On March 3, 1931, during the height of the Depression, the federal government, under the Herbert Hoover administration, passed the Davis-Bacon Act (DBA), which established the requirement for paying local prevailing wages on "public works" projects to laborers and mechanics. In retrospect, many people believe it was one of the most insidious of the Jim Crow laws due to the fact that it effectively eliminated African American, as well as many immigrant, workers from federally funded projects.
The key to how this process worked is the fact that "prevailing wages" were established as the equivalent, for the most part, of union wages in cities in which at least 30% (increased to 50% in 1982) of the laborers and mechanics were union members. In effect, in order to land a contract for a federally funded public works project, you had to be a union company or be able to pay the equivalent of union wages. Segregation was a key factor because at that time, unions would not accept African American members.
According to an article about litigation to repeal the DBA on the Institute for Justice's website:
"The co-author of the Davis-Bacon Act, Rep. Robert Bacon, represented a congressional district in Long Island. Bacon's opinions on issues like immigration demonstrate the extent to which his views were patently racist. For example, in 1927, the same year he introduced the Davis-Bacon Act, he submitted the following statement from 34 university professors concerning a new immigration law into the Congressional Record."
We urge the extension of the quota system to all countries of North and South America from which we have substantial immigration and in which the population is not predominantly of the white race. . . . Only by this method can that large proportion of our population which is descended from the colonists . . . have their proper racial representation. . . . Congress wisely concluded that only by such a system of proportional representation . . . could the racial status quo be maintained.
"In 1927," the article continued. "Bacon submitted H.R. 17069, 'A Bill to Require Contractors and Subcontractors Engaged on Public Works of the United States to Comply with State Laws Relating to Hours of Labor and Wages of Employees on State Public Works.' This action was a response to the building of a Veterans’ Bureau Hospital in Bacon’s district by a contractor from Alabama, who employed only black laborers.”
Clearly there was an effort, at the time, by politicians and unions to control the expenditure of federal monies in order to benefit shops that employed union laborers and mechanics. The social environment of the time (long before the passage of minimum wage laws and the Civil Rights Act) made these types of activities largely invisible to the general public, and as long as this law only applied to public works like highways, bridges or public parks, it had little impact on owners of existing building stock--or the companies they hired to maintain and improve their property.
Costly labor can lead to cut corners
Where things began to become a problem, in my opinion, is the point at which the DBA was amended to include all projects in which federal funds are involved. This means that projects that include collaboration between local or state governments, with federal programs that provide funding for locally or state owned property improvement, also fall under the DBA. Further, projects that include collaboration between local governments and individuals or local non-profits, such as block grants, also are subject to the constraints of the DBA.
I would bet that pretty much everyone reading this blog is aware that preservation, restoration, rehabilitation - conservation in general - of historic buildings is extremely labor intensive. When the DBA causes the cost of that labor to the property owner to increase from 25% to 50% (not an exaggeration), the negative impact on every historic preservation projects is often staggering regulated by DBA.
It doesn’t take someone like Donovan Rypkema, who knows more about the economics of preservation than anyone I have met, to tell you that increasing the cost of labor doesn’t directly translate into more funding being available to the property owner to cover the bills. The pressure to cut corners becomes palpable to any contractor who is forced to pay DBA wages, and, inevitably, the project, the building, suffers.
The more you research the Davis-Bacon Act, the more incredible it becomes that such a Depression-age dinosaur still exists. On April 27, 1979, the Comptroller General of the United States General Accounting Office sent a 128-page report to Congress entitled “The Davis-Bacon Act Should Be Repealed.”
The report states: “We are recommending that the Congress repeal the Davis-Bacon Act because (1) there have been significant changes in the economy since 1931 which we believe make continuation of the act unnecessary, (2) after nearly 50 years, the Department of Labor has yet to develop an effective program to issue and maintain accurate wage determinations, and it may be impractical to ever do so, and (3) the act is inflationary, and results in unnecessary construction and administrative costs of several hundred million dollars annually.”
In 1993, Sen. Hank Brown and Rep. Tom Delaney each submitted bills to suspend the DBA, and each languished on Capitol Hill. These bills and the 1979 report from the Comptroller General are just a few examples from a long list of proposed legislative actions, litigation and public pressure to have the DBA repealed, and several presidents have temporarily suspended the DBA, beginning as early as 1934. From Wikipedia:
• President Franklin D. Roosevelt suspended the Act in 1934 for three weeks to aid in the introduction of New Deal efforts.
• President Richard Nixon suspended the Act in 1971 for one month as an anti-inflationary measure.
• President George H. W. Bush initiated a suspension in Florida, Louisiana and Hawaii. This suspension was not lifted until March 1993 by President Bill Clinton. The cited reason for the suspension was the need to provide as many employment opportunities as possible in the recovery from Hurricanes Andrew and Iniki.
• President George W. Bush suspended the Act for one month in Florida, Alabama, Mississippi and Louisiana after Hurricane Katrina.
Reportedly President George H.W. Bush’s DBA suspension, which only applied to three states, created as many as 11,000 jobs
One can only guess at how many jobs would be created if the DBA were to be eliminated altogether, and the reality is many of those jobs would be at entry or apprenticeship level, affording a significant number of people an opportunity to be educated in the trades. With the DBA in place, every contract that includes federal funding, by its very nature, affords no opportunity for unskilled or apprentice-level tradespeople to be employed on the project. In effect, it destroys the ability of rural and inner-city laborers and contractors to work on projects in their own communities.
Large public works projects are typically done by large general contracting firms, and projects that involve federal monies require three separate bids for any work contracted, which more often than not causes the job to be treated as one contract, which again ends up being bid on by the same large firms. These companies often do not have tradespeople on their payroll who have the skills to do appropriate work on historic buildings. For the most part, specialty tradespeople, who work in the various trades encompassed in the majority of historic preservation projects, are part of small companies with a handful of employees; many are one- or two-person father-and-son or husband-and-wife shops. The wage scale required under the DBA typically precludes them from working on projects that involve federally funded grants.
Even if they can manage to bankroll a prevailing wage project, the amount of paperwork required to meet the certified payroll reporting required under the DBA creates hours of administrative work that can easily turn 8- or 10-hour days into 12-or 14-hour days. It is estimated that government administration costs associated with enforcing the DBA on construction projects is over $100 million annually, and the cost of compliance with the DBA for the construction industry is closer to $200 million. Imagine what kind of work could be done to preserve our built heritage if that money could go directly into historic preservation work.
It is clear that repealing the Davis-Bacon Act is unlikely, given how little response there has been in the past to efforts to do just that, but modifications have been made to the law over its 82-year existence. If legislation could be put in place that stopped the DBA from being enforced on historic preservation projects, or at least on projects that involve private property in registered historic districts, the positive effect it would have on how we maintain and conserve our built heritage would be significant and wouldn't require any changes in how the companies that do the work operate.
Rather, it would create a better environment for hands-on education of tomorrow’s tradespeople by allowing them to work on projects where the true value of their work can be compensated at real, rather than inflated, values.