Davis-Bacon on Steroids

By March 9, 2010Labor Unions

From The Wall Street Journal, an editorial, “Procuring the Union Agenda“:

In a novel variation on pay to play, the Obama Administration is planning to force companies to raise pay and benefits for workers if they want continued access to federal contracts. Waiting to cash in on the impending Executive Order are unions that would end up with a piece of the government’s $500 billion in annual contracts.

The government can’t steer contracts directly to the unions. But it can use its authority over how taxpayer money is spent to favor unions and their agenda. This is good news for Andy Stern and his Service Employees International Union. But not so good for job creation.

The proposed Executive Order is being drawn up by Joe Biden’s Middle Class Task Force. It would oblige government procurement agencies to give contracts to “responsible contractors” who pay workers well and offer higher health, pension, sick leave and other benefits.

The Journal argues that this scheme, enforced by “labor commissars” at each federal agency, would especially disadvantage small businesses unable to offer the full range of benefits larger companies can achieve.

Associated Builders and Contractors, representing companies painfully familiar with Davis-Bacon and project labor agreements, issued a news release last week in response to reports about the “high road contracting policy.” In it, ABC’s Geoff Burr, vice president of federal affairs, said:

The provisions outlined in media reports – as well as in documents from the Center for American Progress, big labor and other special interest groups promoting this policy – fly in the face of free and open competition.

Large and small nonunion construction contractors and their skilled employees – which make up more than 85 percent of the U.S. construction workforce – are the backbone of America’s construction industry. These hardworking men and women have a decades-long track record of meeting and exceeding existing government-determined wage and benefit laws, such as the Davis-Bacon Act, and contracting standards in the best-value evaluation process unique to the federal government’s procurement of construction services.

The proposal is baffling given the Administration’s stated emphasis on jobs creation. As Burr notes, the U.S. construction industry already suffers from an unemployment rate of 24.7 percent. Why would you increase costs on this important sector of the economy?

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