Named after its sponsors, Pennsylvania Senator James J. Davis, and New York Representative Robert L. Bacon, the Davis-Bacon Act was signed into law in 1931 during the Depression era with unemployment at 25%. The Act established the requirement for paying prevailing wages on public works projects, including all federal government construction contracts and most federally assisted contracts.
As the story goes, Representative Bacon introduced the bill after an Alabama contractor won a bid to build a Veteran’s Bureau hospital in his New York district and employed low paid African-American workers from his home state. Opponents claimed there was racist intent to the law but, in reality, the impetus was more of a protectionist policy during a period of exceptionally high unemployment to prevent the import of out-of-area workers.
On close examination of the employment statistics from the era one finds that the racist, or anti-African-American, argument is without merit. In fact, contractors and employers nationwide employed minorities and immigrants at rates dramatically below those of their Caucasian citizen counterparts during this era.
Notable amendments occurred in 1935 to ensure that contractors bidding on public works projects would not lower wages in order achieve a lower bid, and again in 1964 to include fringe benefits in the calculation of prevailing wages.
Almost routine efforts have been made to repeal Davis-Bacon on the grounds that it is outdated, bureaucratic, and expensive. Such legislation has been attempted as recently as 1993, 1995, 1996, 1999, 2000, and 2004.
The Act has been suspended for various reasons on a number of occasions by Presidential edict. For example, Richard Nixon suspended Davis-Bacon during the month of February, 1971 to reduce inflation pressures. From September, 1992 to March, 1993 the Act was suspended by President Clinton to facilitate recovery from Hurricane Andrew. It was again suspended in September and October, 2005 by President Bush in the aftermath of Hurricane Katrina.
On the state level, certain wage laws for the protection of workers in the U.S. date back as far as 1870 when New York instituted its eight-hour law for government employees. Forty-two states followed suit in the years to come, instituting statutes such as child labor laws and workers' compensation insurance.
Thirty-two states have now enacted their own prevailing wage laws, sometimes referred to as “Little Davis-Bacon” statutes. Eighteen states do not have such laws and, although obligated to pay Davis-Bacon wages on federally funded projects, are not so obligated on state or local public works projects. Several states have attempted legislation to repeal their state prevailing wage statutes, including several unsuccessful attempts in California.
Lawsuits are presently ongoing in the State of California whereby various municipalities are attempting to obtain exemptions from the state law for their local public works projects.
California’s prevailing wage law is particularly complex and costly to administer. While California previously made no distinction between residential and commercial wage rates unless a Special Determination was requested from the Department of Industrial Relations, residential rates for a few trades have been recently introduced.
The residential wage rates can noticeably lower the cost of a publically supported residential development.
In our next edition of Sun Country Connection we’ll be analyzing the direct cost impacts of prevailing wage law, how it is applied, and the wages themselves. Can’t wait until then to know how the story ends? Contact Daryl McFarland today at 760-630-8042.
