‘=1 ~ Vt, " V.-'j:‘,'o‘ ' ' ~ . *> “M; 1 « TO I, sf; ‘ O ‘*”‘““‘ " 4 I csvf NO 75 W L P NOV 17 1989 :._;,_v.«..-.;. -fig.-:_-. , LA?‘ ,.,.,_; O. V kg‘, S:,.,% G E R ST. :r2!?§:Y “ %~.3.$:5‘“‘« I THE DAVIS—BACON ACT: HISTORY, O ADMINISTRATION, PRO AND CON ARGUMENTS, @ R AND CONGRESSIONAL PROPOSALS Prepared‘underIcOntract by JOSEPH F. FULTON fOPVECOnOmiCS'DiViSiOn I Jul:v11TO1978T CONGRESSIONAL RESEARCI-I sanvrcs LIBRARY concnnss THE DAVIS-BACON ACT: HISTORY, ADMINISTRATION, PRO AND CON ARGUMENTS, AND CONGRESSIONAL PROPOSALS Table of Contents Page find The Davis-Bacon Act and Related Statutes ..................... Federally assisted construction ........................... 3 Value of construction subject to Davis-Bacon .............. 4 State prevailing wage laws ................................ 4 Other related statutes .................................... 5 Legislative History of the Act ............................... 8 he I~'I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I 8 The 1 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Appellate review: Wage Appeals Board ...................... 18 I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I I Arguments Pro and Con the Davis-Bacon Principle .............. 22 Arguments opposed to Davis-Bacon .......................... 23 Arguments sympathetic to Davis-Bacon ................;..... 29 Bills in the 95th Congress Relating to Davis-Bacon ........... 35 H.R. 6100/S. 1540, Federal Construction Costs IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII Appendix A. Text of Davis-Bacon Act ........................ 51 Appendix B. Statutes which Include Davis-Bacon Provision ... 54 CI IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII THE DAVIS-BACON ACT: HISTORY, ADMINISTRATION, PRO AND CON ARGUMENTS, AND CONGRESSIONAL PROPOSALS The Davis-Bacon Act and Related Statutes The Davis-Bacon Act requires that every contract in excess of $2,000 to which the United States is a party--for construction, alteration, and repair, including painting and decorating, of public buildings or public works--state in its specifications the minimum 1 wages to be paid the various classes of laborers and mechanics:~/ The law applies whether the contract is advertised for bids or nego- tiated on a cost-plus basis. The Act does not cover "force account" work, that is, construction performed by "in house" employees of a 3/ Federal agency for its own use. The Act provides that the minimum wages stated in the contract be based on wages determined by the U.S. Secretary of Labor "to be prevailing" for the "corresponding classes of laborers and mechanics" employed on "projects of a character similar" to the contract work "in the city, town, village, or other civil subdivision of the State" in which the work is to be performed. _l/ Act of March 3, 1931 as amended, 46 Stat. 1494 as amended, 40 U.S.C. 276a et seq. Reproduced in Appendix A. 2/ Federal "force account" construction is performed by Federal blue-collar workers, whose pay rates also are set by the "prevailing local wage" concept found in the Davis-Bacon law. In February 1978, there were 515,572 Federal blue~col1ar em- ployees, according to U.S. Civil Service Commission, Federal Civilian Workforce Statistics, May 1978, table 5. CRS - 2 The four phrases in quotations deal with the wage determination process and represent the heart of the statute. None of the phrases is defined in the Act. It has been left to the U.S. Labor Depart- ment, which administers the law, to flesh out their meaning. The Act requires contractors and subcontractors on Federal construction projects to pay their workers at least once a week with-A out subsequent deduction or rebate, and to post the scale of wages at the work site. Penalties for noncompliance may include, depending upon the gravity or willfulness of the violation, withholding of funds to compensate underpaid employees, cancellation of the contract, and debarment for three years from future Federal contract awards. No criminal penalties are provided in the Act. The law gives the President authority to suspend the Act in the event of a national emergency. This provision has been invoked twice. The first suspension was ordered in June 1934 by President Franklin Roosevelt to end the administrative confusion caused by the simultaneous operation of the Davis-Bacon Act and the National Indus- _i_/ 2/ trial Recovery Act. This suspension was rescinded after 25 daysJ- 1/ The 1934 suspension was invoked because "confusion arose over i. the wage scales on public projects" and was revoked "when condi- tions had clarified," according to a Memorandum of Law of the U.S. Labor Department's Office of the Solicitor, dated February 26, 1971 on the occasion of the second suspension of Davis-Bacon, p. 4. s _g/ Bureau of National Affairs, Labor Relations Reporter, March 1, 1971, 75 LRR 1ss. CRS - 3 The second instance occurred on February 23, 1971, when President Nixon suspended the Davis-Bacon Act in an effort to reduce rapidly rising wage costs in the building industry. The Act was reinstated the following month, on March 29, on the same day that a 12-member tripartite Construction Industry Stabilization Comittee (CISC)--later part of the Cost of Living Council--was established by Executive Order '11588 to review and approve wage increases negotiated in the construc- tion industry.l/ Federally assisted construction. The Davis-Bacon Act applies only to construction contracts made directly with the Federal Govern- ment. The Davis-Bacon provision requiring the payment of locally prevailing wages has been extended beyond construction purchased directly by the Federal Government, by inclusion in 55 other Federal 2/ lawsf_ These laws, in fields such as education, health, transporta- tion and housing, specify that the provisions of the Davis-Bacon Act shall apply on construction projects involving Federal grants, loans, loan insurance, and loan guarantees. Some laws involving federally assisted construction do not contain the Davis-Bacon provision, including a few farm loan statutes and energy measures. 1/ E.O. 1l588 is reproduced in 36 Fed. Reg. 6339, April 3, 1971. The 1971 suspension is further discussed below, pp. 26-27. _2/ Listed in Appendix B. CRS - 4 Value of contruction subject to Davis-Bacon. Labor Depart- ment staff interviewed for this report estimate that Government con- struction subject to the Davis-Bacon Act, or to the Davis-Bacon pro- vision in laws involving federally assisted construction, accounts for 20-25 percent of all construction. The total value of new con- struction in the United States equaled $171 billion in 1977, $147 billion in 1976, and $134 billion in 1975.}! Thus construction sub- ject to the Davis-Bacon requirement represented an estimated minimum of $34 billion in 1977, $29 billion in 1976, and $27 billion in 1975. According to Labor Department staff, by far the larger proportion of this is federally assisted construction rather than construction purchased by the Federal Government itself. State prevailing wage laws. Many States have their own "prevailing wage" statutes for the construction industry. The first such law was that of Kansas, passed in 1891; six other States passed 2/.§/ similar legislation before the Davis-Bacon Act became law in 1931;‘ 1/ U.S. Department of Commerce, Construction Review, v. 24, no. 1, Jan./Feb. 1978, table A-1, p. 11. 2/ Johnson, David B. Prevailing Wage Legislation in the States, p. 840. 3/ "Similar laws were enacted in other countries around the turn ,of the century, including England, France, and Belgium." DeLury, Bernard E. (then Assistant Secretary of Labor for Employment Standards). Employment Standards Digest, v. 2, no. 4, June-July 1975, p. 1. CRS - 5 At the present time 41 States have "little Davis—Bacon Acts." States without such a law are Georgia, Mississippi, North Carolina, South Carolina, Virginia, Iowa, North Dakota, South Dakota, and Vermont. Most of the laws cover construction contracts awarded by the State or its political subdivisions. Sixteen States have no dollar thresholds, that is, they cover all public construction regardless of the contract's amount. Another sixteen States specify minimum contract amounts for coverage ranging from $500 to $10,000, and nine States cover only contracts with higher minimum dollar values (ranging from $25,000 up to S500,000);l/ Federally assisted State or local construction projects covered by both the Davis-Bacon Act and a State statute may be sub- ject to separate Federal and State prevailing wage determinations. Where these schedules differ, the rule is that the higher of the two must be paid[£/ Other related statutes. A number of other statutes govern or affect working conditions on Federal contracts; the most pertinent of them are the following. _l/ Data in this paragraph, except as noted, are from unpublished information supplied by the U.S. Department of Labor, Employment Standards Administration, Division of State Employment Standards. _g/ According to advice from U.S. Labor Department officials. Also stated in Associated General Contractors of America, Davis-Bacon Handbook,.p. 26. CRS - 6 _1_/ The Copeland "Anti-Kickback" Act makes it a Federal crime to induce "kickbacks" on Federal and federally assisted construction contracts. A kickback is an unauthorized refund to the contractor out of the wages and fringe benefits required under the Davis-Bacon Act and related prevailing wage laws. The Copeland Act does not pro- hibit legitimate deductions, such as those for social security taxes, charitable contributions, and union dues. The Contract Work Hours and Safety Standards ActZ/ requires overtime payment at 1 1/2 times the basic rate of pay for work over 8 hours a day or 40 hours a week on Federal and federally assisted contracts. The Miller Act2/ requires contractors receiving Federal construction awards to post a payment bond to protect the wages of employees under the contract, and provides the right to sue on the contractor's bond if a worker is not paid in full within 90 days after completion of his labor. 4/ Reorganization Plan No. 14 of 1956- authorizes the U.S. Sec- retary of Labor to prescribe standards, regulations, and procedures 1/ 18 U.S.C. 874 and 40 U.S.C. 276a, originally enacted June 13, 1934. 2/ Act of August 9, 1969, 40 U.S.C. 333. This Act incorporates and amends the Work Hours Act of 1962, 40 U.S.C. 327. _§/ Act of August 24, 1935, as amended; 40 U.S.C. 270. _£/ Effective May 24, 1950, 64 Stat. 1267. Codified in 5 U.S.C. Appendix. CRS - 7 to assure coordination of administration and consistency of enforce- ment of the Davis-Bacon and other labor standards statutes governing Federal and federally assisted projects. Under the Plan, "the con- tracting agencies funding given contracts have the primary responsibility for the day to day enforcement of these acts, but the Secretary of Labor has been given coordinating and oversight responsibilities to ensure a uniform and vigorous enforcement effort by all agencies.“l/ Two statutes require the payment of prevailing wages on Federal contract purchases for other than construction. The Walsh- Healey Public Contracts Act E/covers Federal contracts of over $10,000 for materials, supplies, articles, and equipment. The McNamara-O'Hara Service Contract Act of 1965;, applies to Federal contracts of over $2,500 for services (such as laundry and drycleaning, custodial, jani- torial, guard, food, linen supply, and storage); generally it protects those employees on Government contract work who are not covered by the Davis-Bacon or Walsh-Healey Acts. Both the Walsh-Healey and Service Contracts Acts require that workers on such contracts be paid at least the prevailing wages for similar work in the industry, as determined by the Secretary of Labor. 1/ Elisburg, Donald (Assistant Secretary of Labor for Employment Standards), Wage Protection under the Davis-Bacon Act, p. 327. 3/ Act of June 30, 1936, as amended, 41 U.S.C. 35. .3] Act of October 22, 1965, 41 U.S.C. 351. CRS - 8 1/ Legislative History of the Act The 1931 statute. Although the Davis-Bacon Act was not passed until 1931, near the low point of the depression of the 1930's, a bill with the same intent had been introduced in the prosperous year of 1927 by Representative Robert L. Bacon (R., N.Y.). Similar bills were under consideration by the Congress between 1927 and 1931, and two of them had been reported out by the House Labor Committee. Early in 1931 identical bills were introduced by Representa- tive Bacon and Senator James J. Davis (R., Pa.), a former Secretary of Labor; the language of the bills became law on March 3 without committee or floor change. The brief hearings and debates on thel bills leave little doubt as to the practice against which they were directed. They were designed to protect local construction wage standards by preventing itinerant contractors from bidding for Federal contracts on the basis of wages lower than those prevailing in the area and then bringing in a lower-paid work force to do the job. Representative Bacon said in the debate on the House bill: A practice has been growing up in carrying out the building program where certain itinerant, irresponsible contractors, with itinerant, cheap, bootleg labor, have been going around throughout the country "picking" off a contract here and a .l/ Act of March 3, 1931 (46 Stat. 1494); as amended Aug. 30, 1935 (49 Stat. 1011); June 15, 1940 (54 Stat. 399); March 23, 1941 (55 Stat. 49) and Aug. 21, 1941 (55 Stat. 658); July 12, 1960 (74 Stat. 418); and July 2, 1964 (78 Stat. 238). Codified in 40 U.S.C. 276a et seq. CRS - 9 contract there, and local labor and the local contractors have been standing on the sidelines looking in. Bitterness has been caused in many comunities because of this situation. This bill ... is simply to give local labor and the local contractor a fair opportunity to participate in this building program._l/ The 1931 Act was brief. It required that contracts in excess of $5,000 for the construction, alteration, or repair of Federal public buildings specify wage rates for laborers and mechanics not less than the locally prevailing wages for work of a similar nature. Disputes as to what the prevailing wage rates were which could not be resolved by the contracting officer were to be conclusively determined by the Secretary of Labor. In case of national emergency the President could suspend the law. Dissatisfaction with operation of the Act was expressed soon after it went into effect. Organized labor's main objection centered on the lack of an effective enforcement mechanism and penalties against violators. The main criticism of contractors-dealt with the law's "postdetermination" of prevailing wage rates, after the contract had been awarded. It was alleged that this provision could put con- tractors to unexpected expense when the prevailing rates were found to be higher than those they had used in their bid. The contractors _l/ 74 Cong. Rec. 6510, Feb. 28, 1931. CRS - 10 wanted "predetermination" of prevailing wages before awarding of the 1/ contract. Subsequent House and Senate hearings in 1932 and 1934 provided a forum for arguments to strengthen the Act, and also for allegations of abuses in the payment practices of construction contractors. These hearings resulted in the comprehensive Davis-Bacon amendment of l935Z/ and also the Copeland "Anti-Kickback" Act of 1934;2/ The 1935 amendment. The 1935 Davis-Bacon amendment was introduced as S. 3303 by Senator David I. Walsh (D., Mass);&/ It was 5/ 6/ passed by both the Senate and House without debate or roll-call, vote, and was signed into law by President Roosevelt on August 30, 1935. The present law is substantially the same as the amendment legislated in 1935, which provided for: _l/ Data in this paragraph from U.S. Congress, House, Committee on Education and Labor. .Legislative History of the Davis-Bacon Act, p. 2. _g/ Amendment of August 30, 1935, 49 Stat. 1011. 3/ Enacted June 13, 1934, 48 Stat. 948. '£/ According to Holland, Thomas W. Brief Legislative History of the Davis-Bacon Act, 1931-1935, p. 10. ‘ 5/ 79 Cong. Rec. 12862, Aug.’9, 1935. 3/ 79 Cong. Rec. 14753, Aug. 23, 1935. CRS - 11 l. Predetermination of prevailing local wages by the Secretary of Labor, so that contractors would know their approximate labor costs in advance of submission of bids. 2. Extension of the Act to include Federal public works as well as Federal public buildings, and clarification of construction, alteration and repair to include painting and decorating. 3. Lowering the dollar minimum for contract coverage from over $5,000 to over $2,000. The legislative history of the 1935 amend- ment implies that this was done because contracts for painting and decorating were brought under the Act at this time. 4. Payment to employees required at least once a week, as well as prominent posting of the wage scale at the work site. 5. Authority to withhold payments from the contractor in sufficient amount (determined by the contracting officer) to reim- burse workers who had received less than the wage to which they were entitled. 6. Authority to terminate a contract where underpayments are found, with liability by the contractor for excess costs occasioned by such action. 7.0 Authorizes and directs the Comptroller General to (a) pay laborers and mechanics any wages due them from accrued payments with- held from the.contractor; and (b) distribute a list to all Govern- ‘ment departments giving the names of persons or firms which he has CRS - 12 found to have disregarded their obligations to employees and subcon- tractors, such violators to be ineligible for Government contracts for a period of three years. 8. Right of legal action by employees to recover from con- tractors wage payments unlawfully withheld. 9. Authority by the President to suspend the Act in the event of a national emergency. Later amendments. After 1935, amendments were enacted in 1940, 1/ 1941, 1960, and 1964. The 1940 amendment_ extended the Act to the Territories of Alaska and Hawaii, and the 1960 amendmentE/ eliminated the reference after the Territories had achieved statehood. Amend- ments in 194l2/ made it clear that the Act applied not only to con- tracts determined through competitive bidding but also to contracts let on a cost-plus or other negotiated basis, many of which were being awarded at that time just prior to U.S. entry into World War II. The most recent amendment, enacted in 1964, added fringe bene- fits within the meaning of wages under the Act. The amendment lists examples of covered fringe benefits--such as medical or hospital care, pensions, work-injury compensation, unemployment benefits, and vacation 1/ June 15, 1940, 54 Stat. 399. _g/ July 12, 1960, 74 Stat. 418. 2/ March 23, 1941, 55 Stat. 49; and Aug. 21, 1941, 55 Stat. 658. CRS - 13 pay--and also includes "other bona fide fringe benefits ... not re- 1 quired by other Federal, State, or local law."_/ The effect of the amendment is to require wage determinations to specify not only locally prevailing hourly rates of pay but also locally prevailing fringe benefits expressed as hourly rates. Contractors discharge their obligation for the required fringe-benefit payments by making irre- vocable fringe-benefit contributions to a trustee or other third person pursuant to a fund, plan, or program or, if there are no such fund commitments in effect, by making cash payments to the workers as a supplement to the basic hourly rate of pay. The 1964 amendment reflected the growth of fringe benefits in American industry. Proponents of the amendment argued successfully that these benefits had become so prevalent and large that their exclusion seriously weakened effectiveness of the Davis-Bacon Act. They also contended that without the inclusion of fringe-benefit costs those contractors who did not pay them were given an unfair competi- 3/ tive advantage. 1] Act of July 2, 1964, 78 Stat. 238. gal These reasons for the amendment are cited in Thieblot, Armand J. Jr., The Davis-Bacon Act, p. 16, CRS -- 14 Administration of the Act The Davis-Bacon Act is administered by the U.S. Department of Labor, Employment Standards Administration (ESA), Wage and Hour _}_/ Division, Office of Government Contract Wage Standards. Within this Office are the Division of Government Contract Regulations and the Division of Construction Wage Determinations. The Division of Government Contract Regulations (1) provides advice to contractors and contracting agencies on the application of existing policies, regulations, and interpretations under the law, (2) makes recommendations to the ESA for revisions or for initiation of new policies, and (3) coordinates enforcement of the Act with ESA regional staff and with contracting agencies. Wage determination. The Division of Construction Wage Deter- minations prepares the prevailing wage determinations required under the Act. With the aid of a regional office staff, the Division con- ducts a continuing county-by-county survey program to determine pre- vailing construction wage rates across the country. Voluntary sub- mission of wage data by contractors and contractor associations, labor unions, public officials, and other interested parties is encouraged. 1/ Administrative responsibility for the Act was placed within the Employment Standards Administration (then the Wage and Labor Standards Administration) on July 1, 1969 pursuant to Labor Secretary's Order 24-69. Before then, the Act had been adminis- tered by the Solicitor's Office in the Labor Department- CRS ~ 15 Where data in the Division's files are not sufficient to make a determination for all the crafts needed for the proposed construction project, the Division may conduct field surveys or hold hearings in the project area to seek out the necessary payroll information. Wage determinations issued by the Labor Department must be included by contracting agencies in invitations for bids. The ap- plicable wage determination becomes part of the successful bidder's contract obligations. Two kinds of wage determinations are currently in use by the Department. One is the general determination (also known as area determination), which is issued when the wage patterns for a particular area and for particular types of construction are well settled and the Department can reasonably anticipate a large volume of Federal or federally assisted construction of the specified type in that area. These determinations are published each Friday in the Federal Register for use by contracting agencies. A national index of all general determinations is published in the Federal Register on the first Fri~ day of each month. General wage determinations have no expiration date; they are updated and modified as needed to keep them current. The second kind of wage determination issued by the Labor ' Department is the project determination, which applies to a specific CRS - 16 project only and remains in effect for a maximum of 120 calendar days 1/ from date of issuance. During the early years of the Act, project determinations were the only type issued. The procedure became too slow to handle the growth in requests for wage determinations as the Davis-Bacon provi- sion was extended to federally assisted construction in more and more statutes. Project determinations rose tenfold in less than 20 years, from 4,453 issued in the fiscal year 1946 to 46,397 issued in fiscal 1963. Consequently, general determinations (at first known as "multiple- agency determinations") were introduced in 1964 for those areas in which construction activity covered by Davis-Bacon tended to be on- going. Since 1971 general determinations have been published in each Friday's edition of the Federal Register. For fiscal 1977 (October 1, 1976 to September 30, 1977), 15,674 project determinations and 2,257 general determinations were issued:Z/ The Labor Department has been issuing annually its thousands of wage determinations, each with separate rates for the various crafts and trades, without benefit of computer help. Criticism of its manual operations has led the Department to engage a consulting 1/ The discussion to this point on Davis-Bacon administration relies heavily on Elisburg, op. cit., pp. 326-328. 2/ Statistics in this paragraph were furnished by the Labor Department's Employment Standards Administration, Division of Construction Wage Determinations. CRS - 17 firm to set up a computer system for the Davis-Bacon program. Computerization is targeted to be operational by the winter of 1979. Labor Department personnel interviewed for this report estimate that 40 to 45 percent of current wage determinations are based on union pay scales, a decline from an estimated 50 percent a few years ago. The ratio varies by category of construction. It is probably highest in building construction, where unionization is relatively widespread, and lowest in residential construction because that sec- tor of the industry is largely nonunion (open shop). The Department's estimates of the proportion of wage determinations which are based upon union pay scales do not extend to the proportion of workers covered by such determinations. Presumably the latter would be higher than 40-45 percent because union pay scales tend to prevail in metro- politan areas with relatively large work forces. Detailed information on administration and enforcement of the Act is contained in four Regulations, Parts 1, 3, 5, and 7, under Title 29 of the Code of Federal Regulations (CFR). Part 1 outlines procedures for predetermination of wage rates. Part 3 deals with ‘the record keeping and payroll information required under Section 2 of the Copeland Act. Part 5 sets forth contract requirements, inves~ tigation Procedures, and reporting to be followed by the procurement 1/ 1976 EmP10Yment and Training Report of the President. Chapter 3, T Constructlpn: the Industry and the Labor Force, p. 65. CRS - 18 agencies and the Department of Labor, outlines the administrative and enforcement authority of all parties, and specifies the fringe benefit requirements of the Act. Part 7 deals with procedures for appealing disputes to the Wage Appeals Board. Appellate review: Wage Appeals Board. Davis-Bacon wage deter- minations made by the Labor Secretary have generally been held not subject to judicial review. In a landmark case in 1954i/the Supreme Court held that the Act confers no litigable rights on private bid- ders, since no one has the contract at that point, and stated that "the correctness of the Secretary's determination is not open to attack on judicial review." The subject of wage-determination review was subsequently con- sidered at length by the House Committee on Education and Labor in 2/ its 1962 oversight hearings on administration of the Davis-Bacon Act.- jThe Committee concluded that (1) judicial review of the Labor Secre- tary's decisions was impracticable because it would take too long and would delay construction plans for both contractors and the Gov- ernment, and (2) administrative review by a board selected from pro- curement experts and the construction industry was preferable. The 1/ United States v. Binghamton Construction Co., Inc., 347 U.S. 171. 2/ U.S. Congress. House. ”Committee.on Education and Labor. Hearings before the Special Subcommittee on Labor on Administration of the Davis-Bacon Act, 1962. CRS - 19 Committee's recommendation, though never implemented by legislation, was heeded by the Labor Secretary; in 1963, by Secretary's Order No. 32-63, the Department's Wage Appeals Board was established.—/ The authority and responsibilities of the Wage Appeals Board (WAB), which consists of three public members appointed for indefinite terms by the Labor Secretary, are spelled out in Secretary's Order No. 24-70, dated October 7, 1970, superseding earlier Secretary's Order No. 32-63. The Board members meet about once a month to hear cases and are paid on a per diem basis for their work. During the calendar year 1977, 34 cases were listed with the WAB and 20 decisions were issued; in 1978 through May, 15 cases were listed with the Board.Z/ The Board is an appellate agency, deciding appeals from deci- sions of Government staff. Most of the appeals concern wage-deter- mination decisions but the Board also has jurisdiction over cases involving enforcement and debarment, the Copeland Act, Reorganization Plan No. 14 of 1950, and overtime matters subject to the Contract -3/ Work Hours and Safety Standards Act;_ The rules of WAB practice are spelled out in 29 CFR Part 7. _i/ The above two paragraphs are based on Elisburg, op. cit., p. 324. _Z/ According to information from Mr.-Craig Bulger, the Board's full- time Executive Secretary. .§/ ‘Labor Secretary's Order No. 24-70, dated October 7, 1970. CRS - 20 Despite the 1954 United States v. Binghamton Construction Co. case, Davis-Bacon staff interviewed for this report noted that the issue of judicial review has not been definitely settled and that a few decisions of the Wage Appeals Board have been taken to court. According to press accounts, the State of Virginia on May 15, 1978 filed suit in U.S. District Court, Alexandria, Va., against the Davis- Bacon staff's wage determination (which had been affirmed by the Wage Appeals Board) with respect to construction of Interstate Route 66 between the Potomac River and the Washington, D.C. Capital Beltway. Compliance and enforcement. The Davis-Bacon Act does not assign overall enforcement responsibility to any one agency. President Truman in 1950 promulgated Reorganization Plan No. 14 to clarify responsibility under the Act and related statutes. Under present procedures, primary responsibility for day-to-day enforcement, such as checking employer payroll records and on-site inspections, rests with the contracting agencies funding the construction. These agencies have the authority to withhold payments to contractors equal to underpayments illegally withheld from workers, and also to terminate contracts where under- payments are found. Coordinating and oversight responsibilities rest with the Secretary of Labor; to this end the Department of Labor issues regulations and interpretations to be followed by the contracting agencies, and conducts its own investigations of alleged violations CRS - 21 when it deems such action necessary--usually because complaints have been received. The Comptroller General also has enforcement responsibilities under the Act. He must reimburse workers any wages due them, from payments withheld from noncompliant contractors. He is authorized to debar from receiving Goyernment contracts for a period of three years any contractor who commits violations which constitute a dis- regard of his obligations to employees and subcontractors. During the fiscal year 1977, the Labor Department found a total of $4,052,452 due in back wages under the Davis-Bacon and related acts (those dealing with federally assisted construction) and $2,881,760 in back wages paid under those laws. The difference between back wages due and back wages paid stems primarily from cases still in litigation or in administrative processing;l/ The number of firms or persons listed by the Comptroller General for three-year debarments from Government contracts because of Davis-Bacon violations equaled, for the three most recent calendar 2/ years, 2 in 1975, 5 in 1976, and 7 in 1977.- 1] Inf0rm3ti0n 3UPP1i€d by Labor Department staff. 3/ Information from Labor Department staff. The debarments list is issued by the General Counsel of the U.S. General Accounting Office. A CRS - 22 Arguments Pro and Con the Davis-Bacon Principle The Davis-Bacon Act is little known to the general public but it has engendered considerable controversy over the years. Part of the controversy deals with administration of the law, discussed in the section below on legislative proposals in the 95th Congress. But the debate extends beyond that, questioning the philosophy of the Act and the need for its continued existence. Opponents of Davis- Bacon would like to see it repealed or its effect curtailed in one way or another. Bills for such purposes have been introduced in the 95th and earlier Congresses. To understand and evaluate these bills it is helpful to know the position and reasoning of those who are hostile and those who are sympathetic to the Davis-Bacon principle. Arguments opposed to the Davis-Bacon concept generally stress the following: (1) The Act was a depression measure which has long since outlived its usefulness, (2) it interferes with the workings of a free competitive market, (3) it is inflationary because it results in Federal and federally assisted construction contracts costing more than other construction contracts, (4) it gives an unfair advantage to union employers over nonunion employers in bidding for Government construction contracts, and (5) it impedes entry of minority groups into the contruction industry. Arguments sympathetic to the purposes of Davis-Bacon may be summarized as follows: (1) The Act is more than a depression measure, CRS - 23 and is needed now as much as ever, (2) it prevents cutthroat competi- tion and promotes fair competition based on decent labor standards, (3) it follows established Federal Government policy to pay prevailing wages, (4) it is not inflationary and in the long run it may reduce costs, and (5) its repeal or weakening would adversely affect apprenticeship programs in the construction industry and hurt minority groups. The above positions are usually developed along the following lines. We strive to state them as persuasively as they might be» expressed by their proponents. The arguments are transmitted by the Congressional Research Service without critical evaluation; they say nothing about the position of the Service. Arguments opposed to Davis-Bacon. (1) The Act was a depression measure which has long since outlived its usefulness. The bill was passed in haste as an emergency statute in 1931, at a low point in this country's most severe depression on record. gworkers at that time would accept almost any pay and travel almost anywhere for a job. The emphasis then was to place a floor under steadily sinking wage rates. The Act was designed to protect local wage standards by preventing migratory contractors from "picking off" Government construction contracts and bringing in low-paid itinerant workers. If the Act ever had any justification, it was then. That situation no longer exists; in fact, the opposite is true today. The construc- CRS - 24 tion industry is more highly unionized than American industry as a whole, and its wage rates are among the highest in the nationfl/ One of the impetuses to present-day inflation comes from rising construc- tion costs%/ The industry is one of the least likely candidates for special Government protection, and yet that is what it is getting. (2) The Act interferes with the workings of a free competitive market. The dynamic growth of our economy has been due mainly to its competitive nature, with producers seeking to turn out the best possible product at the lowest possible price. In order to do this, Droducers must strive for the lowest possible costs--for materials, machinery, and for labor too. Consumers benefit from the lowest pos- sible prices. Workers benefit because such a policy results in the maximum possible employment. Labor can also protect itself by unioni- zing--which it has vigorously done in construction, and which it is encouraged to do by public policy. There is also the protection of a national minimum wage rate applicable to all industries including construction, which at present (1978) is $2.65 an hour and is scheduled .l/ Unionism in construction is estimated currently at about 50 per- cent of the industry's work force (see Washington Post, June 19, 1978, p. A-5) compared to about 25 percent for American industry generally (see U.S. Department of Labor, Bureau of Labor Statis- tics, Handbook of Labor Statistics 1977, Bull. 1966, table 137, p. 293). 9 ~ 1 Average hourly earnings in 1977 equaled $8.04 in construction compared to $5.24 for the private economy as a whole. (Source! U.S. Department of Labor, Bureau of Labor Statistics.) 2/ Between 1965--the year prices began to escalate in the U.S.-- and 1977, the Composite Construction Cost Index of the U.S. Commerce Department rose 133 percent while the Consumer Price Index of the U.S. Labor*Department rose 92 percent. CRS -»25 1/ to rise in stages to $3.35 an hour by January 1, 1981. What is wrong with encouraging the maximum possible competition in biddingi for Government contracts, including wage competition and competition ' 2 from nonlocal contractors?—/ It is contrary to the best economic. policy to narrow the scope of competition, geographic or otherwise. The Federal Government should be combatting this type of protec- tionism, not promoting it. (3) The Act is inflationary because it results in Federal and federally assisted construction contracts costing more than other construction contracts. Partly this is because Labor Department pro- cedures for determining prevailing wage rates help assure that the union pay scale--generally higher than nonunion pay--will be selected. But the law itself is inflationary because of its provision requiring payment of at least prevailing local wages. Where there are con- struction wage rates in a locality below the prevailing ones, and where a contractor paying those lower rates would win the contract in a free competitive market--both plausible assumptions--then the difference between his competitive-market bid and the bid actually _l/ Fair Labor Standards Amendments of 1977, enacted November 1, 1977, P.L. 95-151. ,2/ Government procurement agencies need not accept the lowest bid if it comes from an unreliable, irresponsible bidder. To deter- mine who is a responsible bidder, it is common practice to "pre- qualify" each contractor by rating him through an analysis of his assets, experience, credit rating, and past performance on other projects. According to Thieblot, op. cit., pp. 188-189. CRS - 26‘ winning the contract measures the extent to which the law increases costs to the Government and the taxpayer. It is widely believed that Davis-Bacon hampers efforts to pro- vide low-cost housing for the poor. Interest rate subsidies provided under Federal housing laws to encourage low-income housing are washed out wholly or partly by the higher construction costs resulting from the Davis-Bacon prevailing wage clause included in those same laws. It is also widely believed that one of the major objectives of Federal public works programs, to create jobs and relieve unemployment, is to some extent frustrated by the Davis-Bacon prevailing wage require- ment included in such programs, which results in fewer though higher- paying jobs. "Many persons, including Arthur Burns, Chairman of the Federal Reserve Board, see the Davis-Bacon Act as effectively hindering the number of hard-core unemployed persons who could be absorbed on Government projects due to the high wages which would have to be Daid p 'l/ to them." The suspension of the Davis-Bacon Act by President Nixon on February 23, 1971 (by Presidential Proclamation 4031) is further evidence that the law is an "engine of inflation," as it has been called. After stating in his Proclamation that construction industry collective-bargaining settlements were excessive and were accelerating lj Pohlman, Jerry E. Hard-core Unemployment, Public Housing Construc- tion and the Davis-Bacon Act, p. 196. CRS - 27 1/ inflation throughout the overall economy,‘ the President found that "The Davis-Bacon Act and other acts dependent upon it frequently require contractors working on federally involved projects to pay the high negotiated wage settlements to mechanics and laborers, thereby sanc- tioning and spreading the high rates and thus inducing further acce- 2 leration contributing to the threat to the Nation's economy.”_/ The Act was reinstated the following month, on March 29, 1971, but not before a Construction Industry Stabilization Committee (CISC) had been established to coordinate and review a program of voluntary constraints holding negotiated increases in construction wages to an annual rate _3_/ of about 6 percent. (4) The Act gives an unfair advantage to union employers over nonunion employers in bidding for Government construction contracts. It tends to discourage nonunion (open shop) contractors from bidding on Federal and federally assisted construction jobs because the law's prevailing wage requirement neutralizes any advantage they have when 1/ In a statement accompanying his Proclamation, the President noted that in 1970 the average contract settlement called for a first- year wage increase of 18.3 percent in the building trades compared to 8.1 percent in manufacturing industries. Quoted in Bureau of National Affairs, Labor Relations Reporter, March 1, 1971, 76 LRR 159. 2/ Presidential Proclamation 4031, dated February 23, 1971, p. 2. Reproduced in 36 Fed. Reg. 3457, Feb. 25, 1971. 3/ The Davis-Bacon Act was reinstated and CISC was established by Executive Order 11588, dated March 29, 1971; the E.O. is repro- duced in 36 Fed. Reg. 6339, April 3, 1971. CRS - 28 1/ their pay scales are below prevailing levels.-' When open shop con- tractors do get Government contracts, morale problems may develop among their workers because those on the Government contract would likely be paid more than those on the employer's nongovernment work and also because those on the Government project would probably get lower hourly pay after that job is done. By partially protecting unionized employers from open shop competition for Government contracts, the law makes it easier for construction unions to organize contrac- tors and to negotiate inflationary pay agreements with them. Thus the statute amounts to a union relief and subsidy act. The storm of protest by organized labor to the 1971 suspension of the Act, and labor's ready acquiescence to a wage controls program in the industry in return for lifting the suspension, clearly show the value of this law to the construction unions. (5) The Act impedes entry of minority groups into the con- struction industry. These groups have fewer opportunities because typically they are more likely to find employment in the nonunion sector of the industry, the sector which the law places at a dis- advantage in bidding for Government contracts. .Minority groups are also special targets for jobs under Federal public works programs, but, as noted earlier, such programs are to some extent frustrated in their job-creation objective by the Davis-Bacon Act. .l/ Nonunion wages in construction tend to be lower than union pay, sometimes substantially so. According to 1976 Employment and ” Training Report of the President, op. cit., p. 67. A CRS - 29 Minority groups are hurt in still another way. They often get into construction work informally as helpers or trainees.l The job structure in Davis-Bacon wage determinations tends to follow union occupational classifications and seldom includes separate categories for helper or informal trainee. Employers with Government contracts typically must pay helpers and trainees at the appropriate journey- man (craftsman) rate or else--the more likely outcome--not hire them at all for Davis-Bacon work. Arguments sympathetic to Davis-Bacon. (1) The Act is more than a depression measure, and is needed now as much as ever. It has become commonplace in many circles--particularly among the critics who seek its demise or emasculation--to suggest that the Davis-Bacon prevailing wage program is a product solely of the depression of the A 1930's. This is not so as far as the "little‘Davis-Bacon laws" of the States are concerned. Only 15 of the 41 States with such statutes adopted them during the 1930's. Of the remainder, 7 enacted their laws before the 1930's and the rest after that decade.l/ Represen- tative Bacon, co-sponsor of the 1931 statute, introduced the first of his prevailing wage bills in 1927. His action was related to a 10-year Federal building program that had been authorized by Congress 2/ in the prosperous year of l926;_ Also, the large majority of the .l/ AFL-CIO, Building and Construction Trades Department, In Defense of Davis-Bacon, p. 5. 2/ Ibid., pp. 5-6. CRS - 30 55 Federal statutes which incorporate the Davis-Bacon provision for federally assisted construction were enacted long after the 1930's decade; evidently Congress believes the wage floor provided by the 1/ law is needed now as much as ever. Those who question the continued need for wage floors in con- struction emphasize the relatively high hourly pay rates in the 2/ building trades but ignore the fact that construction work is highly seasonal and that the typical worker in the industry averages fewer 3/ hours per year than other workers. "How many people know, for example, that ... the average income of a worker in the construction 4/ industry is less than the average for workers in manufacturing?" The building trades also are hazardous. The National Safety Council reported a work fatality rate (deaths per 100,000 workers) of 57 in .l/ See Appendix B for a list of these statutes. 3/ Average hourly earnings in 1977 were $8.04 in construction com- pared to $5.63 in manufacturing and $5.24 for private industry as a whole. Source: U.S. Department of Labor, Bureau of Labor Statistics. 3/ Unemployment rates in the construction industry are regularly about twice as high as the average for the country as a whole; construction employment is seasonal, intermittent, and cyclical. According to 1976 Employment and Training Report of the President, op. cit., pp. 61-62. 4/ AFL-CIO, op. cit., p. ii. Average annual earnings of experienced male workers in 1969 equaled $8,750 in construction and $8,849 in manufacturing, according to 1976 Employment and Training Report of the President, op. cit., table 6, p. 68. More recent comparative annual data do not appear to be available. CRS - 31 construction in 1976, compared to a rate of 14 for all industries as a whole in that year. Construction was the second most dangerous industry shown in the Council's tabulation, after mining and quarrying, which had a 1976 rate of 63fl/ The need for labor standards protec- tion in construction remains as real today as in the past. The assertion is sometimes made that, given the existence of a national minimum wage law (the Fair Labor Standards Act), addi- tional wage floors in the construction industry or anywhere else are no longer needed. Coverage of the FLSA has expanded significantly in recent years, the assertion continues, and the minimum wage level has risen substantially. The fact is that the FLSA is intended to protect only the nation's lowest-wage workers; the present minimum is $2.65 an hour. It does nothing for workers above the "poverty pay" level, such as those in construction. The FLSA differs in philosophy from prevailing wage legislation and cannot seriously be suggested as an acceptable alternative. (2) The Act preventscutthroat competition and promotes fair competition based on decent labor standards. No one objects to competition as long as it is based on decent standards and is not exploitative. Davis-Bacon prevents only that type of cutthroat com- petition which seeks to bring substandard wages and working condi- tions into the locality of the Government project. Empirical 1/ National Safety Council. Accident Facts, 1977 edition, p. 23. CRS - 32 evidence shows that employers who cut corners on wages tend to cut corners on quality of construction and materials. As the purchaser, assister, or guarantor of the construction project, the Federal Govern- ment has the right and in fact the duty to resist becoming a party to the deterioration of community labor standards. The nature of the construction industry provides a constant temptation for competition based on wage cutting. The industry has many small employers, entry is relatively easy, and competition is intense. That competition seldom rests on product design, since the structure to be built and the materials to be used are commonly spe- cified in considerable detail by the buyer. Competition thus naturally shifts to labor costs. This is unfair to union contractors because lthey are constrained from cutting wages by collective bargaining agreements whereas nonunion contractors have no such constraint. Without the Act the Federal Government would be placed in the posi- tion of rewarding the contractor who undercuts the going rates. It is this practice which the framers of the legislation intended to prevent. (3) The Act follows established Federal Government policy to pay prevailing wages. It is only one of several Federal statutes mandating the payment of prevailing wages. It is consistent with national policy to eliminate wage rates below those prevailing locally, at least where the Government is purchaser of labor services. The CRS - 33 Walsh-Healey Public Contracts Act, enacted in 1936, requires the pay- ment of the prevailing wage rate for Government contract work in manu- facturing industries. The McNamara-O'Hara Service Contract Act of 1965 requires pay at prevailing rates for employees performing services under contract with the Federal Government. The Federal Government itself employs about a half million blue-collar workers whose wage rates are determined on the basis of prevailing local rates in the communities where they are employed. (4) The Act is not inflationary. In the long run it may reduce costs by (a) preventing awards to incompetent contractors competing only by virtue of low wages, and (b) decreasing industrial strife Tthrough the maintenance of decent labor standards and through helping more Americans live healthier and fuller lives. If the hidden economic and social costs of wage cutting are factored in, a lower initial construction expense to the Government does not necessarily repre- sent a lower total long-run cost. (5) Repeal or weakening of Davis-Bacon would adversely affect apprenticeship programs in the construction industry and hurt minority groups. "The chaos that would come with the repeal of Davis-Bacon would have to have an adverse effect on the labor-management appren- ticeship program in the unionized sector of the construction industry. Too many of the unionized employers, under pressure from nonunion competition, would be forced to cut costs--and one place to trim them CRS - 34 would be in training outlays. In time, many of the existing appren- ticeship programs would be curtailed, and others would be terminated. This would represent another hidden cost that society would have to 1/ pay." Curtailing union apprenticeship programs in construction would not only seriously weaken the industry's training system for new crafts- men but also would hurt minority groups. Minority youth have been actively encouraged in recent years, through union-sponsored Appren- ticeship Outreach Programs, to enroll in apprenticeship training. In the construction industry as of December 31, 1976, workers from minority groups represented 20.7 percent of all registrants in union- sponsored apprenticeship programs compared to less than 10 percent in nonunion-sponsored programs. During 1976 the registered union programs graduated into journeyman status 3,777 workers from minority groups while the nonunion programs graduated l62;Z/ Repeal or weakening of the Act would hurt minority workers as well as other workers in another way. Any savings to contractors from such action would, in the words of the then Assistant Labor 1/ Vcito, P0 320 2/ Data on apprenticeship are unpublished figures from U.S. Depart- ment of Labor, Employment and Training Administration. Quoted in Op. cite, P0 470 CRS - 35 Secretary for Employment Standards Bernard DeLury, "come out of the 1/ hide of the workers regardless of color." Bills in the 95th Congress Relating to Davis-Bacon Several bills have been introduced in the 95th Congress with respect to the Davis—Bacon Act. In the House the bills were referred .to the Committee on Education and Labor, in the Senate to the Comittee on Human Resources. As of this writing (early July 1978), no com- mittee action in either house has occurred or is scheduled on any of the bills. H.R. 738, introduced January 4, 1977 by Mr. Archer, would repeal the Davis+Bacon Act. H.R. 5647, introduced March 28, 1977 by Mr. Ryan and 10 co- sponsors, would amend the Act to provide for a fact-finding panel to determine the cause of work stoppagesand to provide that the Federal Government may, in certain cases, terminate contracts with contractors who are at fault in causing such work stoppages. H.R. 5648, introduced March 28, 1977 by Mr. Ryan and 10 co- sponsors, would amend the Act to prohibit contractors from replacing certain employees participating in a strike. .l/ Quoted in Bureau of National Affairs, Daily Labor Report, April 23, 1975, po'A“3oi CRS - 36 H.R. 8443, introduced July 20, 1977 by Mr. Won Pat, would require the payment of prevailing wage rates on Federal construction contracts in Guam. H.R. 9474, introduced October 6, 1977 by Mr. Mitchell (Md.), would amend the Act to provide that a laborer or mechanic on Federal contract work be paid the appropriate mechanic's or apprentice's wage applicable to a particular trade during any period in which such individual uses the materials, equipment, or tools of such trade. Representative Hagedorn has introduced in the 95th Congress eight bills to amend the Davis-Bacon Act. The first, H.R. 6000, was introduced April 4, 1977. A revised version, H.R. 6100, was intro- duced the next day, on April 5. Subsequently, six bills identical to H.R. 6100 were introduced by Mr. Hagedorn and 48 co-sponsors: H.R. 6899 (May 4, 1977), H.R. 7941 (June 22, 1977), H.R. 8488 (July 22, 1977), H.R. 9295 (September 26, 1977), H.R. 11929 (April 6, 1978), and H.R. 12224 (April 19, 1978). Also identical to S. 6100 is S. 1540, introduced May 17, 1977 by Senators Tower and Schmitt--the only Senate bill concerning the Davis-Bacon Act introduced to date, in the 95th Congress. H.R. 6100/S. 1540, Federal Construction Costs Reduction Act, of 1977. The provisions of this proposal, discussed below, address themselves to various criticisms and alleged shortcomings of the Act and its administration. The proposal amends not only the.Davis-Bacon CRS - 37 Act itself but also the Davis-Bacon provision wherever incorporated in laws involving federally assisted construction. 1. Increases from $2,000 to $40,000 the dollar threshold above which a contract must be valued to qualify for coverage under the Act. Directs the Secretary of Labor to adjust such threshold level annually in proportion to change in the Consumer Price Index. The purpose of this amendment, according to Representative Hagedorn, is "to eliminate nuisance coverage, and to reflect the inflation of the past forty-five years.“l/ Construction costs rose roughly seven- fold between 1931 and 1977, according to the U.S. Commerce Department's Composite Index of Construction Costs, the most widely used deflator for the construction industry.z/ Many Federal procurement agencies support raising the coverage threshold to relieve administrative burden and costs, according to a 1972 study by the Commission on Government Procurement. The majority of the Federal agencies surveyed by the Commission supported a minimum 3/ of $25,000, with recommendations ranging from $5,000 to $100,000.- 1/ Congressional Record [daily ed.], April 22, 1977: H3463. 2/ The Index increased from 23 in 1931 (1972=1oo) to 156.6 in 1977. Index for 1931 from U.S. Department of Commerce, Construction Review, June/July 1977, "Construction Cost Indexes, 1915-76," by Elliot Levy, p. 6. Index for 1977 from Construction Review, Jan./Feb. 1978, table E-1, p. 52, 3/ U.S. Commission on Government Procurement. Report of the Com- mission, Volume 3, Part E, pp. 135-136. CRS - 38 Construction contracts below $25,000 in value are substantial in number but represent only a fraction of total construction expendi- tures.l/ The Associated Builders and Contractors, an association primarily of open shop contractors, supports raising the Act's thresh- old to $40,000 "to encourage bidding from small businessmen and minority contractors (many of whom cannot bear the excessive paper- work burden in complying with Davis-Bacon requirements)."'z/ The AFL-CIO strongly opposes any threshold increase. It believes such increase would significantly reduce protection for 3 workers on small repair and painting contracts._/ The Labor Depart- ment also opposes any increase in the coverage minimum, according to Davis-Bacon staff interviewed for this report. 2. Makes the Act applicable only to wages of unskilled laborers. Exempts apprentices, helpers, and trainees from the Act, and forbids the Secretary of Labor from taking any action which discourages the customary utilization of such persons. The present law requires the Labor Department to determine prevailing wage rates for the various classes of laborers and mechanics 1/ According to studies cited in ibid., p. 140, and in Thieblot, op. cit., p. 78. 3/ Release of the Associated Builders and Contractors on H.R. 6100/ S. 1540. 3/ According to U.S. Commission on Government Procurement. Report of the Commission, Volume 3, Part E, p. 136. CRS - 39 which prevail in the locality of the project. A wage determination may include only a few job classifications or it may consist of pages 1 of separate classifications:—/ Critics of the Department aver that its wage determinations tend to follow union pay schedules and that this perpetuates the highly specialized craft designations of the construction unions and neutralizes the work force flexibility that nonunion contractors provide. Determining the prevailing local wage for only unskilled labor would simplify administration of the Act and leave the higher wages of other construction occupations to competitive market forces. Competition may maintain pay differentials between the unskilled labor rate and those for the various crafts, or it may compress them:Z/ Separate rates for apprentices and trainees, set at some per- centage of the appropriate journeyman rate, are permitted by present Labor Department regulations if the apprentices and trainees are registered in approved Federal or State programs. Unregistered apprentices and trainees on a Davis-Bacon contract must be paid at the regular rate for the journeyman classification in which they _l/ One study estimates an average of 50 individual wage rates per determination. Thieblot, OP. Cit., p. 170, , 2/ Competition will compress craft pay differentials, according to Representative Hagedorn (Congressional Record [daily ed.], April 223 19773 H3463*4) and Davis-Bacon staff interviewed for this report. CRS - 40 work. Helpers may be employed at sub-journeyman rates only where prevailing local job classifications include a bona fide helper cate- gory. These restrictions are intended to prevent using workers as journeymen or laborers but calling them apprentices, trainees, or helpers and paying them less than they are entitled to. Critics allege that the Department's administrative procedures favor union contractors because most registered apprenticeship and training programs are union sponsored and because a helper category is rare in union job structures but common among nonunion contractors. Department procedures, it is contended, impede the informal training channels through which a large part of the construction work force enters the industry, and restricts job opportunities for minority groups. The exemption in H.R. 6100/S. 1540 for apprentices, trainees, and helpers is intended to satisfy these criticisms. 3. Limits the locality for a prevailing wage determination to the county in which the contract is to be performed, except that if the number of like projects in that county within the two preceding years provide an insufficient data base, the locality is to be extended to like projects in the past two years in (in order of priority) the nearest adjacent county, any adjacent county, any secondarily adjacent county, and finally the State itself. No county may be used if out- side the State of the intended project and none may be used which includes a standard metropolitan statistical area of over 200,000 CRS - 41 population. If a sufficient data base is not available from the above, the wage rate determination for unskilled labor shall be twice the minimum wage set by the Fair Labor Standards Act. The Act mandates the payment of wages prevailing for work of like character "in the city, town, village, or other civil subdivi- sion of the State in which the work is to be performed." Present Labor Department practice is to define the boundaries of a local area as the county in which the proposed project is located. If the county does not provide enough recent payroll data for the type of construc- tion being contracted--data for projects completed more than a year earlier are not generally used--the Department may reach into adjacent counties for relevant payroll data. Sometimes this means that metro- politan-area rates are used to establish rates for projects in non- metropolitan areas, but the Department tries to avoid this. State lines are not crossed for wage data, although sometimes the rates found to be prevailing in one locality may be union scales negotiated by a union headquartered in a contiguous State.l/ The detailed definition of locality in H.R. 6100/S. 1540 is intended to satisfy a frequently voiced complaint about Department determinations, that wage scales from metropolitan areas are often applied to rural regions. This procedure, known as "importation of .l/ Information in this paragraph supplied by Labor Department per- sonnel. CRS - 42 wages," would be ironic if true since the legislative intent of the Davis-Bacon Act was precisely to prevent the upsetting of local com- munity pay standards by outside wage practices. One critic has noted that the Department's general wage deter- minations, as opposed to project determinations, define localities in relatively large geographic areas--sometimes entire States in less _1_/ populous regions. The Council on Wage and Price Stability similarly states that "there has been a general movement in the last few years toward determinations covering larger geographical areas, in large part because the administrative burden involved in separate prevailing wage determinations for small areas is too great for the available _2_/ staff to handle." Permitting the use in the data base of wage rates paid within two years of the determination is a change that would probably be opposed by those sympathetic to the Davis-Bacon Act. Going back that far in time for payroll data may make the determination out of date even before the contract is awarded. The prevailing wage determina- tion included in the advertised contract specifications applies for the duration of the project. Many projects last more than a year or two, which may make the determination further out of date and that _l/ Thieblot, op. cit., pp. 50-51. _g/ Council on Wage and Price Stability. An Analysis of Certain Aspects of the Administration of the Davis-Bacon Act, p. 2. CRS - 43 _1_/ much less protection for the workers. A few States have recognized the problem. New York, for example, recently amended its prevailing wage statute to require rate re-determinations to reflect wage changes 3/ while the work is being performed. 4. The prevailing wage determined by the Secretary of Labor for unskilled labor in a given locality shall be the average of wages received by laborers in that locality employed on projects similar to the one being awarded. The average "shall be computed by dividing the sum of the basic hourly wage rates of all such laborers by the number of all such laborers." This relatively brief provision in H.R. 6100/S. 1540 addresses itself to what is perhaps the most criticized wage-determination prac- tice of the Labor Department--the "30 percent rule." The Department's present procedures for the determination of DreV8i1ing wage rates are spelled out in 29 CFR Part 1. The prevailing Wage rate for each trade or craft of laborers and mechanics is the rate Paid in the local area to the majority of those employed in that trade Or Craft on construction similar to the proposed contract, or if there is no one rate paid to a majority, then the rate paid to a plurality of those employed provided this is at least 30 percent. 1/ This point of View is developed in AFL-CIO, op. cit., pp. 53-55. 2/ Inf0rm3ti0n Supplied by the Labor Department's Employment Standards Administration, Division of State Employment Standards, CRS - 44 If there is no such plurality, then the prevailing rate is the average rate (the arithmetic mean) computed by adding the hourly rates paid to all workers in the trade or craft and dividing by the total number of such workers. "According to a representative of the ... Department of Labor, the standards of ‘majority,‘ ‘thirty percent or more,‘ and ‘average’ used in finding the prevailing rate of wages were developed shortly after the Act was passedel and have been used since that time without amendment.... Most states have adopted a similar formula for inter- pretation of their respective ‘little Davis-Bacon‘ laws (New York being an exception which uses forty percent, according to the above Labor Department source).“Z/ Critics of the Department's wage-determination procedures are especially vocal about the 30 percent rule. They allege that to call a rate "prevailing" when it is paid to only a minority of workers is a contradiction in terms. These critics prefer theaveraging method to either the majority or 30 percent rule. They believe that the averaging method results in lower prevailing wage levels because the pay scales of nonunion as well as union contractors are included in 1/ The standards have been in effect since September 1935, promul- gated within 30 days following enactment of the 1935 amendment to the Act. According to AFL-CIO, op. cit., p. 22. 2/ U.S. Commission on Government Procurement. Report 5, Final Report of Study Group #2, pp. 630-631. CRS - 45 calculating the average. They also believe that the majority and plurality rules favor union contractors, since collective bargaining agreements generally cover more workers than are employed by any one nonunion contractor and therefore are more likely to include a large number of workers clustered at a single hourly rate. One objection to the averaging method voiced by Davis-Bacon staff is that an average rate can hardly be called a prevailing rate because it is artificial, a calculated wage level actually being paid to no one or to only a few. Another consideration is that the cal- culation of averages requires more work than the application of the majority or plurality rules, especially where pay schedules include several pages of separate job classifications. This problem should be less important when computerization of the wage-determination process becomes operational. It is not a problem at all under H.R. 6100/S. 1540, which authorizes prevailing rate determinations only for the single classification of laborer. The Council on Wage and Price Stability recently studied the question whether prevailing wages determined by the averaging method would be lower than those determined by the 30 percent or majority «rule, a claim made by proponents of the averaging procedure. The results were inconclusive because of deficiencies in the data sources. On the one hand, the "analysis does not support the contention that the present Davis—Bacon procedures produce rates that are ‘typically CRS - 46 higher’ than the actual average £atg_paid for the same craft in the labor market."l/A On the other hand, the "questions raised by the ... analysis seem to imply that the Labor Department should study further the advisability of changing to an average calculation. ,It appears that there may be potential cost savings in some localities, occupa- tions and classes of construction although the data are somewhat ambiguous and perhaps unreliable.“Z/ 5. Adds to the Act a detailed list of factors for use by the Labor Secretary in defining "projects of a character similar." The Act at present specifies that wages mandated for a proposed contract be at least the wages locally prevailing on "projects ofla character, similar" to the proposed project, but does not define the phrase. Determining "character similar" is important since the industry is, heterogeneous producing manydiverse structures, and wage rates may vary significantly by type of construction. The Labor Departmentadministers this part of the Act by C 3/ classifying construction into the following four categories: 1/ Council on Wage and Price Stability, op. cit., p. 11. _g/ Ibid., p. 11. 3/ A more detailed description of the four categories with a fuller. list of examples for each category may be found in U.S. Department of Labor, Employment Standards Administration, Wage and Hour Division, All Agency Memorandum No. 130, Application of the Standard of Comparison "Projects of a Character Similar" under the Davis-Bacon and Related Acts, March 17, 1978. CRS -’47 (a) Building construction, such as office buildings, hospi- tals, hotels, parking garages, libraries, apartment buildings over four stories, etc. (b) Heavy construction. Those projects not properly classified as "building," "highway," or "residential," such as dams, flood control projects, reservoirs, and water and sewage treatment plants. (C) Highway construction, such as highways, bridges, over- passes, etc. (d) Residential construction, such as single family houses and apartment buildings no more than four stories high. The residential construction category is a relatively new one for wage-determination purposes, according to Labor Department per- sonnel. It was added in the early 1970's, perhaps in part because of a series of Davis-Bacon studies issued between 1962 and 1970 by ,the General Accounting Office (GAO). These studies reviewed the Labor Department's wage determinations for 29 projects, all but one of which were for housing, and concluded that construction costs increased 5 to 15 percent because of determinations which were higher than the wages actually prevailingfl/ Since residential construction is largely nonunion and usually pays lower wages than building construc- tion--the category used by the Department for most of the 1962-70 wage determinations reviewed by GAO--it seems likely that the GAO cost-increase estimate would no longer be applicable for Government 1/ Report to the Congress by the Comptroller General of the United States, Need for Improved Administration of the Davis-Bacon Act Noted Over a Decade of General Accounting Office Reviews, p. 1 and p. 10. CRS - 48 housing projects since the Department's addition of the residential construction category. (According to information supplied by GAO personnel, the General Accounting Office has more recently reviewed a number of other Davis- Bacon projects; a report based on this review has been written and is targeted for release in late 1978.) 6. Unless impractical, wage determinations shall be made no later than 60 days before opening of invitations for bids on the pro- ject. According to Representative Hagedorn: "This would provide oppor- tunity for bidders to assess fully their possible participation, and time for interested parties to challenge improper determinations.“- 7. Requires contractors to submit weekly affidavits certi- fying compliance as to wage payments and posting of the wage scale, except that where evidence of violation exists, requires the submis- sion of weekly certified payroll statements and such other informa- tion as may be required by the Secretary of Labor. This provision is intended to simplify record keeping by eliminating the present Labor Department requirement (in 29 CFR Part 5) for submission to the contracting agency of weekly payroll records by all contractors, not only those in violation. The records must be kept for three years after contract completion. The Department 1/ Congressional Record [daily ed.], April 22, 1977: H3464. CRS - 49 feels that such records are needed to investigate complaints, prevent the payment of journeymen at laborer or helper rates, and generally assure compliance. Contractors and procurement agencies both have complained that the weekly payroll submission is time-consuming, costly, and unnecessary. The Commission on Government Procurement noted that the Associated General Contractors in 1972 estimated the annual cost to contractors of this requirement at $190 million, and that Government procurement personnel "were almost unanimous in their con- clusion that few, if any, violations of significance were ever dis- closed as a result of their review and verification of the weekly _1_/ payrolls." 8. Establishes a Federal Construction Appeals Board, composed of three members appointed by the President for six-year staggered terms subject to Senate confirmation. Any interested person, as defined in the bill, may appeal wage rate determinations or other Labor Department regulations or orders likely to substantially affect future wage rate determinations. Expeditions consideration of appeals would be required, with judicial review available. .l/ U.S. Commission on Government Procurement. Report of the Commission, Volume 3, Part E, p. 139. The Commission's objectivity has been questioned in an AFL- CIO publication because its views were based on material compiled by one of its study groups, four of whose six members came from procurement agencies, a fifth from a nonunion construction firm, and none from organized labor. See AFL-CIO, op. cit., p. 50. CRS - 50 This Board would replace the present Wage Appeals Board (WAB), discussed above, which was established in 1963 by the Secretary of Labor with Board members appointed by him. The chief objection to the WAB is that it is a dependent creation of the Labor Department, the very agency whose determinations and rulings it reviews. 9. Becomes effective 90 days after enactment but would not affect existing bids and contracts. CRS-51 Appendix A , DAVIS-BACON ACT [Public-—No. 403-7 4th Congress] [S. 3303] AN ACT To amend the Act approved March 3, 1931. relating to the rate of wages for laborers and mechanics employed by contractors and subcontractors on public buildings. Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, That the Act entitled “An Act relating to the rate of wages for laborers and mechanics employed on public buildings of the United States and the District of Columbia by con- tractors or subcontractors, and for other purposes,” approved March 3, 1931, is amended to read as follows: “That the advertised specifications for every con- tract. in excess of $2,000, to which the United States or the District of Columbia is a party, for construction, alteration, and/or repair, in- cluding painting and decorating, of public build- ings or public works of the United States or the District. of Columbia within the geographical limits of the States of the Union or the District of Coltunbia, ‘and which requires or involves the employment of mechanics and/or laborers shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be pre- vailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, vil- lage, or other civil subdivision of the State in which the work is to be performed, or in the Dis- trict of Columt.-ia if the work is to be performed there; and every contract based upon these speci- fications shall contain a stipulation that the con- tractor or his subcontractor shall pay all mechanics and laborers employed directly "upon the site of the wo: ., unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account, the full amounts accrued at time of payment, computed at wage rates not less than thos'~ .‘:'L..Llr".1 in the advertised_ specifications, regardless of any cont-ractural relationship which may be alleged to exist between the contractor or subcontractor and such laborers and mechanics, and that the scale of wages to be paid shall be posted by the contractor in a prominent and easily accessible place at the site of -the work; and the further stipulation that there may be withheld from the contractor so much of accrued payments as may be considered necessary by the contracting oflicer to pay to laborers and mechanics employed by the contractor or any subcontractor on the work the difierence between the rates of wages required by the contract to be paid laborers and mechanics on the work and the rates of wages received by such laborers and mechanics and not refunded to the contractor, subcontractors, or their agents. “Sec. 2. Every contract within the scope of this . Act shall contain the further provision that in the event it is found by the contracting oilicer that any laborer or mechanic employed by the con- tractor or any subcontractor directly on the site of the work covered by the contract has been or is being paid a rate of wages less than the rate ~ of wages required 2:‘-c the contract to be paid as aforesaid, the Government may, by written notice to the contractor, t- zminate his right to proceed with the work or such part of the work as to which there has been a failure to pay said required wages and to prosecute. the work to completion by con- tract or otherwise, and the contractor and his .='-vreties shall be liable to the Government for any excess costs occasioned the Government. thereby. “Sec. 3. (a) The Comptroller General of the Uiiited States is hereby authorized and directed to pay directly to laborers and mechanics from any accrued pa} I..l€l'l.tS withheld under the terms of the contract any wages found to be due laborers and mechanics pursuant to this Act; and the Comptroller General of the United States is further authorized and is directed to distribute CRS - 52 a list to all departments of the Government giv- ing the names of persons or firms whom he has found to have disregarded their obligations to em;-Toyees and subcontractors. No contract shall be awarded to the persons or firms appearing on this list or to any firm, corporation, partnership, or association in which such persons or firms have an interest until three years have elapsed from the date of publication of the list containing the names of st: ssh persons or firms. “(b) If the accrued payments withheld under the terms of the contract, as aforesaid, are insuf- ficient to reimburse all -the laborers and mechanics with respect to whom there has been a failure to pay the wages required pursuant to this Act, such laborers and mechanics shall have the right of a action and/or of intervention against the con- tractor and his sureties conferred by law upon persons furnishing labor or materials, and in such proceedings it shall be no defense that such laborers and mechanics accepted or agreed to accept less than the required rate of wages or voluntarily made refunds. “Sec. 4.». This Act shall not be construed to super- sede or impair any authority otherwise granted by Federal law to provide for the establishment of specific wage rates. “Sec. 5. This Act shall take effect thirty days after its pawage, but shall not affect any contract then existing or any contract that may thereafter be entered into pursuant to invitations for bids that are outstanding at the time of the passage of this Act. “Sec. 6. In the event of a national emergency the President is authorized to suspend the pro- visions of this Act. “Sec. 7. The funds appropriated and made available by the Emergency Relief Appropriation Act of 1935 (Public Resolution Numbered 11, 74th Congress) , are hereby made available for the fiscal year ending June 30, 1936, to the Depart- ment _of Labor for expenses of the administration of this Act.” Approved, August 30, 1935. AMENDMENT [Public—-No. 633-—76th Congress] [Chapter 37 3——3d Session] [S. 3650] AN ACT To require the payment of prevailing rates of wages on Federal public works in Alaska and Hawaii. Be it enacted by the Senate and House of Rep- resent/itires of the United States of Amevica in Congress assembled, That section 1 of the Act en- titled “An Act relating to the rate of wages for laborers and mechanics employed on public build- ings of the United States and the District Of Columbia by contractors and subcontractors, and for other purposes,” approved March 3, 1931 (46 Stat. 1494), as amended, is further amended by striking out. the words “States of the Union or the District of Columbia” and inserting in lieu thereof “States of the Union, the Territory of Alaska, the Territory of Hawaii. or the District of Coli.mbia”; and by striking out the words “or other civil subdivision of the State” and insert- ing in lieu thereof “or other civil subdivision of the State, or the Territory of Alaska or the Ter- ritory of Hawaii”. Sec. 2. The amendments made by this Act shall take effect on the thirtieth day after the date of enactment of this Act, but shall not affect any contract in eximnce on such effective date or made thereafter pursuant to invitations for bids out- standing on the date of enactment of this Act. Approved, June 15, 1940. [40 U. S. Code, sec.‘276a—7] The fact that any contract authorized by any Act is entered into without regard to section 5 of Title 41, or upon a cost-plus-it-fixed-fee basis or otherwise without. advertising for proposals, shall not be construed to render inapplicable th: provisions of sections 276a to 276a-5 of this title, if such Act would otherwise be applicabl; to such contract. M arch 23, 1941, 12 noon, ch. 26, 55 Stat. 53; Aug. 2;, 1941, ch. 395, 55 Stat. 658. ens - 53 AMENDMENT [Public-—No. 88—349——88th Congmss] July 2, 1964 [H.R. 6041] ANAU1‘ To amend the prevailing wage section of the Davis-Bacon Act, as amended; and related sections of the Federal Airport Act, as amended; and the National Housing Act, as amended. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 1 of the Act of March 3, 1931, as amended (46 Stat 1494, as amended; 40 U.S.C. 276a), is hereby amended by designating the language of the present section as subsection (a) and by adding at the end thereof the following new subsection (b) : “(b) As used in this Act the term ‘wages’, ‘scale of wages’, ‘wage rates’. ‘minimum wages’. and ‘prevailing wages’ sh-all include- “(1) the basic hourly rate of pay; and “(2) the amount of_— * “(A) the rate of contribution irrevocably made by a contractor or subcontractor to a trustee or to a third person pursuant to a fund, plan, or program; and “(B) the rate of costs to the contractor or subcontractor which may be reasonably anticipated in providing benefits to laborers and mechanics pursuant to an enforcible commit- ment to carry out a financially responsible plan or program which was communicated in writing to the laborers and mechanics affected. for medical or hospital care. pensions on retirement or death. compensation for injuries or illness resulting from occupational activity, or insurance to provide any of the foregoing, for unem- ployment benefits, life insurance, disability and sickness insurance, or accident insurance, for vacation and holiday pay, for defraying costs of apprenticeship or other similar programs. or for other bona fide fringe benefits. but only where the contractor or subcontractor is not required by other Federal, State. or local law to provide any such benefits: Provided, That the obligation of a contractor or subcontractor to make payment in accordance with the prevailing wage determinations of the Secretary of Labor. insofar as this Act and other Acts incorpo- rating this Act by reference are concerned may be discharged by the making of payments in cash. by the making of contributions of a type referred to in paragraph (2) (A), or by the assumption of an enforcible commitment to bear the costs of a plan or program of a type referred to in paragraph (2) (B), or any combination thereof. where the aggregate of any such payments. contributions. and costs is not less than the rate of pay described in paragraph (1) plus the amount referred to in paragraph (2). “In determining the overtime pay to which the .laborer or mechanic is entitled under any Federal law, his regular or basic hourly rate of pay (or other alternative rate upon which premium rate of overtime compensation is computed) shall be deemed to be the rate computed under paragraph (1). except that where the amount of payments, contributions, or costs incurred with respect to him exceeds the prevailing wage applicable to him under this Act. such regular or basic hourly rate of pay (or such other alternative rate) shall he arrived at by deducting from the amount of payments, contributions, or costs actually incurred with respect to him, the amount of contributions or costs of the types described in paragraph (2) actually incurred with respect to him. or the amount determined under paragraph (2) but not actually paid. whichever amount is the greater.” . Sec. 2. Section 15(b) of the Federal Airport Act. as amended (60 Stat. 178, as amended: 49 U.S.C. 1114(b)), is hereby amended by inserting the words “in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 276a--276a—5)" alter the words “Secretary of Labor,". Sec. 3. Section 212( a) of the National Housing Act. as amended -' '-‘=3 Stat. %, as amended; 12 U.S.C. 1715(c) ). is hereby amended by inserting the words “in accordance with the Davis-Bacon Act, as amended (40 U.S.O. 278a—-2‘a'6a—5)," after the words “Secretary of Labor.”. Ste. 4. The amendments made by this Act shall take eflect on the ninetieth day after the date of enactment of this Act, but shall not. aflect any contract in existence on such eirective date or made there- after pursuant to invitations for bids outstanding on such eaective date and the rate 0’ Payments Specified by section 1(b) ( 2) of the Act of March 3, 1931, as amended by this Act, shall, during a period of two hundred and seventy days after such eflective date, become eflective only in those cases and reasonable classes of cases as the Secretary of Labor, acting as rapidly as practicable to make such rates of payments fully elective, shall by rule or regulation provide. Federal con- struction con- tract laborers. D6 bene ts. 49 Stat. 1011. 78 STAT. 238. 78 STAT. 239. Trustee con- tribution. Benefit coats. P bll - u:i.‘.’T§..uf:a of payment. Overtime pay computation. cxclusion of benefit costs. Air) ort re‘ ecu. 33 Sitat. 430. 49 Stat. 1011. Housing 3 tat. 807 ; 73 Stat. 687. 12 CSC 1715c. Eflectlve date. 78 STA1‘. 239. 78 STAT. 240. 0.8. fiflflfifi FINTING G71 IX O--Ill-3 CRS - 54 Appendix B STATUTES RELATED TO THE DAVIS-BACON ACT REQUIRING PAYMENT OF WAGES AT RATES PREDETERMINED BY THE SECRETARY OF LABOR The Davis—Bacon Act (secs. 1-7, 46 Stat. 1494, as amended; Public Law 74-403, 40 U.S.C. 276a-276a-7). National Housing Act (sec. 212 added to c. 847, 48 Stat. 1246, by sec. 14, 53 Stat. 807; 12 U.S.C. 1715c and repeatedly amended). Housing Act of 1950 (College Housing)(amended by Housing Act of 1959 to add labor provisions, 73 Stat. 681; 12 U.S.C. 1749a(f)). Housing Act of 1959 (sec. 40l(f) of the Housing Act of 1950 as amended by Public Law 86-372, 73 Stat. 681; 12 U.S.C. 1701q(c){3)). Commercial Fisheries Research and Development Act of 1964 (sec. 7, 78 Stat. 199; 16 U.S.C. 779e(b)). Library Services and Construction Act (sec. 7(a), 78 Stat. 13; 20 U.S.C. 355c(a)(4), as amended). National Technical Institute for the Deaf Act (580- 5(b)(S), 79 Stat. 126; 20 U.S.C. 684(b)(5)). National Foundation on the Arts and Humanities Act of 1965 (sec. S(k), 79 Stat. 846 as amended; 20 U-5-C. 954(5)). Elemen ary and Secondary Education Act of 1965 as amended by Elementary and Secondary and other Education Amendments of 1969 (sec. 423 as added by Public Law 91-230, Title IV, sec. 401(a)(l0), 84 Stat. 169, and renumbered sec. 433. by Public Law 92-318; Title 1:1, 10. 11. 12. 13. 14. 15. 16. 17. 18. CRS-55 sec. 30l(a)(1), 86 Stat. 326; 20 U.S.C. 1232b)). Under the amendment coverage is extended to all programs administered by the Commissioner of Education. The Federal-Aid Highway Act of 1956 (sec. 108(b), 70 Stat. 378, recodified at 72 Stat. 895; 23 U.S.C. 113(3): as amended), see particularly the amendments in the Federal—Aid Highway Act of 1968 (Public Law 90-495, 62 Stat. 815). Indian Self—Determination & Education Assistance Act (sec. 7, 88 Stat. 2205; 25 U.S.C. 450e). Indian Health Care Improvement Act (sec. 303(b), 90 Stat. 1407; 25 U.S.C. 1633(b)). Rehabilitation Act of 1973 (sec. 306(b)(5), 87 Stat. 384, 29 U-S.C. 776(b)(5)). Comprehensive Employment and Training Act of 1973 (sec. 606, 87 Stat. 880, renumbered sec. 706 by 88 Stat. 1845; 29 U.S.C. 986; also sec. 604, 88 Stat. 1846; 29 U.S.C. 964(b)(3)). State and Local Fiscal Assistance Act of 1972 (sec. l23(a)(6), 86 Stat. 933; 31 U.S.C. 1246(a)(6)). Federal Water Pollution Control Act (sec. 513 of sec. 2, 35 Stat. 894; 33 u.s.c. 1372). Veterans Nursing Home Care Act of 1964 (78 Stat. 502, as amended; 38 U.S.C. S03S(a)(8)). Postal Reorganization Act (sec. 4l0(b)(4)(C); 84 Stat. 726 as amended; 39 U.S.C. 4lO(b)(4)(C)). 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. (ms-56 National Visitors Center Facilities Act of 1968 (sec. 110, 32 Stat. 45; 40 U.S.C. 808). Appalachian Regional Development Act of 1965 (sec. 402, 79 Stat. 21; 40 U.S.C. App. 402). Health Services Research, Health Statistics, and Medical Libraries Act of 1974 (sec. 107, see sec. 308(h)(2) thereof, 88 Stat. 370, as amended by 90 Stat. 378; 42 U.S.C. 242m(h)(2)). Hospital Survey and Construction Act, as amended by the Hospital and Medical Facilities Amendments of 1964 (sec. 6OS(a)(5), 78 Stat. 453; 42 U.S.C. 291e(a)(S)). Health Professions Educational Assistance Act (sec. 303(b), 90 Stat. 2254; 42 U.S.C. 293aXg)(l)(C); also sec. 308a, 90 Stat. 2256, 42 U.S.C. 293a(C)(7)). Nurse Training Act of 1964 (sec. 941(a)(l)(C), 89 Stat. 364; 42 u.s.c. 296a(b)(5)). Heart Disease, Cancer and Stroke Amendments of 1965 (sec. 904, as added by sec. 2, 79 Stat. 928; 42 U.S.C. 299d(b)(4)). Safe Drinking Water Act (sec. 2(a), see sec.1450e thereof, 88 Stat. 1691; 42 U.S.C. 300j-9(e)). National Health Planning and Resources Act (sec. 4, see sec. 1604(b)(l)(H), 88 Stat. 2261, 42 U.S.C. 3000-3(b)(l)(H)). U.S. Housing Act of 1937, as amended and recodified (88 Stat. 667; 42 U.S.C. 1437j). Demonstration Cities and Metropolitan Development Act of 1955 ‘se°5' 11°: 311: 503. 100° so Stat 1259 1270 .1, . ' ' 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 400 CRS - 57 1277, 1284; 42 U.S1C. 3310; 12 U.S.C. 1715c; 42 U.S.C. 1437j). Slum Clearance Program: Housing Act of 1949 (sec. 109, 63 Stat. 419, as amended; 42 U.S.C. 1459). Farm Housing: Housing Act of 1964 (adds sec. 516(f) to Housing Act of 1949 by sec. 503, 78 Stat. 797; 42 U.S.C. 1486(f)). Housing Act of 1961 (sec. 707, added by sec. 907, 79 Stat. 496, as amended; 42 U.S.C. 1500c-3). Defense Housing and Community Facilities and Services Act of 1951 (sec. 310, 65 Stat. 307; 42 U.S.C. 15921). Special Health Revenue Sharing Act of 1975 (sec. 303, see sec. 222(a){5) thereof, 89 Stat. 324; 42 U.S.C. 2689j(a)(5)). Economic Opportunity Act of 1964 (sec. 607, 78 Stat. 532; 42 U.S.C. 2947). Headstart, Economic Opportunity, and Community Partnership Act of 1974 (sec. 11, see sec. 811 thereof, 88 Stat. 2327; 42 U.S.C. 2992a). Housing and Urban Development Act of 1965 (sec. 707, 79 Stat. 492 as amended; 42 U.S.C. 3107). Older Americans Act of 1965 (sec. 502, Public Law 89-73, as amended by sec. 501, Public Law 93-29; 87 Stat. 50; 42 U.S.C. 3041a(a)(4)). Public Works and Economic Development Act of 1965 (sec. 712; 79 Stat. 575 as amended; 42 U.S.C. 3222). Juvenile Delinquency Prevention Act (sec. 1, 86 Stat. 536; 42 U.S.C. 3884). 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. CRS - 58 New Communities Act of 1968 (sec. 410, 82 Stat. 516; 42 U.S.C. 3909). Urban Growth and New Community Development Act of 1970 (sec. 727(f), 84 Stat. 1803; 42 U.S.C. 4529). Domestic Volunteer Service Act of 1973 (sec. 406, 87 Stat. 410; 42 U.S.C. 5046). Housing and Community Development Act of 1974 (secs. 110, 802(g), 88 Stat. 649, 724; 42 U.S.C. 5310, 1440(9)). Developmentally Disabled Assistance and Bill of Rights Act (sec. 125(4), 39 Stat. 488; 42 u.s.c. 5042(4); Title 1, sec. 111, 89 Stat. 491; 42 U.S.C. 6063(b)(l9)). Public Works Employment Act of 1976 (sec. 109, 90 Stat. 1001; 42 U.S.C. I 6708; also sec. 208, 90 Stat. 1008; 42 U.S.C. 6728). Energy Conservation and Production Act (sec. 451(h), 90 Stat. 1168; 42 U.S.C. 688l(h)). Solid Waste Disposal Act (sec. 2, 90 Stat. 2828; 42 U.S.C. 6979). Rail Passenger Service Act of 1970 (sec. 405d, 84 Stat. 1337; 45 U.S.C. 565(d)). Urban Mass Transportation Act of 1964 (sec. 10, 78 Stat. 307; renumbered sec. 13 by 88 Stat. 715; 49 U.S.C. 1609). Highway Speed Ground Transportation Study (sec. 6(b), 79 Stat. 893; 49 U.S.C. 1636(b)). Airport and Airway Development Act of 1970 (sec. 22(b), 84 Stat. 231; 49 U.S.C. 1722(b)). Federal Civil Defense Act of 1950 (S0 U.S.C. App. 2281i). CKS - 59 54. National Capital Transportation Act of 1965 (sec. 3(b)(4), 79 Stat. 644; 40 U.S.C. 682(b)(4), Note: Repealed December 9, 1969 and labor standards incorporated in sec. 1-1431 of the District of Columbia Code). 55. Model Secondary School for the Deaf Act (sec. 4, 80 Stat. 1027? Public Law 89-694, but not in the U.S.C.). 56. Delaware River Basin Compact (sec. 15.1, 75 Stat. 714, Public Law 87-328) (considered a statute for purposes of the plan but not in the U.S.C.). Note: This list consists of the Davis-Bacon Act itself (shown above as No. 1) and 55 statutes which include the Davis-Bacon provision. CRS - 60 Appendix C BIBLIOGRAPHY Books, Pamphlets, and Congressional Publications AFL-CIO. Building and Construction Trades Department. In defense of Davis-Bacon. n.p. December 1977. 58 p. Prepared for the 59th convention of the Building and Con- struction Trades Department, AFL-CIO. A treatment sympathetic to Davis-Bacon from the union viewpoint. The Davis-Bacon guide. Washington, 1976. 116 p. A guide on the Davis-Bacon and related acts: statutes, regulations, administration and enforcement. Associated General Contractors of America. Davis-Bacon handbook. Washington, 1977. 278 p. Provides background information on the Davis-Bacon Act and related laws for AGC members who perform federally involved construction contracts. Includes three articles by Arthur Hintze which appeared earlier in the Constructor, issues of June, August, and November 1975. Comptroller General of the United States. Need for improved admin- istration of the Davis-Bacon Act noted over a decade of General Accounting Office reviews. Washington, General Accounting Office, July 14, 1971. 46 p. Report to the Congress, B—146842. Review made pursuant to the Budget and Accounting Act, 1921 (31 U.S.C. 53) and the Accounting and Auditing Act of 1950 (31 U.S.C. 67). Review based on a series of seven reports issued between June 1962 and August 1970, listed in Appendix I of the Report. Use, administration, and enforcement of Davis-Bacon Act and Service Contract Act labor standards provisions by selected Federal agencies in Colorado for carpetlaying contracts. n.p., November 24, 1975. 20 p. Some agencies were defining contracts as nonconstruction, thereby eliminating Davis-Bacon requirements. Enforcement practices by some agencies were not effective in detecting cases of underpayments. CRS - 61 Council on Wage and Price Stability. An analysis of certain aspects of the administration of the Davis-Bacon Act. By Robert Gold- farb and John Morrall. Washington, May 1976. 14 p. Examines whether the Labor Department's wage-rate deter- minations are higher than the average rates, and calls for further study. 1976 Employment and training report of the President. Chapter 3, Construction: the industry and the labor force (pp. 55-84). Washington, U.S. Govt. Print. Off. 404 p. A A recent analysis of the construction industry. Gould, John P. Davis-Bacon Act: the economics of prevailing wage laws. Washington, American Enterprise Institute for Public Policy Research, 1971. 44 p. KF 3505 .C65G68 Special Analysis No. 15, Nov. 1971. Author surveys and interprets key literature dealing with the economic impact of the Davis-Bacon Act, and attempts his own model for determining impact. Holland, Thomas W. Brief legislative history of the Davis-Bacon Act, 1931-1935. n.p., May 1961. 12 p. ~ Author of this memorandum was at the time Chairman, Missile Site Public Contracts Advisory Committee. Covers the original 1931 enactment and the 1935 amendment. Thieblot, Armand J., Jr. The Davis-Bacon Act. Philadelphia, University of Pennsylvania, The Wharton School, Industrial Research Unit. ‘I975. 239 p. A A “ Report No. 10, Labor relations and public policy series. A comprehensive and critical study of the Act and its administration. The "little Davis-Bacon Acts": prevailing wage laws of they States.l n.p., Merit Shop Foundation, August 1976. 42 p. United Brotherhood of Carpenters and Joiners of America. Advocate for the defense: a rebuttal to the misleading claims of the opponents of the Davis-Bacon Act. n.p. 1975. 5 p. ‘Brief defense of Davis-Bacon in question-and-answer form. U.S. U.S. U.S. Commission on Government Procurement. Congress. Department of Labor. CRS - 62 Report of the Commission on Government Procurement, Volume 3, Part E--Acquisition of construction and architect-engineer services: 107-151. Washing- ton, U.S. Govt. Print. Off., Dec. 1972. JK 1673 .A488 The Commission on Government Procurement was created by Public Law 91-129 in Nov. 1969 to study and recommend to Con- gress methods to promote economy and efficiency of procurement by the Federal executive branch. This citation and the ones immediately below cover the major reports of or to the Commis- sion relating to Davis-Bacon and related procurement acts. Report of the Commission on Government Procurement, Volume 4, Part G--Legal and administrative remedies: 1-85. Part J-- Other statutory considerations: 167-230. Washington, U.S. Govt. Print. Off., Dec. 1972. JK 1673 .A488 Report 5 to the Commission by Study Group No. 2. over the procurement process. Vol. II, Section IV: 583-740. n.p., Nov. 1971. JK 1673 .A486 Prepared as an advisory report to the Commission on Govern- ment Procurement. Controls House. Committee on Education and Labor. Adminis- tration of the Davis-Bacon Act. Hearings before the Special Subcommittee on Labor. 87th Cong., 2d sess. June-July-Aug. 1962. Washington, U.S. Govt. Print. Off., 1962-63. 3 parts plus appendix. A general investigation of the Davis-Bacon Act and its administration. Legislative history of the Davis-Bacon Act. 87th Cong., 2d sess. Washington, U.S. Govt. Print. Off., 1962. 90 p. At head of title: Committee print. Prepared for Committee use by the U.S. Department of Labor, Office of the Solicitor, Division of Wage Determina- tions. Employment Standards Administration. Division of Employment Standards. Federal labor laws and pro- grams: a layman's guide. Bull. 262, rev. Sept. 1971. Washing- ton, U.S. Govt. Print. Off., 1972. 254 p. Brief sumaries of major Federal labor laws and programs, including the Davis-Bacon Act and related statutes such as the Copeland Anti-Kickback law and the Contract Work Hours and Safety Standards Act. CRS - 63 U.S. Department of Labor. Employment Standards Administration. Wage and Hour Division. Regulations, Part 1: Procedure for predetermination of wage rates. Washington, U.S. Govt. Print. Off., reissued Feb. 1977 (WH Publ. 1242). 29 CFR 21138-21142 (updated in Federal Register, v. 43, no. 9, Jan. 13, 1978: 1941). Regulations, Part 3: Payment and reporting of wages applicable to federally financed and assisted construction contracts. Washington, U.S. Govt. Print. Off., revised April 1976 (wH Publ. 1243). 5 p. 29 CFR Part 3. Regulations, Part 5: Labor standards provisions applicable to contracts covering federally financed and assisted con- struction. Washington, U.S. Govt. Print. Off., reissued Feb. 1977 (WH Publ. 1244). 21 p.2 29 CFR Part 5. Regulations, Part 7: Practice before the Wage Appeals Board. Washington, U.S. Govt. Print. Off., reissued Jan. 1978 (WH Publ. 1245). 7 p. 29 CFR Part 7. U.S. Department of Labor. Office of the Solicitor. Decisions of the Wage Appeals Board: index-digest 1964-1968. 49 p. Articles Brozen, Yale. The law that boomeranged. Nation's business, v. 62, April 1974: 70-73. Subtitle: The Davis-Bacon Act was designed to protect local construction firms; but with a friend like that, who needs enemies? Donahue, Charles. 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