In a post on how to approach economic stimulus, Mankiw writes:
More public projects would pass a cost-benefit test if we repealed the Davis-Bacon Act. This law requires contractors on these public projects to pay “prevailing wages,” which are typically union wages well in excess of what would occur in a free market. If the government paid market-determined wages for infrastructure projects, we could have both more infrastructure and less government debt. Without doubt, that legacy would benefit future generations.
Rather than repeal Davis-Bacon, it might make sense to suspend the legislation on grounds of economic emergency.
Another wrinkle: the National Environmental Policy Act (thanks Francis!) will slow down any major infrastructure program, and in the process generate massive fees for lawyers. Might it make sense to design some kind of expedited environmental impact assessment for new highways and rail projects?