Prevailing Wage Laws a Drag on Job Creation

Posted on November 1, 2011. Filed under: Uncategorized |

By Bruce Toll
Co-Founder of Toll Brothers Inc.

Putting Americans back to work is a top priority for the President and members of Congress.

There are certainly some positive aspects to the President’s jobs bill. There are business tax cuts and initiatives aimed at rebuilding the nation’s crumbling infrastructure, deteriorating public schools and neglected homes and commercial buildings in the $447 billion dollar proposal to boost U.S. employment and create as many as 2 million jobs.

While 2 million jobs sounds good, it is not good enough particularly when so many of the men and women once employed in real estate construction are sidelined and when a simple change to President Obama’s jobs package could put as many as another 600,000 back to work. Eliminating Davis-Bacon from the jobs act will make all the difference.

The Davis-Bacon act is a Depression-era law which established the requirement for paying local prevailing wages on all federal government construction projects. Critics of the act note that it greatly increases the cost of federally assisted construction projects when employers are forced to pay union scale wages.

Eliminating the Davis-Bacon requirement from the jobs bill could create 30% more jobs giving hundreds of thousands of additional people jobs who would be left out if the prevailing wage provision is enforced. A recent Washington Examiner article noted that Davis-Bacon wages were on average 25% higher than the real world prevailing wages.

Several times in our country’s history the Davis-Bacon law has been suspended to address an extraordinary national crisis. In 1992 to facilitate recovery from Hurricane Andrew, President George H. Bush suspended the act indefinitely. A year later the law was reinstated by President Bill Clinton. In 2005 President George W. Bush suspended the act in the states hardest hit by Hurricane Katrina citing a national emergency.

Clearly there is a precedent to suspend Davis-Bacon during a national emergency. An unemployment rate above 9% with 14 million workers out of work qualifies as a national emergency. If we are going to spend federal money to repair our bridges, highways and other infrastructure, we will get a lot more bang for our buck without Davis-Bacon.

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