Are Davis-Bacon wages as outdated as this $2 bill? The GAO thinks so.
The U.S. General Accountability Office has issued a new report that calls into question the methodology used by the Department of Labor (DOL) to set federal prevailing wages. The report suggests overhaul to the surveying technique that the DOL utilizes to set rates. But will the DOL listen?
The GAO’s most recent report provides that the DOL has lazily relied upon an outdated methodology that uses unrealistic samples to set wage rates. One of the most surprising statistics is that over 63% of the wages set by the DOL are formulated using data from union labor agreements. Considering the fact that only 11% of the labor used on federal projects is governed by a union labor agreement, this denotes a serious sample problem.
Engineering News Report provides that the DOL has problems beyond the relevancy of its sample. They report that sample size is problematic, as more than 25% of rates were based on six or fewer workers.
It appears that the biggest hurdle for the DOL is getting non-unionized contractors to contribute. The GAO speculates that non-unionized labor is more concerned with the privacy of their operations and doubts that the government’s surveying will inevitably benefit those companies.
So, what is the answer? Better surveying. The GAO recommends that the DOL bring in independent experts to help them devise a better survey. Apparently, the DOL has already rebuked those recommendations, but GAO hopes that Congress will force the issue.
Another recommendation is that the DOL reconfigure their wages to remove state civil subdivisions (by city/county) and utilize more relevant metropolitan statistical areas.
The DOL has already set 5 conferences to discuss Davis-Bacon wages with the industry’s stakeholders. The DOL says that they are committed to ensuring that stakeholders understand the process. Unfortunately, it does not sound as if the DOL will use these conferences to collect contractor feedback on wages.
At the end of the day, I wonder how contractors feel about the wages? The GAO report does not state whether or not they believe that wages are inflated in some areas. But, I speculate that part of their concern is a belief that the federal government is paying too much. Regardless, this is an interesting debate that most likely will result in better oversight at the DOL.
They really need to update the minimum wage to meet the cost of living. It is sad that minimum wage workers can barley afford basic necessities.
Businesses need to be fully aware about all the details of the work needed, paid for and contracted before they hire on government contracts. This only goes to show that many businesses are not kept in the loop as much as they should.