WASHINGTON, D.C. | April 14, 2011
Good morning and welcome to today’s hearing. I would like to thank our witnesses for joining us. Our panel has a wide range of knowledge and experience with the Davis-Bacon Act, and your testimony will provide important insight as we work to ensure the law is serving the interests of job-creators, workers, and taxpayers.
We are in the middle of an important debate over the country’s fiscal future. Years of reckless borrowing and spending by the federal government have brought our nation to the brink of a crisis and something must be done. We can no longer accept waste and inefficiencies as the price of doing business with the federal government, which is why we are here today.
Established by the Hoover administration in 1931, the Davis-Bacon Act requires workers be paid the “prevailing wage rates” on federal construction projects costing taxpayers more than $2,000. Prevailing wages are determined through a complex system of wage surveys administered by the Department of Labor.
The surveys collect salary and fringe benefit information on various job classifications based on similar projects for a given location, typically at the county level. Businesses and labor organizations voluntarily report wage information, and the department can also rely upon local collective bargaining agreements when determining the wage rate. Federal contractors must submit weekly payroll reports to the department certifying appropriate wages have been paid.
While intended as a temporary effort 80 years ago, the Davis-Bacon Act remains a significant feature of federal spending to this day. That is why a recent report by the Government Accountability Office is deeply troubling. Despite years of review and oversight, the GAO found considerable challenges still plague the department’s implementation of the Davis-Bacon Act.
The GAO revealed problems with accuracy, quality, bias, and timeliness of the wage data. Of the surveys reviewed, one in four of the final wage rates were based on the wages of just six or fewer workers. Forty-six percent of the prevailing wages for non-union workers were based on wages reported 10 or more years ago.
The report also identified a lack of transparency about how wage rates are determined, raising concerns for businesses trying to bid for work and taxpayers who want to ensure their dollars aren’t being wasted. According to the GAO, the Department of Labor also fails to follow guidance issued by the Office of Management and Budget, and even disregards its own policy manual by ignoring the impact of nonresponses in the accuracy of the survey.
Despite recent changes adopted by the department, the GAO still found issues with timeliness and believes any improvements the department hopes to achieve “may not be fully realized.” Perhaps the GAO outlined best what’s at stake: “If the resultant prevailing wage rates are too high, they potentially cost the federal government and taxpayers more for publicly funded construction projects or, if too low, they cost workers in compensation.”
These are stunning conclusions for a law that governs how hundreds of billions of taxpayer-dollars are spent. In fact, the failed stimulus committed an estimated $300 billion to federal construction projects that could potentially be covered by Davis-Bacon wage rates. In 2009 alone, federal construction and rehabilitation projects totaled roughly $220 billion.
Are these taxpayer dollars being well spent, and if not, then what should be done about it? Those are the questions we hope to answer today. Simply accepting the status-quo that has been in place since the Great Depression is unacceptable. We have a responsibility to determine whether the law is meeting the needs of today’s taxpayers and workers.