Trump Promises 'An Announcement' on Davis-Bacon Within Two Weeks, Setting Up Showdown With Labor Unions
Davis-Bacon is a blatantly protectionist law that benefits labor unions at the expense of taxpayers (and it's racist too). Trump should dump it.
There are several interesting tidbits—along with the usual Trumpian nonsense—in the New York Times' newest sit-down interview with President Donald Trump, published Thursday morning.
One detail that may have escaped notice at the very bottom of the piece is Trump's claim that his administration is planning "an announcement in two weeks" on possible changes to the federal Davis-Bacon Act. That law, which dates back to 1931, requires all workers on federal projects worth more than $2,000 to be paid the "prevailing wage," which usually means the local union wage rate. The law effectively increases the cost of infrastructure projects by artificially inflating labor costs.
Trump has promised to spend $1 trillion on infrastructure, and that money would go a lot further if Davis-Bacon mandates are repealed, or at least loosened.
Here's what Trump told the New York Times' Glenn Thrush and Maggie Haberman in his typically vague "tune in next week to see what happens" way:
THRUSH: On the infrastructure stuff, a couple of quick things. Davis-Bacon [a law that regulates wages on federally funded projects]. Democrats have said that will be a poison pill. Are you going to touch Davis-Bacon? What are you going to do?
TRUMP: We're going to make an announcement in two weeks —
TRUMP: — on Davis-Bacon.
HABERMAN: O.K. Can you give us a hint on where you are?
[Laughter. Cross talk.]
TRUMP: It's an important question, actually.
TRUMP: It's going to be good.
As Thrush mentions, Democrats are adamant about protecting Davis-Bacon because of the law's importance to their labor union allies. That puts Trump in a bit of tough spot.
Trump may have a hard time convincing conservative Republicans to vote for a $1 trillion infrastructure spending plan, considering that many members of the GOP's congressional majority won their seats by railing against the Obama administration's stimulus and promising to run a more thrifty federal government. Repealing Davis-Bacon rules might help earn Republican votes for an infrastructure spending bill because they could argue (rightly) that doing so would stretch those dollars further.
But abandoning David-Bacon rules would probably cost Trump the support of many, if not all, Democrats who might otherwise support an infrastructure spending plan. The White House doesn't necessarily need Democratic votes on infrastructure (or anything, for that matter, as long as they don't lose a significant chunk of Republican votes like they did on health care), but the Trump administration has been talking about the infrastructure plan as a bipartisan lift that could generate much needed goodwill between congressional factions—because nothing generates good will in Congress like spending lots of money, of course.
The politics of Davis-Bacon might complicate any Trump administration infrastructure plan, but repealing the 85-year old wage mandate makes good sense.
As I wrote in a pre-inauguration preview of how the incoming Trump administration could help states better manage their own affairs, repealing Davis-Bacon (which affects many state-funded infrastructure projects too, since most are partially financed with federal money) would lower the cost of construction and let current infrastructure spending be more productive, even without a new stimulus from Washington. James Sherk, a fellow in labor economics at the conservative Heritage Foundation, has found that repealing Davis-Bacon would save taxpayers $11 billion annually.
If the political and economic arguments aren't enough to convince you that Davis-Bacon should go away, there's the historical argument too. Damon Root has previously written about the awful, racist justification for creating the law in the first place.
It was introduced in response to the presence of Southern black construction workers on a Long Island, N.Y.. veterans hospital project. This "cheap" and "bootleg" labor was denounced by Rep. Robert L. Bacon, New York Republican, who introduced the legislation. American Federation of Labor (AFL) president William Green eagerly testified in support of the law before the U.S. Senate, claiming that "colored labor is being brought in to demoralize wage rates."
Emil Preiss, business manager of the New York branch of the International Brotherhood of Electrical Workers (a powerful AFL affiliate that banned black workers from its ranks) told the House of Representatives that Algernon Blair's crew of black workers were "an undesirable element of people." The bill's co-sponsor, Republican Sen. James Davis of Pennsylvania, was an outspoken racist who had argued in 1925 that Congress must restrict immigration in order "to dry up the sources of hereditary poisoning."
The result was that black workers, who were largely unskilled and therefore counted on being able to compete by working for lower wages, essentially were banned from the upcoming New Deal construction spree. Davis-Bacon nullified their competitive advantage just when they needed it most.
Davis-Bacon is a blatantly protectionist rule that advantages a politically-connected special interest (labor unions) and drives up the cost of almost anything the federal government builds. Abandoning it should be a no-brainer for an administration that has promised to make government run more efficiently, reduce the power of special interests, and rebuild America's infrastructure.