated Builders and Contractors, contractors are required to submit weekly statements of compliance along with their certified payrolls at a cost of $100 million a year. Repeal would eliminate this hidden cost.
When the Davis-Bacon Act was passed in 1931, there were minimal worker protections available, so a standardized salary set by the federal government was necessary. Today, workers are protected by a broad set of regulations including the minimum wage and other Fair Labor Standards Act protections, OSHA, and the National Labor Relations Act. The Davis-Bacon Act serves only one real purpose: union protectionism. Furthermore, the Congressional Budget Office (CBO) found that Davis-Bacon raises government construction costs $1 billion a year. Repealing the Act would reduce the federal deficit $5 billion over five years because the government would not be required to pay the higher wage for federal contracts.
NFIB strongly supports H.R. 2900 and the full repeal of the Davis-Bacon Act. We look forward to working with you on this issue as the 111th Congress continues.
Sincerely,
Susan Eckerly
Senior Vice President
Public Policy