Regulation

Biden's Regulatory Wish List Will Make Infrastructure Projects More Expensive

The 90-year-old Davis-Bacon Act artificially makes federal projects more expensive, and Biden seems to want to strengthen it.

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On Friday, President Joe Biden released the Unified Agenda of Regulatory and Deregulatory Actions, a report compiled by the Office of Management and Budget's (OMB) regulatory affairs branch. The biannual report acts as a regulatory to-do list, detailing all of the changes in regulations that various departments and agencies wish to make. The report's introduction spells out several core areas in which the administration hopes to make significant progress, namely COVID-19 protection, climate change abatement, and mental health and substance abuse treatment.

Many of the rules in the report are nonspecific. For example, one "proposes to update and modernize the regulations implementing the Davis-Bacon and Related Acts to provide greater clarity and enhance their usefulness in the modern economy." The Davis-Bacon Act is a 1931 law which requires that any workers on projects costing more than $2,000 in federal funding must be paid the "prevailing wage" (essentially, the local union wage), regardless of whether the workers are in unions. In 2011, the conservative Heritage Foundation estimated that Davis-Bacon inflated annual construction costs by nearly $11 billion.

It would be terrific if the Biden administration intended to truly "update and modernize" the Davis-Bacon Act, namely by hollowing it out and allowing workers to truly compete for federal construction contracts in a field where wages are not preemptively set, regardless of the applicant's experience. After passing an infrastructure bill that was considerably smaller than originally proposed, any opportunities to cut costs should be obvious winners. Unfortunately, despite the new rule's lack of specificity, Biden's previous rhetoric on the law is discouraging.

"When President Obama put Vice President Biden in charge of the American Recovery and Reinvestment Act (ARRA), Biden made sure that Davis-Bacon Act and Service Contract Act standards were strictly enforced, requiring that the prevailing wage be paid to construction workers and service workers on all projects funded by ARRA," noted Biden's campaign website. "As president, Biden will build on this success by ensuring that every federal investment in infrastructure and transportation projects or service jobs is covered by prevailing wage protections."

In "Executive Order on Tackling the Climate Crisis at Home and Abroad," signed a week after he took office, Biden stipulated that "agencies shall, consistent with applicable law, apply and enforce the Davis-Bacon Act and prevailing wage and benefit requirements." And in his February remarks to labor leaders regarding his plans for a future infrastructure spending bill, Biden indicated that he expected the legislation to create "jobs—good-paying jobs, Davis-Bacon and prevailing wage jobs."

From Biden's statements on the subject, it's clear that any of his proposed "updates" to the Davis-Bacon Act would not make it easier to hire contractors at market rates.