Decades-old data undermines Davis-Bacon wage schedules

Sources: U.S. Department of Labor, Associated Builders & Contractors, Washington, D.C.; CP staff

The Labor Department Office of Inspector General (OIG) cites outdated wage schedules and union-favoring tendencies in an audit report on prevailing wage rates the David-Bacon Act (DBA) mandates on federal or federally assisted construction projects. As of September 2018, according to OIG and authors of a DOL Wage and Hour Division (WHD) report released earlier this month:

  • Union wages prevailed for 48 percent of the wage determinations, despite the fact that just 12.8 percent of the U.S. private construction workforce is unionized;
  • Of the WHD’s 134,738 unique published labor rates, 3 percent, or roughly 4,400, had not been updated in 21 to 40 years;
  • Less than .01 percent of 64,850 union wage rates were more than 10 years old, while 10 percent of the 69,888 nonunion wage rates were more than 10 years old; and, 
  • Union rates are typically updated when locals renegotiate collective bargaining agreements, while WHD must conduct new wage surveys to update nonunion rates.

DBA requires contractors to pay no less than the local prevailing wage to on-site workers on federally funded construction projects exceeding $2,000. To update existing wage determinations, WHD conducts surveys to collect and compile data about hourly rates and fringe benefits paid to workers on four types of projects: building, heavy, highway, and residential. The DBA requires contracting officers to cite the appropriate wage determination in bid solicitations and awards for covered work, including projects financed in part with federal funds. During FYs 2014–2017, more than 70 federal agencies spent upward of $170 billion on DBA-bound construction.

For more than 20 years, OIG, along with the White House Office of Management and Budget, Government Accountability Office, U.S. Congress and other stakeholders, have raised concerns about the timeliness and accuracy of prevailing wage rates, especially given the potential bias produced by surveys’ voluntary nature.

As part of its April 2019 report, OIG lists eight recommendations to improve the overall quality and accuracy of DBA prevailing wage rate records. They include developing and implementing a risk-based strategy to manage rates more than 10 years old and consulting with the U.S. Bureau of Labor Statistics (BLS) to evaluate alternative methods to update wage rates, such as the Consumer Price Index and Occupational Employment Survey data. Report authors also note contractors’ lack of participation in filling out wage surveys and OIG’s continuing efforts to identify new strategies to increase response rates and obtain more relevant wage data.