Repeal Davis-Bacon?
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More public projects would pass a cost-benefit test if we repealed the Davis-Bacon Act.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?
I like Davis-Bacon. It seems to me that one of the goals of a recession is to get money into workers’ hands, and prevailing wage laws do that well. You’d have to convince me that middle-class wages are less important than balanced government budgets.
The second proposal is a little more seductive. I’m much more frustrated by NIMBY lawsuits that take advantage of EIRs than by overpaid workers. Of course, a more ardent protector of the environment might show up and tell us that these threats are as valid as McDonald’s coffee lawsuit hysteria.
— Wrongshore · Dec 1, 10:09 PM · #
I know there’s concerns by Cowen and Kling that public projects efforts would employ a large number of illegal aliens for labor. Maybe Davis-Bacon also encourages this to a degree, but letting employers bid down to cough legal cough prevailing wages would be a Soprano-style godsend to the coyote industry (which probably needs a bailout too with the housing collapse).
Was this tried in New Orleans? How did it work out? I have no idea.
— rortybomb · Dec 1, 10:42 PM · #
Prediction: The Obama Administration will start to realize that “infrastructure” projects take way too long to get started to make a dent in unemployment before the 2010 elections and employ too few workers, many of whom didn’t and won’t vote for Barack Obama.
So, you’ll start to hear about the need to vastly increase spending on “human infrastructure” — i.e., office jobs in social services for the kind of people who vote for Obama.
— Steve Sailer · Dec 1, 11:08 PM · #
Why a temporary suspension of Davis-Bacon? Is that a tactical decision, rather than a judgment about the general merit of D-B?
— wph · Dec 2, 01:18 AM · #
I think you meant the National Environmental Policy Act (aka NEPA). It’s true that NEPA compliance tends to be a massive brake on infrastructure projects. However, (a) the federal government in recent years has been willing to suspend NEPA for certain projects (lining the All-American Canal, building the border fence) and (b) conservative griping about environmental compliance statutes would have a tad more credibility if conservatives demonstrated that they knew what they were griping about. Confusing the organic statute creating the EPA with NEPA is not exactly a minor typo.
— Francis · Dec 2, 01:50 AM · #
absolutely correct, it needs to be repealed, only 15% of the work force benefits from this law and it is a direct cause of the $400. toilet seat and the $300. hammer, infrastructure could be rebuilt through competitive bidding without huge wage payouts. As a small contractor I’ve seen the results first hand paying an employee $15.00 per hour and then landing a PW project where the pay is easily doubled and guess what, never made a dime on one of those jobs, seems like an employee abuses the privelege and accomplishes nothing, many many excuses as to why project is not completed not to mention additional added costs to keep redoing work.
— Ed Barcik · Dec 7, 03:13 PM · #