The Brookings Institution and the Wilson Center entertainingly show that repealing the Davis-Bacon Act would not save taxpayer dollars.
The Brookings Institution and Wilson Center are two of the top 10 research organizations in the United States.
Together, these nonpartisan organizations have relaunched The Fiscal Ship, an online “game” that challenges people to put the federal budget on a sustainable course over the next 25 years. Picking from the menu of tax and spending options can be pretty eye-opening for many Americans.
Embedded in the game is one interesting policy option called “repeal federal construction wage law.” Picking this option means that you’d repeal the Davis-Bacon Act, which requires that workers on federally-assisted construction projects be paid the local prevailing wage. The posited argument for repeal is that it would save the government money. The argument against repeal is:
This is just another way to push down wages of hard-working folks. Davis-Bacon blocks out-of-town firms from parachuting in with low-paid workers and under-cutting local contractors. It could lead to lower-quality work by less-skilled workers.
Interestingly, if you play the game and only choose to repeal the federal prevailing wage law from the list of tax and spending options, your plan results in a 0% change in federal revenue and a 0% change in federal spending. The game gives you a positive mark if your goal is to shrink government but a negative mark if you goal is to reduce inequality.
Ultimately, your plan gets Declined as not helping to fix the budget.
By projecting that repeal of the Davis-Bacon Act would have zero impact on federal spending, the Brookings Institution and Wilson Center reveal that they agree with the Illinois Economic Policy Institute and the preponderance of academic evidence:
Prevailing wage does NOT raise costs to taxpayers.
- 76% of peer-reviewed studies conducted over the past two decades find that prevailing wage is not associated with higher costs.
- Labor costs are a low and declining share of total spending in construction– only about 20-25% of project costs.
- When wages rise in construction, contractors reduce expenditures on materials, fuels, and rental equipment and respond by substituting skilled workers for less-productive workers.
The expert consensus is at odds with claims levied by opponents of prevailing wage, who are often really bad at math and tend to use flawed, outdated methods. Brookings and the Wilson Center forecasting a 0% change in federal spending associated with repeal once again underscores the fact that opponents of the Davis-Bacon Act promise cost savings that simply cannot be delivered in reality.
While there is zero evidence that repealing Davis-Bacon is a budgetary cure, there is clear evidence that eliminating prevailing wage would cut working-class wages, erode local economic development, and disproportionately impact veterans – who are more likely to work in construction than non-veterans. Upholding the Davis-Bacon Act is a great deal for American taxpayers.
After weighing bi-partisan arguments from conservative groups such as the Heritage Foundation and the American Enterprise Institute and from progressive organizations such as the Center for American Progress and the Center on Budget and Policy Priorities… the Brookings Institution and the Wilson Center ultimately seem to agree with the vast majority of the economic evidence.
Repeal of the Davis-Bacon Act would not save taxpayer dollars.