NCPA - National Center for Policy Analysis

Employment Effects of Davis-Bacon

December 1, 2003

The federal Davis-Bacon Act, which requires federally funded construction projects to pay the "prevailing" or union wage, raises wage rates, reducing construction employment -- particularly that of minorities, says economist Farrell Bloch.

The Davis-Bacon Act has raised construction costs, which have adversely affected the employment of minority construction workers and laborers. Bloch found that:

  • Davis-Bacon increases wage rates by $1, resulting in 146,000 jobs being lost nationwide; this includes the loss of 110, 000 jobs that would have been filled by minority construction workers and less-skilled laborers.
  • Because Davis-Bacon Act is equivalent to a 25-cent increase in the mean hourly wage, elimination of the Act would increase the total number of construction jobs nationally by more than 36,000; 27,000 of those jobs would go to minority workers and laborers.

Thus in addition to removing the inefficiencies induced by wage floors, repealing Davis-Bacon would increase the relative construction employment of minorities and laborers, says Bloch.

Source: Farrell Bloch, "Employment Effects of Davis-Bacon," Government Union Review and Public Policy Digest, Vol. 21, no. 2, Public Service Research Foundation.

 

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