Policy Memo
Topline
Repealing the Davis-Bacon Act would reduce construction costs, expand job and income opportunities, and ensure taxpayers receive more bang for their buck.
Affordability 101 · Chapter 4: Freedom to Build
Plymouth Institute for Free Enterprise
Repealing the Davis-Bacon Act would reduce construction costs, expand job and income opportunities, and ensure taxpayers receive more bang for their buck.
The Davis-Bacon Act is a 1931 law that requires contractors on federally funded construction projects to pay at least the local “prevailing” wage. While the law has lost its discriminatory intent against black workers, its reliance on collectively bargained wage and benefit rates effectively discriminates against non-unionized construction companies and the 89% of construction workers who are non-unionized.
The Davis-Bacon Act and the 71 active related acts collectively apply to an estimated $217 billion in federal and federally assisted construction spending per year and provide minimum-wage rates for an estimated 1.2 million U.S. construction workers. Davis-Bacon drives up federally funded construction costs by an estimated 9.9%. This is because the Department of Labor (DOL) uses its own contrived calculations of “prevailing wages” instead of actual market wages. For example, market-based wage surveys from the Bureau of Labor Statistics (BLS) show that wages for cement masons are $36.95 per hour in Nassau-Suffolk, NY, but Davis-Bacon wages are $51.97 per hour (41% above market wages) and Davis-Bacon benefits add $33.56 per hour—totaling about $171,000 in annual compensation for cement masons.
In 2023, the Biden administration finalized an 812-page “updated” Davis-Bacon rule that added insult to injury with more than 50 significant changes, including using new and less accurate wage-determination criteria and expanding the number of jobs and workers covered by the Davis-Bacon Act.
Related Legislation: Davis-Bacon Repeal Act (S. 4477, H.R. 8602).
Perhaps more aptly described as Destroying-Building Affordability, the Davis-Bacon Act, which drives up prices and restricts competition, must go.
This memo is part of Affordability 101, Advancing American Freedom’s playbook of 101 policy solutions to make life more affordable.