Report Reveals Consequences of Removing Davis-Bacon in the Gulf

October 17 2005

Legislative Affairs

A new report released by a well-regarded Washington research organization shows that President Bush’s decision to cut wages for construction workers on federal projects in the areas affected by Hurricane Katrina could actually slow reconstruction, increase rebuilding costs, and speed the flow of much-needed dollars out of the Gulf region.

Last month, the President suspended the wage protections of the 1931 Davis-Bacon Act, which requires federal contractors to pay “prevailing wages” on construction projects. The White House and Congressional Republicans defended the wage cut in part by saying it would remove red tape that could slow the reconstruction and that it would reduce construction costs. But the report released today by the Economic Policy Institute shows that the wage cut will likely have the opposite effect in both cases.

The study, authored by University of Utah economics professor Peter Phillips, examines federal highway reconstruction efforts in the aftermath of the 1994 Northridge earthquake in California and finds that prevailing wage standards helped to ensure that rebuilding was accomplished by highly productive workers over an unexpectedly brief time period, and that the finished work was of a high quality. Because the work was completed quickly and efficiently, wage standards likely led to lower, not higher, construction costs. Phillips’ study also finds that federal prevailing wage standards, by keeping money in the devastated area, were helpful in Southern California’s overall economic revitalization.

Rep. George Miller (D-CA), the senior Democrat on the House Education and the Workforce Committee, has introduced legislation to overturn the President’s misguided Gulf Coast wage cut. That legislation now has 205 cosponsors in the House, including every single Democratic member. Miller issued this statement on the EPI report today: “This important report from the Economic Policy Institute confirms that the Bush Administration’s Gulf Coast wage cut will hurt workers, Gulf Coast communities, and federal taxpayers. If the wage cut helps anyone, it will be the Administration’s cronies, including profitable contractors like Halliburton. This is just another example of the Bush Administration acting on behalf of a few special interests, rather than all Americans. Gulf Coast workers need fair wages to rebuild their lives, and Congress should act right away to overturn the President’s Gulf Coast wage cut.”