Tom Williams/CQ Roll Call via AP Images
The new rule is expected to particularly benefit workers in states like Texas, one of the deadliest places for construction workers, and other states lacking their own prevailing-wage laws.
President Joe Biden is set to restore a New Deal labor rule in what could be the most significant change to construction worker pay since the rule was gutted in the 1980s.
The Department of Labor is preparing to issue a final rule tomorrow on the Davis-Bacon Act, which sets a wage floor for construction workers on public-works projects. Davis-Bacon is often known as a “prevailing wage,” as it refers to the going rate for laborers in a given area.
The change could raise the salaries of the lowest-paid workers on infrastructure ranging from highways and bridges to battery plants, hydrogen production facilities, and semiconductor fabs.
If upheld in court, it would be a step toward shrinking the wage gap between Northern states, which have generally higher worker protections, and the South and Southwest, where contractors are more hostile to unions and reliant on a migrant workforce. The new rule is expected to particularly benefit workers in states like Texas, one of the deadliest places for construction workers, and other states lacking their own prevailing-wage laws.
The rule, which will be finalized by acting Labor Secretary Julie Su, is expected to be immediately challenged. The Associated Builders and Contractors (ABC), a trade group that fights unionization, could file suit as soon as this week. The DOL could be forced to defend the rule for years in court; another recent rule change was litigated for over a decade.
The department published its proposed rule more than a year ago, but the final rule was delayed by efforts to make it airtight against litigation and because it has been held up in the Office of Information and Regulatory Affairs, an office in the White House that throughout several administrations has been an executive branch gatekeeper for regulations.
It’s not clear how soon the new Davis-Bacon rules will take effect. In general, agencies set regulatory effective dates 30 to 60 days after publication of a rule, but may give regulated parties more time to come into compliance.
Anticipating new government incentives from bills such as the CHIPS and Science Act, cleantech and advanced electronics companies have broken ground on new plants. Since the start of 2022, construction spending on new factories has more than doubled. But many of those projects have not yet received federal funds—meaning the job sites are not yet subject to prevailing-wage provisions. TSMC and Intel, for example, are both building colossal chip fabs near Phoenix that are not yet under Davis-Bacon.
Progressives have long argued that even if Davis-Bacon raises the cost of building, it could still lead to more public-works projects.
Labor unions have led the inside-baseball campaign to restore Davis-Bacon to its pre-1970 standards. Climate advocacy groups, such as the labor-environmentalist BlueGreen Alliance, have been largely absent from the push for Davis-Bacon reform, despite long-standing efforts and philanthropic funding poured into winning over the building trades to the climate cause. In a 2022 interview with the Prospect, months after the rule change was proposed, BlueGreen Alliance Executive Director Jason Walsh said he wasn’t aware of it. He added, “Clearly we would be supportive of that.”
Opponents of Davis-Bacon have long argued that prevailing-wage rules give union contractors an unfair advantage and raise construction costs. ABC calls the rule “more pork for special interests.” Progressives have long argued that even if Davis-Bacon raises the cost of building, it could still lead to more public-works projects, since higher-paying union jobs create a more active labor constituency in a virtuous cycle, as a counterweight to special interests seeking to minimize public investment.
In a letter last year, Rep. Virginia Foxx, chair of the House Committee on Education and the Workforce, called the potential inflationary impact of the rule change “unconscionable” and “characteristic of this administration and its failure to take inflation seriously.” Since then, the threat of inflation has subsided, taking some of the sting out of industry groups’ warnings.
GIVEN THE SUPPORT REPUBLICANS ALSO RECEIVE from the building trades, Davis-Bacon has had a politically complex history. Alexander Acosta, Trump’s first labor secretary, faced pressure from non-union construction firms to undercut Davis-Bacon, but resisted. After Acosta was forced out over his role in approving a plea deal for Jeffrey Epstein while a U.S. attorney, industry groups prevailed upon Trump to appoint Eugene Scalia, long-standing gun for hire for deregulatory and anti-union employers. Scalia quietly revised construction wage standards, in a slight to the building trades during Trump’s final months in office.
The Biden DOL’s proposed Davis-Bacon rule includes changes to enforcement, anti-retaliation provisions, and tools to hold contractors responsible for wage violations. It would explicitly include certain green job classifications under Davis-Bacon, such as solar panel and wind turbine installation. And it would change the department’s reliance on survey data to set prevailing wages, which in some cases is decades old.
Between 2010 and 2019, the DOL’s enforcement of Davis-Bacon violations returned more than $229 million in back wages to workers. But in its proposed rule, the department cites huge hurdles to enforcement such as long delays, including one case in which a contracting agency agreed that Davis-Bacon applied to a contract, but workers were not paid missing wages for eight years. The proposed rule would make Davis-Bacon effective by “operation of law,” meaning that DOL could demand back pay even where contractors had no knowledge that they were subject to Davis-Bacon requirements.
Most notably, the department plans to reverse a 1983 reform by President Ronald Reagan that disadvantaged union wage rates and made wage determinations correspond less and less to actual pay.
Until the 1980s, a wage rate was considered prevailing if it was paid to at least 30 percent of workers in an area. The standard often benefited workers who were paid collectively bargained rates, and prevented contractors from undercutting the local workforce. If no single rate was paid to more than 30 percent of workers, the prevailing wage was determined by taking the weighted average of pay.
Industry groups have long urged the department to rely on average wages, but Congress’s legislative intent was for prevailing-wage rates to reflect “actually paid” wages, not “artificially determined” ones.
In 1982, the Reagan DOL acknowledged that legislative intent to reflect actually paid wages, but eliminated the 30 percent rule, replacing it with a majority requirement: 50 percent plus one worker must be making a wage for it to count as prevailing. Since then, the use of average wages has increased dramatically, the DOL has found.
The Biden DOL argues that using averages can drag down wages by allowing “a single low-wage contractor in the area to depress wage rates on Federal contracts below the higher rate that may be generally more prevalent in the community.”
IF REAGAN’S CHANGES TO DAVIS-BACON were a blow for organized labor, they capped off a coordinated open-shop drive that dates back to the Vietnam War. New research by the historian Andrew Elrod shows how the Nixon and Carter administrations set the table for the Reagan administration to weaken the rule.
“The construction unions were around for 40 years before the Depression. In the New Deal order, and with the Federal Highway Act, international [union] staff became tied into government,” Elrod told the Prospect. “The modern process of Davis-Bacon determinations was invented during World War II, when over half of all construction spending was coming from the federal government, and they had to figure out what prevailing wage to pay.”
That system of stabilization held up through World War II and the Korean War, but later came under strain. In his classic history, Wars of Attrition, labor law professor Marc Linder presents a puzzle: In the last quarter of the 20th century, why did construction unions suffer such a dramatic decline, despite being insulated from new market pressures that pummeled other sectors?
“Unlike industrial unions, the building trades were not victims of cheap imports from an inexorably globalizing economy: high-wage union pipefitters building petrochemical and power plants in Texas and Michigan did not lose their jobs to low-paid construction workers in or from China, El Salvador, or Indonesia,” Linder writes, and “unlike the airlines and trucking industries, it had not been plunged into deregulation.”
Between 2010 and 2019, the DOL’s enforcement of Davis-Bacon violations returned more than $229 million in back wages to workers.
For both Linder and Elrod, a proximate cause of the business attack on construction unions is their Vietnam-era wage offensive. By the late 1960s, construction pay was rising rapidly and outpacing wage growth in manufacturing unions. Congress and the White House resisted using taxes to slow the wartime boom, Elrod has pointed out; “Instead, the onus for economic stabilization fell officially to labor.” When austerity and the Federal Reserve’s interest rate hikes failed to arrest inflation, Nixon suspended the Davis-Bacon Act.
“Everyone remembers Nixon did price controls,” Elrod said, but months earlier, “the Nixon administration used Davis-Bacon repeal as a cudgel to force the international unions and the construction industry to convene and discuss a program of wage restraint.”
In exchange for reinstituting Davis-Bacon, union leaders agreed to centralize bargaining authority and limit the settlement and negotiating power of locals. But even as unions entered this political bargain, Elrod found, employers had a plan to expand non-union contracting in the Sun Belt.
Nixon relied on construction unions for his political base, and could not complete its evisceration, despite the best efforts of business lobbyists. (Recall the Hard Hat Riots, in which construction workers and office workers attacked student demonstrators, in what became an iconic and easily exploitable image of the era’s political divides.)
Carter’s Government Accountability Office, stacked with anti-labor Southerners, put out a 1979 report called “The Davis-Bacon Act Should Be Repealed.” By the 1980s, right-wing think tanks funded a series of revisionist attacks on Davis-Bacon, arguing that Davis-Bacon is racist “Jim Crow” legislation.
Peter Philips, a labor economist at the University of Utah, has traced the history of these attacks to Scott Alan Hodge, a right-wing architect of the Bush tax cuts who popularized associating prevailing-wage laws with Jim Crow in a 1990 editorial in The Wall Street Journal.
A search of more than 40,000 public comments on the Biden DOL’s proposed rule reveals surprisingly few references to arguments that Davis-Bacon discriminates on the basis of race, a possible sign that public debate is moving on from free-market think tanks’ pet brainworm.
To Elrod, a key lesson of the post-Vietnam weakening of the building trades is that open-shop drives come in cycles. “One of the most recent and successful open-shop drives was in the construction industry, and it started during the Vietnam War around the Mellon financial complex: Alcoa, U.S. Steel, Koppers Chemical, DuPont,” he said.
Viewed in light of that push, the hostility to labor of administrations of Nixon, Carter, and Reagan may look more like a symptom than a cause of the post-’60s business climate. That begs the question of whether the recent surge in manufacturing—and the Biden administration’s efforts to restore union-friendly regulations—signal a reversal in secular trends that have prevailed since the 1960s.
