Suit Challenges Constitutionality Of Federal Davis-Bacon “Prevailing Wage” Law
Washington, D.C. — Today, a group of Davids took on the Goliath of labor union protectionism: the Davis-Bacon Act.
Representing small, minority-owned contracting firms and public housing tenants, the Washington, D.C.-based Institute for Justice filed a lawsuit challenging the Davis-Bacon Act on race discrimina-grounds. The lawsuit, which named Labor Secretary Robert Reich as defendant and was filed in U.S. District Court for the District of Columbia, is a cornerstone of the Institute’s efforts to promote economic liberty — the right of every American to earn an honest living free from excessive government regulation.
The Davis-Bacon Act was passed in 1931 at the urging of unions to stifle competition from migrant black workers by requiring “prevailing wages” on all federal construction projects. The law applies t federal construction projects over $2,000 and requires “prevailing” (usually union) wages and the use of union-dictated job classifications. A 1983 Congressional Budget Office study found the Davis-Bacon Act costs taxpayers $1 billion a year in unnecessary costs.
By mandating inflated union wages and requiring inefficient work practices, the law places small, minority-owned construction firms at a severe competitive disadvantage, and destroys employment and tra opportunities for low-skilled workers. A contractor working on a Davis-Bacon contract in Seattle, for instance, must pay ditch diggers $40,000 a year in salary and benefits; in Boston, a worker who hammers a nail must be classified as a “carpenter” and paid the equivalent of $60,000 in salary and benefits.
The National Association of Minority Contractors has opposed the law due to its devastating impact on minority contracting opportunities. The black unemployment rate in the construction industry in the fourth quarter of 1992 was 26.8 percent — more than twice the white unemployment rate.
The plaintiffs include minority contracting firms in Seattle and Boston who have been disadvantaged or driven out of business by the Davis-Bacon Act; and public housing tenant groups whose ability to provide work and training opportunities to low-income workers is thwarted by the law.
The lawsuit was formally announced at a news conference on Tuesday, November 9, at 10:30 a.m. in Washington, D.C. Plaintiffs Nona Brazier, president of Seattle-based Brazier Construction, which suspended operations due to the Davis-Bacon Act; and John Cruz, president of Boston-based John B. Cruz Construction Company were in attendance.
The Institute for Justice promotes and defends economic liberty, school choice, private property rights, and the free exchange of ideas in the courts and through a program which trains law students, lawyers, and public activists in public interest litigation. The Institute was founded in September 1991 by Chip Mellor and Clint Bolick.