Capping a 28-month rulemaking process in August, the U.S. Department of Labor (DOL) issued a final rule, Updating the Davis-Bacon and Related Acts Regulations, which revises prevailing wage calculations and increases paperwork for contractors on federal and federally assisted construction projects.
“This is yet another handout to organized labor on the backs of taxpayers, small businesses and the free market,” said Associated Builders and Contractors Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “Unfortunately, the DOL’s final rule disregards the feedback of ABC contractors, construction industry stakeholders and thousands of small businesses urging the withdrawal of this unnecessary, costly and burdensome regulation. Instead, the DOL is moving forward with dramatic changes to prevailing wage regulations, reversing much-needed reforms that were established nearly 40 years ago, and unlawfully increasing the regulatory burden on small businesses, new industries and public works projects.”
“With this final rule, the DOL has abandoned any possibility of instituting commonsense reforms to Davis-Bacon regulations to ensure accurate and prompt prevailing wage determinations while providing the regulated community with the clarity needed to deliver high-quality projects at an affordable cost to taxpayers,” he added. “Instead, the rule makes it much more likely that the DOL will adopt union wage scales at the prevailing wage at a greater frequency than in current practice, which already adopts union wage scales at improbable rates considering just 11.7 percent of the construction industry is unionized. ABC will now be forced to take appropriate action to address the numerous illegal provisions of the final rule and protect our members, and ultimately hard-working taxpayers, from the harmful impacts of this regulation.”
The 1931 Davis-Bacon Act and related regulations require contractors and subcontractors that perform work on federal and federally funded construction projects of $2,000 or more to pay a government-determined prevailing wage and benefit rate on an hourly basis to on-site construction workers. According to the DOL rulemaking, the Davis-Bacon Act and 71 active Related Acts collectively apply to an estimated $217 billion in federal and federally assisted construction spending per year—about 63 percent of all government construction put in place—and provide government-determined wage rates for an estimated 1.2 million U.S. construction workers.
“The final rule comes in the midst of challenging economic conditions facing the construction industry, including high materials costs and a skilled labor shortage of more than half a million in 2023,” Brubeck noted. “The onerous new requirements and artificial inflation of construction costs imposed by this rule will only exacerbate these headwinds and undermine taxpayer investments in infrastructure.”
TEAMSTERS LEADERS COUNTER CRITICS OF DOL’S RETURN TO DAVIS-BACON ROOTS
The International Brotherhood of Teamsters applauded the Department of Labor for its early-August ruling on prevailing wage standards under the Davis-Bacon and Related Acts (DBRA). The agency returned the definition of “prevailing wage” to a standard used from 1935 to 1983, thereby requiring compensation on federally funded construction projects to be on par with a living wage for workers in a given locality. The DOL measure, union officials contend, also improves the prevailing wage update system so rates keep pace with actual wages; modernizes regulatory language to reflect current construction industry practices; and, strengthens worker protection and enforcement mechanisms to ensure employer compliance.
“The methods for determining prevailing wage rates never should have been modified in the first place, so we commend Labor Secretary Su for doing right by working-class communities,” said Teamsters General President Sean M. O’Brien. “The workers on these jobs are responsible for re-building our country. They are patriots and deserve to be rewarded for their service.”
“With the passage of the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, we’re experiencing a federally backed construction boom at a level that hasn’t been seen since the New Deal,” added Building Material and Construction Trade Division Director Thomas Gesauldi. “Modernizing prevailing wage standards under the DBRA is integral to making sure these investments benefit the American middle class.”