Most people outside of the construction industry are surprised to learn that the wages and benefits paid to workers on government construction projects are set by the government and construction unions, not by the marketplace. As taxpayers, they are generally outraged when they learn that these wages may be double the market wages in many areas of America. They may be even more shocked to learn that this law was enacted to prevent blacks from working on taxpayer funded construction projects.

This legislation had its origins in Jim Crow America, a time when the Democrat controlled Federal government openly discriminated against blacks by enacting laws that restricted opportunities available to them. An Alabama contractor used black workers to build a Veteran’s Bureau hospital in Representative Robert Bacon’s district on Long Island in the mid 1920’s. Starting in 1927, Representative Bacon introduced 13 separate bills to prevent black workers from working on Federal construction projects. Finally in 1931, he and Senator James Davis from Pennsylvania were able to pass a bill that required the payment of “prevailing” wages on Federal construction projects. Since the American Federation of Labor was instrumental in the passage of this bill, the term “prevailing” wages really meant union wages. The initial threshold for paying “prevailing” wages was $5000, but that was lowered to $2000 in 1935. 

The Department of Labor was given the task of determining what the prevailing wages were in each county in America. In areas where over 30% of the construction workforce was union, the law mandated that “prevailing” wages were automatically union wages. Even in other areas of the country, this became the Department of Labor standard.

Representative Bacon achieved his goal of preventing black workers from working on government projects. Before the passage of the Davis-Bacon Act, black unemployment was at the same level as white unemployment. After the passage of this Act, as well as other New Deal legislation, black unemployment rose to double the rate of white unemployment. After being shut out of construction employment, many blacks were forced to rely on government assistance programs for their survival.

Even today, the close association between “prevailing” wages and unions, to ensure that construction jobs go to union workers, excludes minority workers from opportunities on government construction projects. The Federal government has created special contracting programs for minority contractors at the taxpayer’s expense rather than allowing minority contractors and minority workers to compete for work through the Free Enterprise System unencumbered by prevailing wages.

In addition to discriminating against minority workers, Davis-Bacon has cost the taxpayers billions of dollars every year. The estimated annual cost of Davis-Bacon legislation was 11 billion dollars for the year 2010 alone. This 80 year program has blatantly discriminated against not only minorities, as it was originally intended, but also against the taxpayers by forcing them to subsidize a 20-25% cost premium on every government construction project.

This abuse of the taxpayer is made even worse because of the enactment of similar legislation by 32 states that require the payment of “prevailing” or union wages on state and local funded projects. The net effect is that the taxpayers are paying 20-25% too much for every school, bridge, road, sewer line or water line constructed in those states.

After 80 years, isn’t it time to end government sponsored discrimination against minorities and taxpayers?

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