Study Finds Federal Davis-Bacon Act Increases Costs, Limits Competition in Wisconsin

A new study from Wisconsin Institute for Law & Liberty (WILL), partnering with Associated Builders & Contractors of Wisconsin (ABC), shows the federal Davis-Bacon Act  increases costs while limiting competition for construction jobs in Wisconsin. The Davis-Bacon Act, enacted in 1931, requires construction companies to provide a federally mandated “prevailing wage” on projects funded by at least $2,000 in federal money.

The study found the Davis-Bacon Act artificially raises employment costs in Wisconsin by up to 50 percent for taxpayer funded federal projects. 90 percent of Wisconsin businesses responding to the WILL and ABC survey agreed that the Davis-Bacon Act increases their employment costs. Evidencing that the Davis-Bacon Act limits competition for these federal construction jobs, 67 percent said they would be more likely to bid on projects if the law was lifted.

Although Wisconsin recently eliminated its prevailing wage law for local and state government projects, the federal Davis-Bacon Act is still leading to increased costs on the many Wisconsin construction projects funded by both state and federal dollars. The study recommends repealing the federal law or, if repeal is impossible, making policy changes such as increasing the $2,000 threshold for Davis-Bacon Act applicability, tying wage estimates to Bureau of Labor Statistics data, or allowing states to opt out of Davis-Bacon Act compliance.