ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Tuesday, September 27, 2005

Davis-Bacon Act

Many bits have been used by the Lefty blogosphere to attack the President's suspension of the Davis-Bacon Act, which is a New Deal era law that requires all companies involved in Federally financed construction projects to pay their workers a "prevailing wage." Contrary to what Jesse Jackson & DailyKos will tell you, suspension of Davis-Bacon is not a suspension of minimum wage... Now, who determines what the appropriate wage should be? Why, the government! (Any free-market economist cringes at the thought...)

Rather, the Davis-Bacon Act requires that employers pay at least the "prevailing wage" to their workers. In the city of St Louis, this means that a carpenter makes $58k/year (at least) without overtime. You can imagine that if a novice carpenter makes $58k/year, the skilled carpenter is going to require a higher wage than that.

Now, why would Bush suspend this regulation? In addition to the higher costs to the taxpayer, Davis-Bacon also has significant bureaucracy to monitor compliance. (Imagine having to verify and audit that every company on a federal project pays their employees per the guidelines.) The end result is that the only companies that are likely to be able to meet the Davis-Bacon guidelines are the companies that already do business with the federal government (can anyone say Halliburton?). And, if one of the stated goals of this federal largesse is to encourage the spirit of entrepreneurship, Davis-Bacon could be just enough red-tape to kill that initiative. Imagine an entrepreneur, looking to start up his business in New Orleans and help rebuild. His friends, neighbors, and former coworkers all decide they want to work for him and he's got to train them on the job. Since they don't have any skills, he pays them correspondingly - at least until they become skilled. Now the federal government is telling him that he has to pay them $30/hour

Is this a politically smart move? No... the 30 second ads and the press releases attacking the President (and the GOP) are too easy to write. I am frankly surprised that Karl actually allowed that to go in. Only time will tell whether it is a correct decision...

Mickey Kaus has more

We've Redefined the Democratic Party and Rediscovered Our Core Value--The Davis-Bacon Act!
Some emailers argue that Kevin Drum and Bruce Reed were merely pointing out that Bush has a political motive in suspending Davis-Bacon Act wage rules in the Katrina rebuilding effort. Sure. But it's cheap to condemn someone for having a political motive for doing X without assessing whether X is the right thing to do. JFK had a political motive for phoning Martin Luther King in jail! The ideal, if you are a politician, is to come up with a policy that's a) the right thing to do and b) causes huge political problems for your opponents. Welfare reform used to be such an issue for the GOPS. Now Bush is making an issue of various indefensible regulations that Democrats defend at the behest of public employee unions--the civil service rules that cost the Dems the 2002 election when Bush suspended them as part of the Homeland Security bill (prompting many Democrats to oppose it), and now Davis-Bacon's wage regs. The way to defuse this new Bush weapon is for the Dems to stop defending the indefensible regulations! Not to accuse Bush of playing "politics" or exploiting a "wedge issue." ("Politics" is how the general public interest in efficient government can be brought to bear against the special union interest in a government gravy train.)

Now, Mickey Kaus goes on to say that the Dems should trade Davis-Bacon for an across the board increase in the minimum wage - not exactly a position that a free market libertarian such as myself would suggest. However, it is a good political strategy.

And James Taranto of the WSJ's Best of the Web pokes fun at blogger Josh Marshall at Talking Points Memo.
We haven't been reading Josh Marshall's blog much recently, because he is off on another one of his manic and utterly tedious crusades. This one concerns what Marshall describes as the "Gulf Coast wage cut"--i.e., President Bush's decision to suspend the Davis-Bacon Act, which mandates "prevailing" (read: union) wages for government contractors, in the Katrina reconstruction programs.
Anyway, we bring this up because a reader pointed out this post from Marshall's blog yesterday:

TPM is looking for a new web intern who'll be responsible for various aspects of on-going site design, site maintenance, assistance administering the TPM community site, TPMCafe, and work on our various projects like . . . our new tracking of which members of Congress are supporting President Bush's Gulf Coast Wage Cut. . . .

This is an unpaid internship.
When your money is at stake, Marshall is willing to let unions dictate wages. When it comes to his own money, he not only refuses to pay prevailing wages, he won't even pay the minimum wage--or indeed any wage at all! Just who is trying to bamboozle whom here?


Your Co-Conspirator,
ARC: St Wendeler