Davis-Bacon’s Union Problem

The phrase, “good-paying jobs,” seems to reverberate throughout the entirety of President Joe Biden’s industrial policy. With each federally funded project, the White House thinks it can create the infrastructure needed to provide, in abundance, such critical outputs as high-speed internet, clean drinking water, or cutting-edge semiconductors. At the same time, they claim these projects will create jobs with salaries that pay well above market rates. This ignores, however, the harsh realities of tradeoffs and opportunity costs. While this may be evident to anybody who understands basic economics, the problem appears entirely foreign to the president. Siphoning dollars from finite federal grants to compensate workers at artificially high rates will necessarily shrink the output of the Biden administration’s infrastructure projects. The Department of Labor (DOL) has doubled down on the administration’s profligate, pro-union agenda. In August, it revised the regulations governing
the Davis-Bacon Act (DBA), a 1931 statute that guarantees wages and fringe benefits that equate to “prevailing” local compensation rates to contractors who work on most federally funded projects. Fortunately, however, Republican Pennsylvania Rep. Lloyd Smucker has introduced a resolution under the Congressional Review Act to block Biden’s pro-union pandering. “The Davis-Bacon Act and now more than 70 active Related Acts collectively apply to an estimated $217 billion in Federal and federally assisted construction spending per year and provide minimum wage rates for an estimated 1.2 million U.S. construction workers,” the DOL writes in its final rule. These figures will almost surely rise steeply as Washington disburses funds from such laws as the bipartisan infrastructure package of 2021, the CHIPS Act, and the Inflation Reduction Act. Until the 1980s, the federal government determined a region’s “prevailing wage” through a three-part process. First, it ascertained whether 50 percent of
workers in the relevant occupation and locality receive a single rate. If not, it did the same, but with a 30-percent threshold. Absent that, it calculated a weighted average. President Ronald Reagan’s DOL excised the 30-percent rule, but Biden’s has reinstated it. This change will cost the public dearly — particularly now, a time when “infrastructure week” seems never to end. According to the Bureau of Labor Statistics, in 2022, unionized workers’ median weekly income exceeded that of non-union workers by 18 percent. “The Biden administration estimated that there was $262 billion in federal construction contract spending in Fiscal Year 2021,” writes Sean Higgins, a research fellow at the Competitive Enterprise Institute. “Reverting to the Davis Bacon Act’s 30 percent standard would likely raise those costs by approximately $20 billion, a substantial additional burden to taxpayers.”

Besides its fiscal imprudence, the 30-percent rule’s revivification will unfairly shield union members from their non-unionized competition. Unionized workers comprise 30 percent of workforce in a given industry and locality more often than they comprise a full half. So, in localities where unionized rates now make up between 30 percent and 50 percent of all rates, the new rule likely sets those rates as a wage floor for DBA-regulated federally funded projects. Unions employ collective bargaining to exert upward pressure on wages. Conversely, to tether union demands to market realities, workers must retain their ability to decline union membership and to undercut unions’ demands absent privately and voluntarily negotiated exclusivity contracts. Preventing such undercutting forecloses the competitive threats posed by unions’ perennial nemesis — free labor markets. It constitutes little more than a nepotistic handout to Democrats’ Big Labor allies. It fortifies unions’ power to cut out
workers who, by either choice or circumstance, lack membership.

The Davis-Bacon Act’s anticompetitive — and even racist — origins expose its exclusionary workings fully. Many of its advocates, including the titular Rep. Robert Bacon of New York, sought to preclude black Americans from outcompeting their white countrymen in labor markets. Such pernicious reasoning drove early support for minimum-wage laws as well. The law succeeded. “In 1931, the unemployment rate of blacks was approximately the same as the rate for the general population,” reports columnist George Will. “Davis-Bacon is one reason the rate for blacks began to deviate adversely.” The racial undertones of Davis-Bacon may have subsided in the present day. Nonetheless, the law persists in ensconcing union workers to the detriment of most others. Times change, but the laws of economics remain static, no matter what kind of intentions politicians pave the regulatory roads with. To justify its selectively granted largess, the White House says it will ensure “investments in America lead to jobs
where construction workers are paid fairly.” Sensible observers ought to dispense with the pretense that bureaucrats can determine a fixed, objective metric of “fair” compensation. As an economic matter, employers and workers negotiate wages and benefits based on the value added by the position in question, workforce supply and demand, and other factors, all of which vary greatly.

The Biden administration’s emotionally charged appeals cannot slip the bonds of economic reality. The president’s labor policies will disadvantage non-union workers unfairly and produce less infrastructure. He may manage to convince some voters otherwise, but the laws that govern scarcity, tradeoffs, and competition will remain unmoved.


More FDA Hypocrisy

Earlier this year, Dr. Robert Califf, commissioner of the United States Food and Drug Administration (FDA), emerged as a vocal advocate against misinformation in the public health domain. A commitment to combating the real problem of health rumors and falsehoods is commendable. But Califf’s recent statements regarding tobacco harm reduction reveal a concerning level of misinformation of his own—and the distinct whiff of hypocrisy. In January, the FDA announced an initiative designed to address public health misinformation. Explaining the rationale, Califf stated, “I actually believe that misinformation is the leading cause of death right now in the US.” He added that “people are making bad choices driven by the information that they get.” In May, Dr. Califf doubled down on this, declaring: “The distortions and half-truths of misinformation and disinformation pose enormous dangers to the effectiveness of science and to public health itself, through the negative impact it has on individual
behavior.”

Yet on November 2, he tweeted, “Use of tobacco products in any form—including e-cigarettes—is unsafe, especially among youth.” A statement doesn’t have to be an outright lie to be a costly distortion. Calling vapes “unsafe” is only true if you apply a standard of safety far higher than we apply to other life activities or consumption choices. Oversimplifying a complex issue, Califf ignored a large body of evidence that alternative nicotine products are exponentially safer than combustible tobacco—a distinction that is surely the key public health point, when the cigarettes that these products can replace kill nearly half a million Americans each year. Numerous studies have demonstrated that switching from cigarettes to vapes or other reduced-risk products substantially reduces a person’s health risks. By sidelining these findings in favor of a simple recommendation not to use nicotine products in any circumstances, Califf contradicts the principles of harm reduction and contributes to the
perpetuation of misinformation.

Youth vaping, which Califf and his FDA colleagues continually emphasize, is a subject of debate regarding the extent, or presence, of net harms at a population level. What is not debatable is that any vaping harms do not come remotely close to those of smoking. Califf obscured this reality once more on November 8, this time expressing alarm about “millions of teenagers getting addicted to nicotine through vaping.” The same tweet also warned of smoking-related deaths. But rather than point out how millions of people have quit smoking thanks to vapes, Califf chose to make youth use his sole vaping point. Again, it’s a distortion of public health priorities. Califf’s depiction is also directly misleading. According to the Centers for Disease Control and Prevention (CDC), “current use” of vapes among US middle and high school students stood at 2.13 million in 2023, a big decline on the previous year. Yet most of this “current use” was occasional; well under a third of that 2.13 million total
(29.9 percent of high school students who vape) reported daily use that could even potentially qualify as addiction—not “millions.” What’s more, modern definitions of addiction or substance use disorder rely significantly on the presence of serious life harms—harms largely absent with most teen vaping.

A more helpful approach would be nuanced enough to recognize that harm reduction strategies can be tailored to different age groups. It would balance legitimate concerns around youth access with the top priority of providing accurate information to people who smoke—including on harm reduction tools shown to be effective for smoking cessation. Frustratingly, Califf has the platform to promote harm reduction as a valid strategy for adults who smoke, in a way that could meaningfully swell the numbers of those who benefit. His FDA role does not preclude this, as his agency colleagues at least grudgingly admit that tobacco harm reduction has a role to play. Califf’s failure to take this opportunity, along with the FDA’s refusal to properly regulate a wide array of vaping products to be made available to people who smoke, undermines public health goals. Talking down, or even ignoring, the benefits of harm reduction hampers the prospects of millions of people who smoke taking steps to improve
their health.

In the fight against misinformation that Commissioner Califf ostensibly champions, it is crucial for public officials to lead by example. They have a duty to provide accurate, evidence-based and proportionate information to the public. Califf’s ill-conceived comments on tobacco harm reduction fail that test.

Blogs:

Monday: Taxpayers Protection Alliance Urges Members of Congress to Support the CARS Act ([link removed])

Tuesday: Looming Kroger-Albertson’s Challenge Exposes Antitrust Hypocrisy ([link removed])

Wednesday: USPS Must Steer Clear of Costly, Electric Trucks ([link removed])

Thursday: TPA Slams Biden Administration’s Proposed Overreach in Drug Patents ([link removed])

Friday: The WHO’s COP10 Delayed Until 2024 ([link removed])



Media:

December 1, 2023: Spiked ran TPA’s op-ed, “The Conservatives have become the party of prohibition.”

December 3, 2023: The Times of Northwest Indiana (Munster, Ind.) ran TPA’s op-ed, “Postal Service must steer clear of electric trucks.”

December 4, 2023: WBFF Fox45 (Baltimore, Md.) interviewed me about education spending in Maryland.

December 4, 2023: Filter ran TPA’s op-ed, “The Hypocrisy of FDA Commissioner Califf’s Stance on Vaping.”

December 4, 2023: The Daily Caller ran TPA’s op-ed, “Biden’s Handout To Unions Will Waste Taxpayer Money That Should Go To Infrastructure.”

December 4, 2023: Patrick Hedger appeared on Memphis Morning News (WKIM radio) about the FTC's battle against Subway sandwiches.

December 4, 2023: The American Spectator ran TPA’s op-ed, “New York’s Attempted Hit on the NRA Violated the First Amendment.”

December 4, 2023: WBFF Fox45 (Baltimore, Md.) interviewed me about transportation spending in Maryland.

December 4, 2023: TPA was mentioned in an editorial in the Duluth News Tribune (Duluth, Minn.) titled, “Even political opposites can agree: Fix the USPS.”

December 4, 2023: WBFF Fox45 (Baltimore, Md.) quoted TPA in their story, “Baltimore County Council president tries to strip inspector general's powers again.”

December 6, 2023: I appeared on 55KRC Radio (Cincinnati, Ohio) to talk about the menthol ban and electric vehicles.

December 6, 2023: I appeared on WBOB 600 AM (Jacksonville, Fla.) to talk about the Federal Trade Commission and Congress.

December 7, 2023: WBFF Fox45 (Baltimore, Md.) interviewed me about red light cameras in Baltimore new red-light cameras in Baltimore.

December 7, 2023: The Carolina Journal ran TPA’s op-ed, “Menthol ban would harm North Carolina consumers and taxpayers.”

December 7, 2023: ABC7 WJLA TV (Washington, D.C.) interviewed me about excessive travel expenses by Loudon County (Va.) officials.

Have a great weekend!

Best,
David Williams
President
Taxpayers Protection Alliance
1101 14th Street, NW
Suite 1120
Washington, D.C. xxxxxx
www.protectingtaxpayers.org ([link removed])

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