Dive Brief:

• Secretary of Labor Marty Walsh rolled out new rulemaking proposals for the first time in nearly 40 years to change the Davis-Bacon Act, which sets the prevailing wages contractors must pay workers on federal projects.
• While a construction employers group said the changes represent "more pork for special interests" for unions, which President Joe Biden supports, Walsh claimed the changes would do the exact opposite. "This action is an example of the federal government being a good steward of taxpayer money," Walsh said on a conference call Friday. "As President Biden said during the State of the Union, when we invest in our workers, we build an economy from the bottom up and the middle out."
• Workers groups and unions cheered the announcement, saying it would protect construction workers' wages and shield them from exploitation.

Dive Insight:

The Davis-Bacon Act, originally passed in 1931, uses pay surveys administered by the DOL to set the prevailing wage in a federally funded project's location. It impacts $217 billion in federal spending annually and 1.2 million construction workers.

But the process can be complicated and cumbersome for contractors and has elicited concerns that it skews wage rates.

Under the current process, at least 51% of surveyed wages need to be within a "same or similar" margin. If they're not, the weighted average — as opposed to a simple average — of all wages is used. That means more frequent occurrences of low wages could drag down the overall rate.

"The concern… is that those weighted averages are not reflective of actual wages paid to actual workers on actual construction projects in that local community," said Jessica Looman, acting wage and hour division administrator at DOL during the briefing.  

To remedy that, DOL's proposal would return to the system used until 1983, when the last changes to the act were made during President Ronald Reagan's first administration. At that time, the overhaul was viewed as a major blow to organized labor.

Under the once-and-proposed setup, if the 51% threshold is met, that's the prevailing wage, just like now. But if it's not, the new rule would allow just 30% of same or similar wages to be used. If that bar can't be achieved, a weighted average would then be used.

And that's where construction employer groups called foul.

"The process to determine what's a prevailing wage rate is already archaic, and this proposal is going back in time 40 years," said Ben Brubeck, vice president of regulatory, labor and state affairs at Associated Builders and Contractors, in an interview.

Brubeck said while ABC, the majority of whose 16,000 contractor members are non-union shops, has been advocating for Davis-Bacon reform for years, the current proposal unfairly favors union labor.

"Under the 30% rule, union rates are going to prevail more often," Brubeck said. "When that happens, the union contractors are more competitive. But if the government determines the wage is less than the union rate, that's a problem for them, because they can't compete on wages, since they're locked into a union contract."

Instead, Brubeck suggested using Bureau of Labor Statistics data to determine prevailing wages for a given position and location.

"We've suggested for decades to go and do something that's scientifically modern and can be done more frequently, and that will result in higher wages for workers everywhere," Brubeck said.

Comment period

Worker and union groups praised the potential rule change.

"NABTU commends the Biden administration for today's proposal to bring the Davis-Bacon Act's 41-year-old regulations into the 21st century," said Sean McGarvey, president of North America’s Building Trades Unions group, in a statement. "The proposed updates to the regulations will restore the act's intended bipartisan purpose to protect the hard-earned wages of construction workers, and in doing so, shield them from exploitation." 

Also included was an anti-retaliation clause that would protect workers who report employers for noncompliance. DOL said it was opening a 60-day comment period for input on the new rules.

At ABC, Brubeck said the group would fight for more time, while opposing the floated rules in their current form.

"A 60-day comment period is too short for the first significant reform in 40 years," Brubeck said. "We'll be asking for an extension."