Why Davis Bacon is Important – Doesn’t It Just Cost More?

Why Davis Bacon is Important – Doesn’t It Just Cost More?

The Davis-Bacon Act is a law probably better known as the prevailing wage law. This law preserves local area wages and labor standards where contracts for federal construction work are concerned. This law regulates that companies on federal construction jobs must pay their workers no less than the prevailing wage for the local area in which the work is performed. With many companies looking for ways to cut costs some may ask is this law still necessary isn’t it just causing a price increase?

The Davis- Bacon Act was originally written to encourage the development and opportunity for high-skilled, higher wage labor workers that take pride in a job well done. On jobs where the Davis-Bacon is applied, contractors both union and non, win bids based on who has the most productive, best skilled, and best managed workforce.

Many organizations have fought to lower local labor standards and wage rates. Many believe prevailing wages should be cut as much as 50% to cut the cost of government construction projects and relieve the cost to taxpayers. Studies, however, have shown that where the local wage is dropped worker skill and motivation to do a good job drop significantly and companies change their focus from attaining the best training and work force to the cheapest labor putting the quality of work at risk.

The philosophy of the Davis-Bacon Act is that a community is at a better advantage when they encourage competition that builds a drive to acquire new skills, builds productivity, pays well and provides for the health and mature age needs of its citizens.

Surprisingly to some, the Davis- Bacon Act actually is not more expensive for the federal government. John T. Dunlop Ph.D, the Secretary of Labor under President Ford and a Harvard University professor had stated that “Davis-Bacon is at least neutral with respect to costs.”

Dunlop a prominent economist in construction states that productivity is much higher on prevailing wage jobs and jobs that use high-skilled high-waged laborers as opposed to jobs with a lower cost labor force. Inferior construction requires repairs and revisions causing lengthy delays and this could actually end up costing the government more money.

So as far as saving money and providing a competitive relevant job market, keeping the Davis-Bacon act in place is the best bet for federal construction projects. This is backed by both government and independent studies.

For more information on Davis-Bacon and Davis-Bacon pension plans please feel free to browse our website or contact us at anytime.