Associations Speak Up Against Final Davis-Bacon Rule

Associations Speak Up Against Final Davis-Bacon Rule

On August 8th, the U.S. Department of Labor issued a final rule to revise the Davis-Bacon Act and Related Acts regulations that apply to federal and federally assisted construction projects funded by taxpayers. Industry associations (NAHB, AGC, and ABC) all state that it could have been handled better.

(NAHB): Alicia Huey, chairman of the National Association of Home Builders (NAHB) and a custom home builder and developer from Birmingham, Ala., issued the following statement after the U.S. Department of Labor announced the issuance of the final rule to modernize the Davis-Bacon and Related Acts:

The Department of Labor had the opportunity to enact positive change that truly modernizes the system for determining prevailing wages on construction projects covered under the Davis-Bacon and Related Acts (DBRA). Instead, this final rule fails to address many of NAHB’s concerns made during the rulemaking process, including the DBRA’s overly burdensome contractor requirements and wage determinations that are misrepresentative of the real wages being paid in an area. Unfortunately, this rulemaking will discourage builders from using covered federal programs that make rental housing affordable for low-and-moderate-income families, increase construction costs and exacerbate the nation’s housing affordability crisis.

(AGC): The Associated General Contractors of America’s chief executive officer, Stephen E. Sandherr, issued the following statement in reaction to the emerging details of the final rule to amend regulations issued under the Davis-Bacon and Related Acts:

With an over 800-page rulemaking, where AGC is cited over 60 times, there is a lot to analyze to get a solid understanding of the full impact such a massive rulemaking will have on the federal construction market.  A preliminary analysis shows that while more work will be covered, this rulemaking critically missed an opportunity to improve the wage determination process. The 40-year awaited update reverts to the pre-1983 methodology for determining whether a wage rate is prevailing, also referred to as the “30 percent rule”. Just as proposed, this final rule appears to make it easier on the Department of Labor (DOL) itself to set prevailing wages with less of the data it already collects, or lack thereof.

AGC holds that the DOL’s almost exclusive reliance on voluntary surveys to produce and update wage determinations has created a compensation system for Davis-Bacon covered construction that poorly reflects the construction labor market in many parts of the country. AGC recommended the DOL should instead focus on how to collect more accurate data, instead of being able to rely on less, or even at times inappropriate data, to determine wages that are truly prevailing.

While we look forward to working with the DOL on implementation of the rule, we will continue to evaluate all our options on behalf of our members.

(ABC): Associated Builders and Contractors issued the following statement in response to the U.S. Department of Labor issuing a final rule, Updating the Davis-Bacon and Related Acts Regulations, which will make drastic revisions to the Davis-Bacon Act and Related Acts regulations that apply to federal and federally assisted construction projects funded by taxpayers.

This is yet another Biden administration handout to organized labor on the backs of taxpayers, small businesses and the free market,” said ABC 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,” said Brubeck. “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% of the construction industry is unionized. ABC will now be forced to take appropriate legal 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 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,” said Brubeck. “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.”

ABC submitted nearly 70 pages of comments on the DOL’s proposed rule, and its more than 50 significant changes, urging the DOL to withdraw the proposal.

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% of all government construction put in place—and provide government-determined wage rates for an estimated 1.2 million U.S. construction workers.

The Congressional Budget Office estimates that repealing the 1930s-era Davis-Bacon Act would save the federal government $24.3 billion in spending between 2023 and 2032. A May 2022 study found that the Davis-Bacon Act costs taxpayers an extra $21 billion a year, increases the price tag of construction projects by at least 7.2% and inflates construction workforce wages by 20.2% compared to local market averages if the DOL calculated prevailing wages using modern and scientific methodology via the U.S. Bureau of Labor Statistics.

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