Analysis of the Davis-Bacon Act

History of the Act Davis-Bacon Act

The Davis-Bacon Act of 1931 is a law that was instituted at the federal level that required all on-site employees to be paid fair wages, benefits, and overtime weekly when engaged on government-funded construction, alteration, or repair projects that had a minimum value of $2000. The historical context of the Davis-Bacon law extends to 1920 when the federal government was undertaking a major program entailing the public works. This program was noted to have had a major implication in areas where it was executed when the country entered the Great Depression in 1929 (Whittaker, 2004). The economy took a major hit due to the depression, which was characterized by a massive loss of jobs. This implied that few opportunities for work that arose were taken with no much regard to the wage rates and the prevailing conditions. It was noted that the contractors being granted government projects would engage the imported labor from the low-wage areas. This would offer these contractors a leeway to underbid the contracts and be awarded as the lowest bidder. Such contractors would then offer sub-standard wages to laborers who were desperate and this resulted in limited attention to the quality of the work.

Reason for Enactment of Davis-Bacon Act

The drafting of the Davis-Bacon Act by the Congress was geared towards prescribing a formal payment of wages not less than the locally prevailing wage bill (Whittaker, 2004). This was meant to offer protection to the local contractors who were fair and to the workers living in areas where unscrupulous contractors and low-wage workers from other regions carried out the work. It can, therefore, be identified that the Davis-Bacon Act was meant to protect both the contractors and the workers.

 The Davis-Bacon Act was established as an emergency measure geared towards achieving the stabilization of the construction industry and to encourage contractors to offer fair wages to the contractors. The fair wages, in this case, were determined by the prevailing wages in local areas where the construction work was being carried out (Bernstein, 2017). It is indicated that the intention of providing these rules was to prevent the non-unionized blacks and immigrant laborers from offering stiff competition from the unionized white workers at a period when jobs were scarce due to economic depression. In a way, the law led to the development of barriers against the unskilled and low-skilled workers from joining the construction industry.

Impact of Davis-Bacon Act to Human Resource and Compensation

The Davis-Bacon Act was developed focused on the federally funded contracts that were over $2000 and dealing with construction, alteration, and repairs of public works. The contracts covered included bridges, dams, plants, highways, streets, sewers, power lines, airport, and piers. The contracts for construction, alteration, and repair entailed works of painting, alteration, remodeling, demolition work, and preparatory clean-up work. Contractors who fall under this category need to aware of the implications of the Davis-Bacon Act to the wages of their employees. Such contractors are required to pay the prescribed wages to their employees. The provisions of the act cover the workers under contract including those carrying out manual physical labor. However, the provisions of this act exclude the staff involved in administrative, executive, and clerical functions. The contractor is thereby mandated to pay the laborers under contract not less than the prevailing local wages engaged in similar work. The Secretary of the Department of Labor determines these prevailing wages. The wages rates and benefits are determined through the analysis of similar positions in neighboring locations. The fringe benefits cover the benefits in the industry including the medical care, unemployment compensation, and insurance cover. The Department of Labor oversees the administration and enforcement of the labor standards.

Human resource departments in most organizations have been forced to comply with the provisions of the Davis-Bacon Act. To ensure compliance, organizations are noted to maintain certified payroll. The certified payroll is important for compliance and avoidance of fines for any violation. These certified payrolls are mandatory for all government-funded construction projects and are required to be submitted weekly and provide reports on every on-site employee.

Future of the Davis-Bacon Act

The Davis-Bacon Act has had quite a number of amendments since its initial formation. However, critics about the negative effects of the acts have not ceased. The critics argue that the act leads to inflationary impact by unnecessarily increasing the cost of federal construction. It is also argued that the act hampers competition for small and minority-owned businesses (Whittaker, 2007). The Davis-Bacon Act was enacted as a solution during the Great Depression. This implies that the provisions are not ideal for normal economic conditions. The federal government has already enacted the Fair Labor Standards Act for minimum wages across the economy (Whittaker, 2007). The Congress through further amendments or abolishment will determine the future of the act.

Effects of Davis-Bacon Act to Employer and Employee

It has been indicated that the adoption of the Davis-Bacon Act leads to a 25-cent increase in the overall construction mean hourly wage. For employers, the failure to abide by the Davis-Bacon Act proposed prevailing Act is likely to cause penalization of contracts. This may be in form of withholding payments enough to settle the liabilities or the underpayments. Non-compliance offered enough grounds for contract termination.

Support of the Act

While I would support the original intentional of the Act, I believe that it is not relevant at this time that we have minimum wage laws. I believe it is high time that the Davis-Bacon Act was abolished. The Act makes the contractors inflate their costs to cater to the prevailing wages set out by the federal government.

References

Bernstein, D. E. (2017). Prevailing Wage Legislation and the Continuing Significance of Race. J. Legis., 44, 154.

Whittaker, W. G. (2004). The Davis-Bacon Act: Issues and Legislation During the 108th Congress.

Whittaker, W. (2007). Davis-Bacon: The Act and the Literature. Congressional Research Service.