Will the infrastructure bill be a giant payoff for big labor?
The legislation was unanimously approved in committee, and President Trump has expressed his support via Twitter. There is, however, a catch to consider this Labor Day — the bill has glaring blind spots that give union leaders control to spend taxpayer dollars without reins.
It may be true that our infrastructure needs more investment, and this legislation seems well on its way to passage. However, the bill fails to address one of the major drivers of cost and waste: the Davis-Bacon Act, which effectively mandates that contractors seeking to bid on any federal project must pay a set wage determined by bureaucrats in Washington, D.C.
And in practice, it’s even worse than it sounds, because those federal bureaucrats virtually always set the prevailing wage wherever the union bosses want.
The end result is that open-shop employers cannot work on those federal projects without agreeing to work under inefficient union rules and typically paying into a pension fund from which few, if any, of their employees will receive little of.
In order to work a Davis-Bacon contract, non-union shops can be forced to operate under the same absurd work rules that say a worker who swings a hammer isn’t allowed to plug in an extension cord. Most non-union contractors are not set up to work with such anti-productive job restrictions, so they end up losing out on the work, if they even bid at all.
Of course, Davis-Bacon was originally enacted in 1931 at the behest of overwhelmingly white construction unions, with the express purpose of, in the words of then-American Federation of Labor union president William Green, preventing rival shops from employing non-union “colored labor.”
Today, Davis-Bacon continues to serve a discriminatory function, limiting federal projects to politically-connected unionized firms at the expense of the 87.2 percent of American construction workers who choose not to affiliate with a union.
Thus, independent contractors and sub-contractors are left at a significant disadvantage in submitting proposals, effectively barring hundreds of thousands of skilled tradesmen from working on government-funded projects.
And of course, the firms that participate in Davis-Bacon projects ultimately pass on their compliance costs to the American taxpayer. Davis-Bacon has been estimated to increase taxpayers’ construction costs up to 38 percent according to academic and government economists.
Congress has a responsibility to all citizens to ensure that their tax dollars are being spent effectively. By repealing Davis-Bacon, Congress could potentially fund four projects for every three we can fund under the current wage regime without increasing spending by a dime.
And even if Congress refuses to act, President Trump could immediately suspend Davis-Bacon with a stroke of his pen and empower thousands of contractors to bid on the very projects their tax dollars finance.
Davis-Bacon has been suspended four times by presidents of both parties. President Franklin Roosevelt even suspended the Act in 1934 simply to make implementing the New Deal easier.
This infrastructure bill represents an opportunity to enact desperately-needed reforms and save taxpayers billions. Congress, and President Trump, would do well not to squander it.
Stan Greer is a senior research associate for the National Institute for Labor Relations Research.