Jobs-Killers Old and New

Feb 24, 2010

From Charles Lane (via @chamberflack) an old bad idea:

I’ve said it before, but it bears repeating. Rather than tinkering with the tax code and calling it a “jobs bill,” Congress and the Obama administration might try scouring the U.S. Code in search of job-killing laws to repeal. And as I am hardly the first to notice, one of the worst job-killers in federal law is the Davis-Bacon Act. Adopted in the 1930s to "stabilize" the construction industry (in part by protecting white workers in the North against competition from migrating Southern blacks), Davis-Bacon requires employers to pay the "prevailing" local wage as calculated by the Labor Department on federally-funded projects. By artificially raising labor costs on public projects, Davis-Bacon both reduces employment and soaks taxpayers. The main beneficiaries are the construction unions whose jobs it protects.

Yet Davis-Bacon not only remains on the books; at organized labor's behest, and with the support of President Obama, Congress further entrenched and even expanded it in the $862 billion stimulus bill...The inevitable result has been less job creation at a slower pace than would have otherwise occurred...Even if there had been no delay, Davis-Bacon would not have served the public interest. The law does not protect wages against an artificial drop due to a flood of federal construction money -- it forces an artificial increase. Davis-Bacon sets wages based on calculations by the Labor Department’s Wage and Hours Division, rather than statistics from the Bureau of Labor Statistics. The Wage and Hours Division’s formula, heavily influenced by union lobbying, "calculates, not the prevailing wage, but the wage that would prevail if the wage-setting process were dictated by the construction unions," according to a study by the Beacon Hill Institute at Suffolk University. The result is "prevailing" wages that are 22 percent higher, on average, than those documented by the impartial Bureau of Labor Statistics.

...In boom times, Davis-Bacon's protectionism is merely pernicious. In an economic emergency of this magnitude, it's outrageous.

And over on the Daily Caller, a new one:

Documents obtained by The Daily Caller confirm the White House is seriously considering adopting a series of proposals that would favor unionized companies bidding on federal contracts. The documents acknowledge the proposals are likely to increase the cost of government contracting and the size of the bureaucracy. The proposals, collectively known as “High Road Contracting Policy,” were first reported earlier this month. The basic elements of the policy would give preference to companies bidding on federal contracts that pay their hourly workers a “living wage” and provide health insurance, employer-funded pension plans and paid sick days....in a draft of the policy obtained by The Daily Caller the administration acknowledges the proposals would increase contracting costs as well as the size of the bureaucracy...The document says those increases would be offset by savings on public assistance, productivity gains and increased price competition. Glenn Spencer at the U.S. Chamber of Commerce disagreed.

“One worry would be that some companies decide it’s just not worth it to engage in government contracting,” Spencer said. “What’s a little bit disturbing about [the proposal] is that it doesn’t require you to pay the higher wages and additional benefits just to workers on a specific contract, but to every employee in country. The impact on employers is likely to be far greater than actual cost of contracting. On that, it’s pretty clear costs will go up.”

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