NCPA - National Center for Policy Analysis

Ditching Union Scam Long Overdue

April 28, 1997

Not only is the 66-year-old Davis-Bacon Act a lingering anachronism, it is a costly vehicle for fraud and abuse, according to a recent inspector general's report.

Davis-Bacon drives up the cost of all federally-subsidized construction projects by requiring, in effect, that union wages prevailing in the area be paid workers.

  • A federal audit of 800 wage survey forms used to calculate the local "prevailing" or union wage found that nearly two out of three forms contained "significant" errors -- with the possibility that "deliberate misreporting" may have existed.
  • The report recommends removing union officials and other third parties from the survey process -- to avoid potential fraud.
  • This month, a federal grand jury issued a 17-count indictment against an Oklahoma union official who was charged with inflating wages and claiming work on taxpayer-funded projects that did not even exist.
  • The Oklahoma Labor Commissioner uncovered a project that supposedly employed 20 workers making $21.05 an hour -- the project and the reported wages being totally fictitious.

When Brenda Reneau, the Oklahoma Labor Commissioner, demanded to know whether union officials or contractors submitted the bogus forms, she reports being "totally stonewalled" by the U.S. Department of Labor -- which claimed the data fell into the category of "trade secrets." The data was only released after four members of Congress put pressure on Department officials.

Ms. Reneau says she has received reports of abuses in other states.

Source: Editorial, "Wage Scam," Wall Street Journal, April 28, 1997.


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