Tuesday, September 27, 2005 - 11:35 PM EDT
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According to NPR on Friday, a company Link is among the first government contracted agencies to work in that region. They are paying anywhere from $14 - 20/ hour for clean up work. It's considered short term work (3 to 9 month term vs permanent employment) and want to revitalize the community by putting this money back into it. The region will have to hire 100s of times the number of regular workers, and it will be very difficult to hire all at higher wages. So the contractors have to bid the jobs based on what they can pay...and we will all pay. There is systemic poverty, but can you fix it with a higher wage for a short time for a temporary situation...even a year or two. And, should it be the federal government that uses a catastrophe to to this? If someone was working for minumum wage before the hurricane, should they make 2 or 3 times that now at government (tax payer) expense? Some of the folks interviewed on NPR consider these Link jobs to be their ticket out...they don't want to stay in New Orleans.
Environmentally, the people would be safer if they didn't rebuild in some of the same areas. The wetlands and marsh returned to a more natural state would help diminish the negative effects of tidal surge. To rebuild in an area that has disrupted the natrual river and gulf water flow is environmentally questionable. This area will continue to be completely dependant on levees and pumps and at the mercy of another big storm, earthquake, tsunami ...etc. Since we think of cities as permanent, and certainly value the lives and property, then does this make complete sense?
Attached below is an article from Harvard University. It explains the background of the Act. I thought you'd like to see the other side of the story. It looks like with the act in place, many more workers would come in from different areas and the benefits would be disproportionately not available to the people in New Orleans.
"Thus, the Davis-Bacon Act constitutes a formidable barrier to entry into the construction industry for unskilled or low-skilled workers. This is especially harmful to minorities because work in the construction industry pays extraordinarily well compared to that for other entry-level positions, and could otherwise provide plentiful opportunities for low-income individuals to enter the economic mainstream."
Effects of the Davis-Bacon Act
The Davis-Bacon Act imposes tremendous economic and social costs-at least $1 billion in extra federal construction costs and $100 million in administrative expenses each year. Industry compliance costs total nearly $190 million per year. Repeal of the Act would also create an estimated 31,000 new construction jobs, most of which would go to members of minority groups.
Davis-Bacon's impact on the ability of minorities to find work in the construction industry has been particularly devastating. The Department of Labor's initial set of regulations did not recognize categories of unskilled workers except for union apprentices. As a result, contractors had to pay an unskilled worker who was not part of a union apprenticeship program as much as a skilled laborer, which almost completely excluded blacks from working on Davis-Bacon projects. 7This effectively foreclosed the only means by which unskilled blacks could learn the necessary skills to become skilled workers.
As a result, while black and white unemployment rates were similar prior to passage of the Davis-Bacon Act, they began to diverge afterwards. This problem persists today. In the first quarter of 1992, the black unemployment rate was 14.2 percent, even though the overall national rate was only 7.9 percent.
The racial difference in unemployment rates is especially pronounced in the construction industry. According to a recent study by the National Urban League, in the fourth quarter of 1992, 26.8 percent of all blacks involved in the construction industry were jobless compared to only 12.6 percent of white construction workers. 8
Despite recent racial progress, Davis-Bacon continues to inhibit minority economic progress in several ways. For instance, union apprenticeship programs, even if they no longer discriminate, still strictly limit the number of enrollees and impose arbitrary educational requirements on potential applicants, thereby excluding the most disadvantaged workers. 9
Moreover, unskilled workers must be paid the same wage as a skilled worker, forcing the contractor to pay laborers considerably more than the market value of their work. For example, in Philadelphia, electricians working on projects covered by the Davis-Bacon Act must be paid $37.97 per hour in wages and fringe benefits. The average wage of electricians working for private contractors on non-Davis-Bacon projects is $15.76 per hour, with some laborers working for as little as $10.50 per hour.
Thus, even minority, open-shop contractors have no incentive to hire unskilled workers. Ralph C. Thomas, former executive director of the National Association of Minority Contractors, stated that a minority contractor who acquires a Davis-Bacon contract has "no choice but to hire skilled tradesmen, the majority of which are of the majority. " As a result, Thomas said, "Davis-Bacon closes the door in such activity in an industry most capable of employing the largest numbers of minorities." 10
The paperwork a contractor must fill out pursuant to Davis-Bacon contracts also discriminates against small, minority-owned firms. Many do not have personnel with the necessary expertise to complete the myriad forms and reports required.
As a result of all these factors, the Davis-Bacon Act prevents rural and inner-city laborers and contractors from working on projects in their own communities. Ironically this is one problem Davis-Bacon was intended to prevent. Bacon said during debate over the Act, "Members of Congress have been flooded with protests from all over the country that certain Federal contractors on current jobs are bringing into local communities outside labor," and "that the government is in league with contract practices that make it possible to further demoralize local labor conditions."11
Such a claim could easily be made today by inner-city and rural contractors. Yale Brozen, an economist at the University of Chicago, found that the "prevailing wage" for the Appalachian region of western Pennsylvania is set at the same level as that of Pittsburgh, despite the fact that the wages normally paid by the rural contractors are only half the levels of union contractors in Pittsburgh. The same is true of inner cities, where small, minority-owned, open-shop firms are forced to pay union wages when working on Davis-Bacon projects, because of the high concentration of unionized workers in other parts of the city.
As a result, rural and inner-city contractors are deterred from seeking Davis-Bacon contracts because they cannot afford to pay the higher wages to their employees and larger and more highly unionized firms are encouraged to seek out such contracts. The result makes it clear that the government is in fact "in league with contract practices" that "demoralize local labor conditions," only now at the expense of minorities rather than whites.
The results of this practice were clearly demonstrated in Los Angeles. In the parts of the city where the riots occurred, the rate of unemployment for black workers is 27.6 percent. Despite an ample supply of local labor to help rebuild the city, Davis-Bacon has and continues to freeze out local unskilled minority workers from those available jobs. In contrast is the situation in South Florida and coastal Louisiana, where the suspension of Davis-Bacon created 5,000 to 11,000 jobs.
In addition to this statistical evidence, individuals involved in the construction and renovation of low-cost public housing have testified as to the disastrous effects of the Act. When Ralph L. Jones, president of a company that manages housing projects for the Department of Housing and Urban Development, gained control of a pair of dilapidated 200-unit buildings in Tulsa, Oklahoma, he intended to hire many of the building's unemployed residents to help restore the property. But the Davis-Bacon Act required him to pay everyone working on the project union wages, forcing him to hire only skilled laborers, very few of whom were minorities.
Mary Nelson, director of Bethel New Life, Inc., a social service organization located in Chicago, has found that Davis-Bacon adds up to 25 percent to her total costs and frequently prevents her from hiring unskilled, low-income workers to work on projects renovating the public housing that they themselves live in. Elzie Higginbottom, builder of low-income housing in Chicago's South Side, has had similar problems. Davis-Bacon requires him to pay carpenters (defined by the Act as someone who hammers in a nail) $23 per hour. As a result, he complained, "I've got to start out a guy at $16 per hour to find out if he knows how to dig a hole. I can't do that." 12
Conclusion
The constitutional challenge to Davis-Bacon is a cornerstone of the Institute for Justice's program to restore economic liberty as a fundamental civil right. The Institute is challenging Davis-Bacon on the grounds that it is racially discriminatory, since it was passed to discriminate against blacks and immigrants, and as a result, violates the equal protection guarantee of the Fifth Amendment. The courts need only look to the legislative and administrative history of the law to determine that racial discrimination was among its purposes. The courts could also void the Davis-Bacon Act for impinging on the right of individuals to pursue employment opportunities, thereby violating the Fifth Amendment's due process clause. The Institute for Justice has brought together a unique coalition of plaintiffs to challenge the law. Complainants range from individual minority contractors, who have either lost opportunities to successfully acquire government contracts or who have gone out of business altogether because of the application of Davis-Bacon, to resident-management corporations who because of the law have been unsuccessful in their attempts to involve public-housing residents in rebuilding programs at their own developments.
Borne of racial animus, the Davis-Bacon Act has undermined the efforts of economic outsiders to find employment in the construction industry for more than six decades. Given the influence of organized labor over Congress and the extent to which the Clinton administration's support of NAFTA alienated this key constituency, it is highly unlikely that either branch will risk further undermining union support by pursuing reform or repeal of the Davis-Bacon Act. Thus, the only avenue that remains open is the judiciary. The courts should bury this relic of the Jim Crow era.
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At the time of the original publication, John Frantz was a law student at Harvard University in Cambridge, Massachusetts.
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1. Johnson, "Negro Workers and the Unions," The Survey, April 15, 1928.
2. Ibid., p. 3.
3. Employment of Labor on Federal Construction Work, Hearings on H.R. 7995 and H.R. 9232 Before the House Committee on Labor, 71st Congress, 2nd Session, March 6, 1930, p. 26-27.
4. Rates of Wages for Laborers and Mechanics on Public Buildings of the United States, 74 Congressional Record 6504, 6513 (1931).
5. Ibid., pp. 6515-6520.
6. Employment of Labor on Federal Construction Work, p. 6516.
7. Ibid., p. 4. 8. National Urban League, Quarterly Economic Report on the African American Worker, Fourth Quarter, 1992, Table 7 (presently unpublished).
9. John Gould and George Billingmayer, The Economics of the Davis-Bacon Act, (Washington, D.C.: American Enterprise Institute, 1980), p. 62.
10. Testimony by National Association of Minority Contractors before House Subcommittee on Labor Standards of the Committee on Education and Labor, Sept. 30, 1986, p. 3.
11. Employment of Labor on Federal Construction Work, p. 6511.
12. Patrick Barry, "Congress's Deconstruction Theory," The Washington Monthly, January, 1990, p. 11.
Why Does Davis-Bacon Persist?
The harmful effects of the Davis-Bacon Act do not seem to impair its popularity. They are interpreted away and placed on the doorsteps of capitalism. The American public does not suspect the Davis-Bacon Act, the Norris-LaGuardia Act, or the Smoot-Hawley Tariff Act of having played an ominous role in the Great Depression. It lays the blame instead on mysterious failings of the private-property order and the profit motive. It does not suspect labor legislation of causing unemployment, especially among minorities. Instead, the public is persuaded that white middle-class racism, especially among employers, is responsible for the unemployment plight.
To raise the income of labor by legislative fiat or union coercion is the very essence of interventionism. In the eyes of the American public, to raise wages is virtue, to take from employers is morality. In the world of reality, however, inexorable economic principles contradict such notions and point up the inevitable consequences of policies based on these notions. In economic life, principle must prevail in the end.
-Hans F. Sennholz
Reprinted with permission from The Freeman, a publication of The Foundation for Economic Education, Inc., February 1994, Vol. 44, No. 2.
http://www.libertyhaven.com/politicsandcurrentevents/unionsandotherorganizations/davisbacon.html
