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EXAMINING THE DEPARTMENT OF LABOR’S 

IMPLEMENTATION OF THE DAVIS–BACON ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, APRIL 14, 2011 

Serial No. 112–18 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: 

http://www.gpoaccess.gov/congress/house/education/index.html 

or 

Committee address: http://edworkforce.house.gov 
(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Thomas E. Petri, Wisconsin 

Howard P. ‘‘Buck’’ McKeon, California 

Judy Biggert, Illinois 

Todd Russell Platts, Pennsylvania 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Scott DesJarlais, Tennessee 

Richard L. Hanna, New York 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Kristi L. Noem, South Dakota 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Dennis A. Ross, Florida 

Mike Kelly, Pennsylvania 

[Vacant] 

George Miller, California, 

Senior Democratic Member 

Dale E. Kildee, Michigan 

Donald M. Payne, New Jersey 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Lynn C. Woolsey, California 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Dennis J. Kucinich, Ohio 

David Wu, Oregon 

Rush D. Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

David Loebsack, Iowa 

Mazie K. Hirono, Hawaii 

Barrett Karr, Staff Director 

Jody Calemine, Minority Staff Director 

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

TIM WALBERG, Michigan, Chairman 

John Kline, Minnesota 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Kristi L. Noem, South Dakota 

Dennis A. Ross, Florida 

Mike Kelly, Pennsylvania 

[Vacant] 

Lynn C. Woolsey, California, Ranking 

Donald M. Payne, New Jersey 

Dennis J. Kucinich, Ohio 

Timothy H. Bishop, New York 

Mazie K. Hirono, Hawaii 

George Miller, California 
(III) 

C O N T E N T S 

Page 

Hearing held on April 14, 2011 .............................................................................. 1 

Statement of Members: 

Hirono, Hon. Mazie K., a Representative in Congress from the State 

of Hawaii, submission for the record ........................................................... 50 

Walberg, Hon. Tim, Chairman, Subcommittee on Workforce Protections ... 1 

Prepared statement of ............................................................................... 3 

Additional submissions: 

Prepared statement of the Women Construction Owners & Executives, USA .................................................................................. 57 

Letter, dated Feb. 18, 2004, ‘‘Concerns Persist With the Integrity 

of Davis-Bacon Act Prevailing Wage Determinations’’ ................ 58 

Draft, dated July 29, 2004, ‘‘Davis-Bacon Process Evaluation— 

Final Report’’ ................................................................................... 61 

Woolsey, Hon. Lynn, ranking minority member, Subcommittee on Workforce Protections ............................................................................................ 4 

Prepared statement of ............................................................................... 5 

Questions submitted for the record ......................................................... 98 

Statement of Witnesses: 

Eisenbrey, Ross, vice president, Economic Policy Institute .......................... 18 

Prepared statement of ............................................................................... 20 

Supplemental statement dated May 4, 2011 .......................................... 95 

Markey, Thomas M., Deputy Administrator for Program Operations, 

Wage and Hour Division, U.S. Department of Labor ................................ 9 

Prepared statement of ............................................................................... 11 

Response to questions submitted for the record ..................................... 99 

Mistick, D. Thomas, on behalf of Associated Builders and Contractors ...... 32 

Prepared statement of ............................................................................... 34 

Sherk, James, senior policy analyst in labor economics, the Heritage 

Foundation ..................................................................................................... 22 

Prepared statement of ............................................................................... 24 

Letter submitted for the record ................................................................ 100 

Sherrill, Dr. Andrew, Director of Education, Workforce, and Income Security, U.S. Government Accountability Office .............................................. 7 

Prepared statement of ............................................................................... 9 

Response to questions submitted for the record ..................................... 100 

(1) 

EXAMINING THE DEPARTMENT OF LABOR’S 

IMPLEMENTATION OF THE DAVIS–BACON ACT 

Thursday, April 14, 2011 

U.S. House of Representatives 

Subcommittee on Workforce Protections 

Committee on Education and the Workforce 

Washington, DC 

The subcommittee met, pursuant to call, at 10:04 a.m., in room 

2175, Rayburn House Office Building, Hon. Tim Walberg [chairman of the subcommittee] presiding. 

Present: Representatives Walberg, Kline, Bucshon, Woolsey, 

Payne, Kucinich, Bishop, Hirono, and Miller. 

Staff present: Katherine Bathgate, Press Assistant; Kirk Boyle, 

General Counsel; Casey Buboltz, Coalitions and Member Services 

Coordinator; Ed Gilroy, Director of Workforce Policy; Benjamin 

Hoog, Legislative Assistant; Barrett Karr, Staff Director; Ryan 

Kearney, Legislative Assistant; Brian Newell, Deputy Communications Director; Molly McLaughlin Salmi, Deputy Director of Workforce Policy; Ken Serafin, Workforce Policy Counsel; Linda Stevens, 

Chief Clerk/Assistant to the General Counsel; Alissa Strawcutter, 

Deputy Clerk; Loren Sweatt, Professional Staff Member; Aaron 

Albright, Minority Communications Director for Labor; Tylease 

Alli, Minority Hearing Clerk; Daniel Brown, Minority Staff Assistant; Jody Calemine, Minority Staff Director; Brian Levin, Minority 

New Media Press Assistant; Jerrica Mathis, Minority Legislative 

Fellow, Labor; Celine McNicholas, Minority Labor Counsel; Richard 

Miller, Minority Senior Labor Policy Advisor; Megan O’Reilly, Minority General Counsel; Julie Peller, Minority Deputy Staff Director; Meredith Regine, Minority Labor Policy Associate; Melissa 

Salmanowitz, Minority Communications Director for Education; 

Michele Varnhagen, Minority Chief Policy Advisor and Labor Policy 

Director; and Michael Zola, Minority Chief Investigative Counsel. 

Chairman WALBERG [presiding]. A quorum being present, the 

subcommittee will come to order. Good morning and welcome to today’s hearing. I would like to thank our witnesses for joining us. 

Our panel has a wide range of knowledge and experience with the 

Davis-Bacon Act and your testimony will provide important insight 

as we work to ensure the law is serving the interest of job creators, 

workers and taxpayers. 

We are in the middle of an important debate over the country’s 

fiscal future. Years of reckless borrowing and spending by the fed-
2 

eral government have brought our nation to the brink of a crisis 

and something must be done. 

We can no longer accept waste and inefficiencies as the price of 

doing business with the federal government, which is why we are 

here today. Established by the Hoover Administration in 1931, the 

Davis-Bacon Act requires workers to be paid the prevailing wage 

rates on federal construction projects costing taxpayers more than 

$2000. 

Prevailing wages are determined through a complex system of 

wage surveys administered by the Department of Labor. The surveys collect salary and fringe benefit information on various job 

classifications based on similar projects for a given location, typically at the county level. 

Businesses and labor organizations voluntarily report wage information and the Department can also rely upon local collective bargaining agreements when determining the wage rate. 

Federal contractors must submit weekly payroll reports to the 

Department, certifying appropriate wages have been paid. While 

intended as a temporary effort 80 years ago, the Davis-Bacon Act 

remains a significant feature of federal spending to this day. 

That is why a recent report by the Government Accountability 

Office is deeply troubling. Despite years of review and oversight, 

the GAO found considerable challenges still plague the Department’s implementation of the Davis-Bacon Act. 

GAO revealed problems with accuracy, quality, bias and timeliness of the wage data. Of the surveys reviewed, one in four of the 

final wage rates were based on the wages of just six or fewer workers. 

Forty-six percent of the prevailing wages for non-union workers 

were based on wages reported ten or more years ago. The report 

also identified a lack of transparency about how wage rates are determined, raising concerns for businesses trying to bid for work and 

taxpayers who want to ensure their dollars aren’t being wasted. 

According to the GAO, the Department of Labor also fails to follow guidance issued by the Office of Management and Budget and 

even disregards its own policy manual by ignoring the impact of 

non-responses in the accuracy of the survey. 

Despite recent changes adopted by the Department, the GAO 

still found issues with timeliness and believes any improvements 

the Department hopes to achieve, quote—‘‘may not be fully realized.’’ 

Perhaps the GAO outlined best what is at stake and I quote— 

‘‘If the resulting prevailing wage rates are too high, it potentially 

cots the federal government and taxpayers more for publicly funded 

construction projects or if too low, they cost workers in compensation.’’ 

These are stunning conclusions for a law that governs how hundreds of billions of taxpayer dollars are spent. In fact the failed 

stimulus committed an estimated $300 billion to federal construction projects that could potentially be covered by Davis-Bacon wage 

rates. 

In 2009 alone federal construction and rehabilitation projects to- taled roughly $220 billion. Are these taxpayer dollars being well 

spent? And if not then what should be done about it? Those are the 
3 

questions we hope to answer today, simply accepting the status quo 

that has been in place since the great depression is unacceptable. 

We have a responsibility to determine whether the law is meeting the needs of today’s taxpayers and workers. Again I would like 

to thank our witnesses. And we will now recognize the senior 

democratic member of the sub-committee, Ms. Woolsey, for opening 

remarks. 

[The statement of Chairman Walberg follows:] 

Prepared Statement of Hon. Tim Walberg, Chairman, 

Subcommittee on Workforce Protections 

Good morning and welcome to today’s hearing. I would like to thank our witnesses for joining us. Our panel has a wide range of knowledge and experience with 

the Davis-Bacon Act, and your testimony will provide important insight as we work 

to ensure the law is serving the interests of job-creators, workers, and taxpayers. 

We are in the middle of an important debate over the country’s fiscal future. 

Years of reckless borrowing and spending by the federal government have brought 

our nation to the brink of a crisis and something must be done. We can no longer 

accept waste and inefficiencies as the price of doing business with the federal government, which is why we are here today. 

Established by the Hoover administration in 1931, the Davis-Bacon Act requires 

workers be paid the ‘‘prevailing wage rates’’ on federal construction projects costing 

taxpayers more than $2,000. Prevailing wages are determined through a complex 

system of wage surveys administered by the Department of Labor. 

The surveys collect salary and fringe benefit information on various job classifications based on similar projects for a given location, typically at the county level. 

Businesses and labor organizations voluntarily report wage information, and the department can also rely upon local collective bargaining agreements when determining the wage rate. Federal contractors must submit weekly payroll reports to the 

department certifying appropriate wages have been paid. 

While intended as a temporary effort 80 years ago, the Davis-Bacon Act remains 

a significant feature of federal spending to this day. That is why a recent report 

by the Government Accountability Office is deeply troubling. Despite years of review 

and oversight, the GAO found considerable challenges still plague the department’s 

implementation of the Davis-Bacon Act. 

The GAO revealed problems with accuracy, quality, bias, and timeliness of the 

wage data. Of the surveys reviewed, one in four of the final wage rates were based 

on the wages of just six or fewer workers. Forty-six percent of the prevailing wages 

for non-union workers were based on wages reported 10 or more years ago. 

The report also identified a lack of transparency about how wage rates are determined, raising concerns for businesses trying to bid for work and taxpayers who 

want to ensure their dollars aren’t being wasted. According to the GAO, the Department of Labor also fails to follow guidance issued by the Office of Management and 

Budget, and even disregards its own policy manual by ignoring the impact of nonresponses in the accuracy of the survey. 

Despite recent changes adopted by the department, the GAO still found issues 

with timeliness and believes any improvements the department hopes to achieve 

‘‘may not be fully realized.’’ Perhaps the GAO outlined best what’s at stake: ‘‘If the 

resultant prevailing wage rates are too high, they potentially cost the federal government and taxpayers more for publicly funded construction projects or, if too low, 

they cost workers in compensation.’’ 

These are stunning conclusions for a law that governs how hundreds of billions 

of taxpayer-dollars are spent. In fact, the failed stimulus committed an estimated 

$300 billion to federal construction projects that could potentially be covered by 

Davis-Bacon wage rates. In 2009 alone, federal construction and rehabilitation 

projects totaled roughly $220 billion. 

Are these taxpayer dollars being well spent, and if not, then what should be done 

about it? Those are the questions we hope to answer today. Simply accepting the 

status-quo that has been in place since the Great Depression is unacceptable. We 

have a responsibility to determine whether the law is meeting the needs of today’s 

taxpayers and workers. 

Again, I would like to thank our witnesses, and will now recognize the senior 

Democrat of the subcommittee, Ms. Woolsey, for her opening remarks. 
4 

Ms. WOOLSEY. Thank you, Mr. Chairman. And thank you for 

holding this hearing to examine the Department of Labor’s implementation of the Davis-Bacon Act because it provides us a forum 

today to highlight how it has helped maintain decent wages for 

workers in support of local communities that are vulnerable to 

changes to the economy. 

Of course we are also here because the Government Accountability Office, GAO, has determined that there are issues with the 

survey process used by the Department of Labor to determine local 

prevailing wages. 

GAO—from that time surveys used outdated wage data and had 

low response rates. And it is my understanding that—and the 

other questions that you brought up—that the department has instituted policies to address these issues, most of them, to be sure. 

So let us be clear. We all agree that the department must work 

to see that its survey process is effective and the wage rates it publishes for federal projects are accurate. Making certain that federal 

policies work as intended is not a partisan issue. 

We should be careful however not to read into the GAO report 

and draw conclusions that it absolutely doesn’t make. The report 

does not conclude that Davis-Bacon drives up the cost of construction projects or inhibits job growth. These are discredited theories 

that don’t hold up to scrutiny. 

The Davis-Bacon Act requires contracts and contractors on federal construction projects to pay their employees no less than the 

locally prevailing wage. This is important because it ensures that 

the federal government does not use its bargaining power to drive 

down wages which would actually hurt local economies. 

Instead the act makes certain that federally financed projects encourage competition, contribute to the development of a skilled 

workforce for the future and pay decent wages. This is sound and 

proven public policy. 

Without prevailing wage laws like Davis-Bacon contractors would 

be encouraged to assemble the cheapest and most exploitable workforce rather than the best trained, equipped, and managed workers. It would be a race to the bottom subsidized by the federal government. 

Much of the opposition to prevailing wage protections is grounded in decades of false rhetoric and misinformation. Studies consistently show that Davis-Bacon prevailing wage requirements do not 

increase the cost of federal construction. 

In addition, several reports on prevailing wage requirements 

have found that prevailing wages provide numerous benefits including higher wages, better workplace safety, increased government revenues and they elevate workers skills and standards in 

the construction industry. 

My point is the 2006 study determined that states with prevailing wage laws had higher rates of construction training programs. And the trainees were more likely to complete their programs compared to the states without prevailing wage laws. 

We have seen the effects when prevailing wage laws have been 

repealed at the state level. Competitive pressures in the industry 

led to lower wages for workers. There is also an increase in work 
5 

related injuries and illnesses. The last thing construction workers 

need in this economy is to have their wages cut. 

At the end of the day that is just what any argument against 

Davis-Bacon prevailing wage protection would amount to, a reduction in wages and the elimination of a standard of living for workers where they can raise and educate their families while ultimately ensuring their own retirement. 

Mr. Chairman, I have confidence that we can use this hearing 

constructively to discuss the legitimate issues raised by the GAO 

and not as a policy to debate whether or not Davis-Bacon has some 

merit that we know they have. I yield back. 

[The statement of Ms. Woolsey follows:] 

Prepared Statement of Hon. Lynn C. Woolsey, Ranking Minority Member, 

Subcommittee on Workforce Protections 

Thank you Mr. Chairman and thank you for holding this hearing to examine the 

Department of Labor’s implementation of the Davis-Bacon Act because it provides 

us a forum today to highlight how it has helped maintain decent wages for workers 

and supported local communities that are vulnerable to changes in the economy. 

Of course, we’re also here because the Government Accountability Office (GAO) 

has determined that there are issues with the survey process used by the Department of Labor to determine local prevailing wages. GAO found that at times surveys 

use outdated wage data and had low response rates. It is my understanding and 

the other questions that you brought up that the Department has instituted policies 

to address some of these issues. 

Let’s be clear: we all agree that the Department must work to see that its survey 

process is effective and the wage rates it publishes for federal projects are accurate. 

Making sure federal policies work as intended is not a partisan issue. 

We should be careful, however, not to read into the GAO report and draw conclusions that it absolutely doesn’t make. The GAO’s report does not conclude that 

Davis-Bacon drives up the costs of construction projects or inhibits job growth. 

These are discredited theories that don’t hold up to scrutiny. 

The Davis-Bacon Act requires contractors on federal construction projects to pay 

their employees no less than the locally prevailing wage. This is important because 

it ensures that the federal government does not use its bargaining power to drive 

down wages which would actually hurt local economies. Instead, the Act makes certain that federally financed projects encourage competition, contribute to the development of a skilled workforce for the future, and pay decent wages. This is sound 

and proven public policy. 

Without prevailing wage laws, like Davis-Bacon, contractors would be encouraged 

to assemble the cheapest and most exploitable workforce rather than best trained, 

equipped, and managed workers. It would be a race to the bottom, subsidized by 

the federal government. 

Much of the opposition to prevailing wage protections is grounded in decades of 

false rhetoric and misinformation. Studies consistently show that Davis-Bacon prevailing wage requirements DO NOT increase the cost of federal construction. In addition, several reports on prevailing wage requirements have found that prevailing 

wages provide numerous benefits including: higher wages, better workplace safety, 

increased government revenues, and they elevate worker skills and standards in the 

construction industry. 

Likewise, a 2006 study determined that states with prevailing wage laws had 

higher rates of construction training programs, and trainees were more likely to 

complete their programs compared to the states without prevailing wage laws. 

We have seen the effects when prevailing wage laws have been repealed at the 

state level—competitive pressures in the industry lead to lower wages for workers. 

There is also an increase in work-related injuries and illnesses. 

The last thing construction workers need in this economy is to have their wages 

cut. At the end of the day, that is just what any argument against Davis-Bacon prevailing wage protections would amount to—a reduction in wages and the elimination of a standard of living for workers where they can raise and educate their 

families, while ultimately ensuring their own retirement. Mr. Chairman, I have confidence that we can use this hearing constructively to discuss the legitimate issues 

raised by the GAO and not as a policy to debate whether or not Davis-Bacon has 

the merits that we know they have. 
6 

Chairman WALBERG. I thank you, Ranking Member. Pursuant to 

committee rules all members will be permitted to submit written 

statements to be included in the permanent hearing record. And 

without objection the hearing record will remain open for 14 days 

to allow questions for the record. Statements and extraneous material reference during the hearing to be submitted for the official 

hearing record. 

It is now my pleasure to introduce our distinguished panel of witnesses. Dr. Andrew Sherrill is Director of Education, Workforce 

and Income Security with the U. S. Government Accountability Office in Washington, D. C. He was appointed to GAO’s senior executive service in 2009. 

In his 20 years at GAO he has led teams in producing reports 

for the Congress on a broad range of topics including workforce development, unemployment insurance, workers’ compensation programs, women in the labor force, welfare reform, foreign labor programs, and mass care after hurricane Katrina. 

Mr. Sherrill received his PhD and M. A. from the University of 

Texas at Austin and his B. A. from Trinity University at San Antonio, Texas. In addition he completed course work in the masters 

program at the Lyndon Baines Johnson School of Public Affairs at 

the University of Texas at Austin. He is a member of the National 

Academy of Social Insurance. And we welcome you. 

Mr. Thomas M. Markey is the deputy administrator of program 

operations at the U. S. Department of Labor. Mr. Markey has 

served at the Department of Labor in a variety of positions since 

1972 including his role as the Director for the Federal Employees 

Compensation Program from 1985 through 1998. Mr. Markey is a 

graduate of Rutgers University and is a veteran of the United 

States Army. And we thank you for your service. 

Mr. Ross Eisenbrey is vice president of the Economic Policy Institute and a former staffer with this committee, welcome back. Mr. 

Eisenbrey is a lawyer and former commissioner of the U. S. Occupational Safety and Health Review Commission. Prior to joining 

the Economic Policy Institute he worked for many years as a staff 

attorney and legislative director in the U. S. House of Representatives and as a committee counsel in the U. S. Senate. 

Additionally he served as policy director of the Occupational 

Safety and Health Administration from 1999 to 2001. Mr. 

Eisenbrey holds a J. D. from University of Michigan Law School— 

go Blue—and a B.A. from Middlebury College as well as was raised 

in Michigan itself, so welcome. 

Mr. James Sherk is senior policy and analyst of labor economics 

at the Heritage Foundation. In his position Mr. Sherk works on 

minimum wage, card check, rising standards of living and other 

tax, labor and economic issues in Heritage Center for Data Analysis. 

Mr. Sherk received an M. A. in Economics with a concentration 

in Econometrics in Labor Economics from the University of Rochester and a Bachelor’s Degree in Economics and Mathematics from 

my district, Hillsdale College. Welcome, glad to have you here. 

Mr. Thomas Mistick is principal of the Church Restoration 

Group. Mr. Mistick’s Church Restoration Group offers restoration 
7 

and construction services for historic and sacred sites across the 

country. 

Mr. Mistick has completed more than $1 billion in construction 

and restoration during his 30-plus years running the Mistick family of companies. Mr. Mistick has a great deal of experience trying 

to navigate the Davis-Bacon regulations, otherwise known as realworld experience. 

Mr. Mistick received his undergraduate degree from Harvard 

College where he graduated cum laude. He holds a graduate degree 

in Systems Analysis and Finance from Stanford University’s Graduate School of Business and a J. D. from the University of Pittsburg School of Law. Mr. Mistick is testifying on behalf of the Associated Builders and Contractors. Thank you, each of you, for being 

here. 

Before I recognize each of you to provide your testimony let me 

briefly explain our lighting system. You will each have 5 minutes 

to present your testimony. When you begin—and I guess I would 

say 5 minutes unless the Chairman here enjoys your testimony so 

much and is known to let it go on and on. 

I know that the ranking member and the full committee—the 

gentleman from California—will make it very clear to me when I 

have gone past that red light. 

And I appreciate that, Mr. Miller. 

When you begin the light in front of you will turn green. When 

1 minute is left the light will turn yellow and when your time has 

expired the light will turn red at which point I will ask that you 

wrap it up quickly. Your remarks are important but the time is of 

necessity as well. 

After everyone has testified members will each have 5 minutes 

to ask questions of the panel. 

And so having said that let me start with Mr. Sherrill, your testimony we appreciate. 

STATEMENT OF DR. ANDREW SHERRILL, DIRECTOR OF EDUCATION, WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. SHERRILL. Mr. Chairman, ranking member Woolsey, and 

members of the sub-committee, I am pleased to be here today to 

discuss the Department of Labor’s procedures for determining prevailing wages under the Davis-Bacon Act. 

Our prior reports—in those of Labor’s Inspector General have 

made various recommendations to improve these procedures. Today 

I will present the results of our report that was publicly issued last 

week. 

This report covers two topics, first the extent to which labor has 

addressed concerns regarding the quality of the Davis-Bacon wage 

determination process and second additional issues identified by 

stakeholders regarding the wage determination process. 

In recent years Labor has taken several steps to improve its 

wage determinations. However, Labor has not addressed some key 

issues with survey quality such as the representativeness and sufficiency of survey data collected. 

Among the steps Labor had taken is to shift away from a onesize-fits-all approach for the four construction types. For highway 
8 

surveys Labor began using certified payrolls as the primary data 

source. For building and heavy surveys Labor adjusted timeframes 

to better manage the quality of data received. 

Labor expects these and other changes to reduce the time needed 

to process highway surveys by more than 50 percent—by more 

than 80 percent and building and heavy surveys by more than 50 

percent. 

While it is too early to fully assess the effects of Labor’s changes 

a review found that they may not achieve expected results. Of the 

12 surveys conducted under Labor’s review process that we assessed against Labor’s new timelines we found that ten were behind schedule, some by several steps in the process. 

Many published wage rates are several years old. Labor’s 2010 

performance goal was for 90 percent of published wage rates for 

building, heavy and highway construction to be no more than three 

years old. Labor achieved 61 percent. When we drilled down we 

found almost 75 percent of the union prevailing rates were three 

years old or less. In contrast 36 percent of the non-union prevailing 

rates were three years old or less, almost half were ten or more 

years old. 

We also found critical problems with Labor’s wage survey methodology—continued or survey-hindered survey quality. Labor cannot determine whether its wage determinations accurately represent prevailing wages because it does not calculate survey response rates or analyze those who do not respond. 

A low response rate may mean the results are misleading or inaccurate if those who differ—if those who respond differ substantively and systematically from those who do not respond. While 

Labor is required by law to issue wage rates by the civil sub-division of the state, its goal to issue them at the county level is often 

not met because of insufficient survey response. 

We reviewed four surveys that were issued in 2009 or 2010 and 

found that Labor issued 11 percent of wage rates for key job classifications using data from a single county. Forty percent of the wage 

rates were based on statewide data. That means that the rate was 

based either on data from all of the rural—or all of the metropolitan counties in the entire state. 

In the four surveys over one-quarter of the wage rates for key job 

classifications were based on data reported for six or fewer workers. The statutory requirement to issue rates by civil sub-division 

limits Labor’s ability to address inadequate data. Labor’s not able 

to augment its survey data with sources that draw on other geographical areas such as metropolitan statistical areas that may better reflect regional markets. 

We interviewed a wide variety of stakeholders including academics, contractors, contractor associations, unions to obtain their 

perspectives. They voiced two key concerns, first little incentives to 

participate in the wage surveys, second a lack of transparency in 

the survey process. 

Stakeholders cited various factors. They said were disincentives 

to participate, for example, kit contractors may lack the necessary 

resources, do not understand the purpose of the survey, may not 

see the point in responding. 
9 

Stakeholders also said there was a lack of transparency about 

the number of workers and wage rates used to calculate prevailing 

wages for each job classification and for providing such information 

could enhance understanding of the process and result in greater 

participation. 

So in sum, to improve the quality and timeliness of the wage surveys we recommended that Labor enlist the National Academies or 

another independent statistical organization to evaluate and try to 

provide objective advice on the survey, its methods and design, potential for conducting a sample survey instead of a census survey 

and other aspects of doing the process. 

We also recommended that Labor take steps to improve the 

transparency of its wage determinations which could encourage 

greater participation in the survey. Finally we suggested that Congress consider amending the requirement that Labor issue wage 

rates by civil subdivision to provide the agency with more flexibility. 

Mr. Chairman, ranking member Woolsey, members of the subcommittee, that concludes my remarks. I would be happy to answer 

any questions you may have. 

[The statement of Mr. Sherrill may be accessed at the following 

Internet address:] 

http://www.gao.gov/new.items/d11486t.pdf 

Chairman WALBERG. Thank you, Dr. Sherrill. 

Mr. Markey? 

STATEMENT OF TOM M. MARKEY, DEPUTY ADMINISTRATOR 

FOR PROGRAM OPERATIONS, WAGE AND HOUR DIVISION, 

U.S. DEPARTMENT OF LABOR 

Mr. MARKEY. Chairman Walberg, ranking member Woolsey and 

members of the sub-committee, thank you for the opportunity to 

talk to you today about the role of the Department Wage and Hour 

Division in Davis-Bacon wage determination. 

The Davis-Bacon Survey Program was evaluated extensively in 

the 1990s and early 2000s. The two evaluations that are most relevant of what we will be discussing today are the 1999 GAO report 

and the 2004 OIG report. Both reviews concluded that despite 

Wage and Hour’s efforts there were still numerous problems with 

timeliness and accuracy of wage determinations. 

To address these concerns Wage and Hour enlisted the help of 

McGraw-Hill Construction Analytics to assess our process and operations. They recommended improving and stabilizing the IT system, developing policies and training for survey staff, establishing 

metrics to measure time limits and productivity and improving 

communication with internal staff and external stakeholders. 

Wage and Hour has implemented improving this based on these 

recommendations which are starting to bear fruit. From 2005 

through January 2011 Wage and Hour issued several major releases to both its automated systems. These changes were designed 

to complete and publish wage determinations in a more timely 

fashion. In 2007 a bridge connecting both of these IT systems be-
10 

came operational, thereby allowing improvements to survey performance measurements. 

In addition Wage and Hour increased the number of survey staff, 

established a new yearly training program for all survey staff, 

drafted a new manual of operations—and using a manual and a 

training guide that is updated with each IT system release—instituted performance measures for the age of wage rates, the period 

of time from completion of the survey to publication and the time 

required to conduct surveys. 

It also incorporated analyst tracking reports enabling supervisors 

to monitor the time spent by analysts and survey processing and 

in specific task. Finally it developed new performance standards in 

the fiscal year 2010 rating cycle for Wage and Hour staff. Wage 

and Hour’s recent re-engineering efforts are as follows. 

For highway construction many state departments of transportation conduct surveys of highway construction using the same payment data as Wage and Hour. We now work with these states to 

issue and maintain current prevailing highway wage rates. 

For residential surveys to combat traditionally low response 

rates we are now conducting these surveys separately so we can 

also call and visit to supplement the mailing that contractors receive. 

For building and heavy construction we initiate a pilot program 

of completing these in a shorter period of time—on average Wage 

and Hours’ completing these surveys under this pilot within 24 

months as opposed to many years in the past. At the same time 

Wage and Hour was conducting all these improvements the agency 

published wage determinations for 22 statewide backlog surveys. 

The 2011 GAO report contains two recommendations. With regard to the first one on the National Academies or other statistical 

organizations we feel that given that we are currently making 

changes to contract to a different organization and evaluate the efforts of Wage and Hour may be premature, especially in light of 

cost considerations. Wage and Hour nevertheless will explore the 

options for seeking independent evaluation of survey methodology. 

With regard to a transparency the wage determinations are 

housed on WDOL, which is the result of a collaboration of multiple 

federal agencies. Consequently any changes to the website must be 

made in collaboration with these other entities and cannot be made 

unilaterally by the department. We do, however, agree that the 

public should have more information to clearly understand the 

process here and have opened a dialogue with these other agencies. 

Eight years after its enactment, the Davis-Bacon and related 

Acts continued to protect the wages of hard-working Americans as 

they build the nation’s infrastructure. Wage and Hour is doing its 

part in this endeavor by re-engineering the Davis-Bacon Survey 

Program to ensure that the injection of federal construction funds 

to communities does not depress the wages of the local workforce. 

Again thank you for the opportunity to testify today. I am happy 

to answer any questions that the sub-committee may have. 

[The statement of Mr. Markey follows:] 
11 

Prepared Statement of Thomas M. Markey, Deputy Administrator for 

Program Operations, Wage and Hour Division, U.S. Department of Labor 

Chairman Walberg, Ranking Member Woolsey, and Members of the Subcommittee, thank you for the opportunity to talk with you today about the role of 

the U.S. Department of Labor’s Wage and Hour Division (WHD) in Davis-Bacon Act 

wage determinations and enforcement. I appreciate the opportunity to discuss 

WHD’s efforts to reengineer the Davis-Bacon Survey Program and our work to revitalize the enforcement of Davis-Bacon requirements on federally funded construction 

projects. 

The principle underlying the Davis-Bacon Act (DBA) is simple—to ensure that the 

Federal Government’s extensive contracting activity does not have the unintended 

consequence of depressing workers’ wages. Since its enactment in 1931, the DBA 

has ensured minimum compensation levels for construction workers based on the 

wages paid in a given locality and has provided a level playing field for all contractors in the construction industry. Construction is a labor-intensive sector of the 

economy, often with multiple layers of contracting and subcontracting. Without the 

DBA and the over 60 Davis-Bacon ‘‘related Acts’’ that contain Davis-Bacon prevailing wage requirements, the Federal contracting agencies, state and local governments, and recipients of Federal grants who are responsible for federally funded or 

assisted construction projects might never assume direct responsibility for the wages 

of the laborers and mechanics who build our nation’s buildings, pave our roads, dig 

our trenches, and maintain our infrastructure. 

The DBA and the standards that it imposes on the Federal government and recipients of Federal funds ensure that hard-working middle class Americans will not 

see their wages and benefits undercut by Federal spending practices. As important, 

these standards enable local contractors and subcontractors to compete for local 

projects by protecting them from underbidding by contractors who import workforces 

from outside the local community. As Secretary Solis’ vision for the Department of 

Labor appropriately articulates, it is about ‘‘Good Jobs for Everyone.’’ 

Today, the Federal government continues to construct buildings, build dams, and 

fund housing projects. State highway departments pave roads with Federal funds 

from the Federal Highway Administration. Local and State governments build 

water treatment plants, modernize schools, and renovate airports. Many of these 

projects are funded by the American Recovery and Reinvestment Act of 2009 (Recovery Act), which appropriated substantial funding for construction, alteration and repair of Federal buildings and for infrastructure projects. The DBA therefore is as 

relevant today as it was when it was first enacted, and it continues to provide stable 

wage rates and benefits that attract higher-skilled labor. And by attracting higherskilled workers who are both experienced and productive, construction projects are 

more often completed on time and at lower cost. 

The average annual earnings for construction workers in May 2009 was $43,350— 

not significantly higher than the average annual earnings for construction workers 

reported in 1995, when the Department last testified on the DBA before the House 

Subcommittee on Workforce Protections. The industry remains particularly susceptible to economic fluctuations that bring on periods of high unemployment and 

underemployment, as we have seen in the most recent recession that began in December 2007. When Federal construction causes a sudden significant increase in the 

demand for local labor in a high unemployment labor market, absent a prevailing 

wage requirement, there is a strong downward pressure on local wages as the unemployed and underemployed are drawn into the area for work. The Davis-Bacon 

and related Acts provide the safety net for those local workers, their construction 

companies, and their communities. 

DOL and Davis-Bacon Wage Determinations 

The longstanding mission of the Department of Labor’s Wage and Hour Division 

(WHD) is to promote and achieve compliance with labor standards to protect and 

enhance the welfare of the nation’s workforce. To this end, the WHD is responsible 

for administering and enforcing some of our nation’s most comprehensive federal 

labor laws covering, among other things, requirements and obligations relating to 

minimum wage and overtime pay, recordkeeping, child labor, family and medical 

leave, migrant work and worker protections in certain temporary worker programs, 

and the prevailing wages for government service and construction contracts. 

The Davis-Bacon Act requires that all contractors and subcontractors performing 

work on federal contracts in excess of $2,000 for the construction, alteration, or repair of public buildings or public works (and contractors or subcontractors performing on federally assisted contracts under the related Acts) pay their laborers 

and mechanics not less than the prevailing wage rates and fringe benefits listed in 
12 

the contract’s Davis-Bacon wage determination for corresponding classes of laborers 

and mechanics employed on similar projects in the area. Davis-Bacon labor standards clauses must be included in covered contracts. Since the 1990s, WHD has focused on improving the accuracy and timeliness of DBA wage determinations by reengineering the DBA survey program and providing the best opportunities for increasing stakeholder participation. During the last 24 months in particular, WHD 

has reevaluated and changed various administrative processes, addressed recommendations from various audits, improved outreach, and enhanced enforcement. 

These changes of the last two years are already producing positive results. 

For example, the survey backlog is gone. The only surveys being processed in the 

system at this time are recent surveys and some of these surveys are nearing publication. Additionally, the time needed for survey analysis (cutoff date to on-site 

verification) has decreased from 2-5 years to less than 12 months. 

The 2011 Government Accountability Office (GAO) audit of the Davis-Bacon Survey Program at issue in today’s hearing analyzed WHD’s IT system, the timeliness 

and accuracy of the survey process, the effectiveness of WHD personnel, and the 

performance measures WHD employed. Prior to the audit, WHD was already engaged in addressing many of these issues, but, as WHD staff acknowledged to the 

GAO auditor, WHD’s improvements to its DBA survey program are ongoing. 

IT System 

WHD has adopted a systematic approach to effect improvements in the wage determinations IT system. From 2005 through January 2011, twenty-nine (29) major 

releases and updates were made to WHD’s Automated Survey Data System (ASDS) 

and seventeen (17) major releases and updates were made to the Wage Determination Generation System (WDGS). The changes were designed to increase the speed 

of processing so that surveys could be completed and published in a more timely 

fashion. In 2007, a ‘‘bridge’’ connecting both of these IT systems (an enhancement 

that had been discussed in WHD’s May 2006 report to Congress) became operational, thereby allowing improvements to survey performance measurements and 

other reports. 

These IT improvements have enhanced the efficiency and effectiveness of myriad 

tasks performed both by the WHD’s analysts and by the agency’s contract staff at 

the University of Tennessee’s Construction Industry Research and Policy Center 

(CIRPC). For example, the usual time needed to complete basic business processes, 

such as loading F.W. Dodge reports that identify construction projects within a particular geographic area, has been reduced from three weeks to one hour; the time 

needed to prepare documents for on-site verification has been reduced from one 

month to one day; and area practice resolution by WHD staff has been reduced from 

weeks to one day. 

IT development and resulting changes to the survey process to further increase 

the accuracy and timeliness of DBA wage surveys and wage determinations are still 

ongoing. Also, improvements to reports used to assess the performance of both WHD 

analysts as well as the overall program continue to be developed and implemented. 

Process (Timeliness and Accuracy) 

Prior to the 2011 GAO audit, WHD began reviewing survey processes in the key 

areas in which there was substantial time expenditure by staff (WHD and contract 

staff). Many of the large time expenditures were reduced by IT improvements. For 

example, the time spent by WHD survey analysts on administrative/clerical type 

functions was greatly reduced when WHD modified the University of Tennessee contract, thereby freeing WHD staff to concentrate on analysis and clarification of data. 

Regional WHD analysts are now performing analysis and clarification of data within 

two weeks of the receipt of such data. Despite a large amount of data still being 

received on the survey cut-off date, processing time is quicker than before because 

all other data is reviewed and processed by the cut-off date. Currently, contractor, 

third party, and on-site verification are being performed within an average of six 

to eight months from survey cut-off date compared to the 12-15 months it took prior 

to 2010. 

Early IT problems had caused a backlog of surveys awaiting on-site verification, 

analysis, review, and publication. In 2005, there were 22 statewide surveys in 

WHD’s Automated Survey Data System (ASDS) that had been started in the years 

2002 through 2004. This backlog of surveys in the data system affected the start 

of new surveys. To remedy this, changes were made to the IT program allowing 

cross-regional work and, as a result, new surveys were started in 2007. Additionally, 

all of the 22 ‘‘old’’ surveys were completed and published either in FY 2009 or in 

FY 2010. 
13 

Beginning in 2002, new statewide surveys were conducted of all four types of construction (residential, highway, building, and heavy) in an effort to maximize responses. Because they covered all four types of construction at one time, the surveys 

were very large and clarification and analysis became much more difficult. In 2009, 

WHD determined that it would be more efficient for residential and highway surveys to be conducted separately, while continuing to conduct building and heavy 

construction statewide surveys concurrently because the same universe of contractors are engaged in both building and heavy construction. Additionally, most building construction is related to heavy construction, i.e., site prep and utility infrastructure. 

Concerning highway construction, because many state Department of Transportation (DOT) offices conduct state surveys of highway construction using the same 

payment data used by WHD in their surveys, WHD contacted all state DOTs regarding state conducted highway construction surveys to obtain their data and survey information. For those states in which highway surveys were not conducted by 

the state, WHD began working with those states to obtain certified payroll data so 

that WHD could conduct the survey. Based on this effort, 33 states now work with 

WHD to issue and maintain current prevailing highway wage rates. Three states 

(Arkansas, Mississippi, and Utah) were surveyed by WHD, and new highway rates 

were published in 2008. WHD will also publish 11 statewide highway surveys funded under the Recovery Act in 2011 (Oklahoma, New Mexico, North Carolina, South 

Carolina, Nebraska, Maine, Vermont, New Hampshire, Colorado, Louisiana, and 

Florida). WHD will work with the state DOTs on the three remaining states (Kentucky, Massachusetts, and Idaho) to obtain state data or conduct a survey in 2012. 

Also in 2012, WHD will schedule new highway surveys for Arkansas, Mississippi, 

and Utah. Upon publication of these surveys, WHD will have met its goal of having 

all surveys of highway construction completed with results (wage rates) published 

within the last three years. WHD will then develop a survey plan with a schedule 

of publishing rates for 17 states each year so that highway construction wage rates 

are based on data no older than three years. 

Residential surveys are the most difficult of all surveys to conduct because the 

construction projects are small and the contractor response rate is the lowest of all 

survey types. As a result, WHD decided to conduct these surveys separately so that 

additional calls and/or visits to contractors to solicit participation could be made. 

WHD began its revised residential construction program in 2010 with a statewide 

survey of Missouri. Residential surveys of Maine, Vermont, New Hampshire, Maryland, Virginia, North Carolina, South Carolina, Nevada, Washington, and Oregon 

will follow in 2011 and 2012. 

Personnel 

WHD has increased the number of both its Federal survey staff in the regional 

offices as well as contract staff at the University of Tennessee to provide support 

for the increased number of surveys and the reduced timeframes in which surveys 

are to be concluded. 

In 2006, the WHD national office established a new yearly training program for 

all of the field offices in each region. Training is also provided to University of Tennessee staff by WHD national office personnel. 

Additionally, WHD has drafted a new manual of operations. Once approved, it 

will be posted on the WHD Intranet for use by staff as well as on the agency’s public 

website. Moreover, with each new update to WHD’s IT systems (WDGS and ASDS), 

a training guide is now also prepared and training on the new release is provided 

to analysts. WHD prepared a comprehensive user manual for each of the automated 

systems in 2008. The manuals are updated with each release and are maintained 

on the WHD Intranet. 

Yearly planning meetings are held with the Regional Wage Specialists (RWS), 

Senior Wage Analysts, and National Office staff. Monthly conference calls are held 

with all regional and national office staff. In addition, regular calls as well as onsite visits are made to contractors. 

Performance Measures 

From 2004 through 2009, the only performance measure that WHD reported for 

the Davis-Bacon Survey Program was related to the processing of wage determinations submission (‘‘WD-10’’) forms, which measured only how efficiently WHD staff 

processed the survey forms. However, in 2006, WHD instituted additional performance measures for this program to address the timeliness of the DBA wage survey 

and wage determinations program. The age of wage rates, the period of time from 

completion of the survey to publication, and the time required to conduct surveys 
14 

are now measured. Reports measuring these items are in ASDS and WDGS and are 

calculated based on the work processes performed in the system. 

The 2011 GAO Report indicates that start dates are being entered into the system 

differently by regions and, therefore, the ability to accurately measure the survey 

timeliness is affected accordingly. However, the surveys reviewed and discussed in 

the 2011 GAO report were entered into ASDS in early January 2009, prior to the 

date when a new survey time tracking report was implemented in the October 2009 

ASDS release. This accounts for the differences in reporting by the regions. In the 

planned April 2011 release, ASDS will automatically populate the fields when the 

region enters data so there will be uniformity in reporting. This report, along with 

the analysts’ time reports, will allow WHD to monitor the processes in which large 

amounts of time are being spent and allocate resources accordingly. 

Analyst time tracking reports were incorporated into ASDS in 2009, enabling supervisors to monitor the time spent by analysts in survey processing and in specific 

tasks. Additionally, all WD-10s reviewed and submitted by analysts are also reviewed by the senior wage analyst in each region and feedback is given immediately 

to the analysts. All of these initiatives have resulted in more accurate reporting of 

information, allowing, among other things, WHD national office personnel to monitor the time spent in specific survey activities. Additionally, new performance 

standards were also developed for the FY 2010 rating cycle for WHD regional and 

national office survey and wage determinations staff. These standards are closely 

aligned to the agency’s program performance goals and measures. 

As documented in the foregoing, WHD has implemented numerous changes over 

the last five years. As GAO acknowledges with respect to timeliness, it is too early 

to assess the effects of Labor’s 2009 changes. This is also true with respect to other 

process improvements that WHD has implemented over the last two years. For 

building and heavy construction, the new processes instituted in 2009 and 2010 

broke down the survey process for these types of construction into discrete tasks and 

estimated how long each task should take, with a goal of completing building and 

heavy surveys in a shorter period of time (19 months). There were five surveys in 

the pilot: Montana, Wyoming, North Carolina, South Carolina, and West Virginia. 

The 2011 GAO Report states that WHD is behind schedule in each of these surveys. 

The pilot program was developed to test this process, refine it, and eventually meet 

the estimated goal of 19 months. Of the nine building and heavy statewide surveys 

started in 2009 with data collection cut-off dates from December 31, 2009, to February 28, 2010, four surveys (Montana, Wyoming, New Hampshire, and Vermont) 

are being published now; three surveys (North Carolina, South Carolina, and Maine) 

will be published in next two months; and two surveys (West Virginia and Nebraska) are in on-site verification and will be published in the summer of 2011. This 

is an average of 24 months from the time the survey was entered in the system to 

publication and an average of 12 months from the survey cut-off date to publication. 

This clearly indicates that WHD has substantially reduced the time in every process 

as compared to five or ten years ago. WHD continues to make improvements to the 

survey process in order to reach its goal of a 19-month turn around time period. 

In addition to conducting and completing all of the above surveys, WHD conducted and completed a building, heavy, highway, and residential survey of Guam 

in 2010, and a residential weatherization construction survey of 50 states and 

Washington D.C. in 2009. The weatherization construction survey in particular 

stands out as a significant accomplishment for WHD as the agency completed it 

within 3 months. The Department of Energy’s weatherization program received $5 

billion as a result of the Recovery Act. The Recovery Act also applied Davis-Bacon 

Act provisions to the program for the first time because Congress wanted to assure 

that workers employed on Recovery Act-funded projects were paid the legally mandated wages and benefits. WHD initiated and completed the prevailing wage rate 

surveys during July and August 2009 and published weatherization rates for more 

than 3,000 counties by September 3, 2009. After publication, it was discovered that 

due to the inexperience of some community action agencies with the Davis-Bacon 

survey requirements, some of the data submitted to WHD had errors. As a result, 

WHD decided to re-verify all the submitted survey data to ensure the data was accurate and reliable. WHD then published revised prevailing wage rates for weatherization in December 2009. 

Guam will continue to be surveyed every year in accordance with the legal requirements concerning Federal construction projects on Guam. The further reduction of survey time should continue as more and more of the survey and wage determination processes are being automated and improved. 

As WHD conducts surveys more frequently in accordance with the new processes 

outlined above, the age of the surveys addressed in the 2011 GAO Report with contractors and unions should be reduced. New wage surveys of states surveyed in 2002 
15 

are already being conducted. Surveys of Georgia, New Hampshire, Maine, and 

Vermont are currently being conducted. Surveys of Florida, Utah, and Nevada are 

planned for late 2011. 

The 2011 GAO Report also refers to the quality of representation and responsiveness in WHD’s survey results. WHD has already taken steps to address this concern. Notably, the December 2010 ASDS release has provided the capability to track 

responses for every contractor and interested party, and the April 2011 release will 

give us additional reporting capability. The automatic breakdown by construction 

type will occur later in 2011. This will only affect building and heavy construction 

surveys as they are conducted together as one survey. However, as discussed in the 

2011 GAO Report, since these efforts are ongoing it is premature to assess their effectiveness at this time. 

The 2011 GAO Report discusses the lack of incentive for stakeholders to participate in the survey process. Despite an aggressive outreach program to increase participation in the survey process from all parties, including small contractors and 

their associations, the Davis-Bacon survey is still a voluntary survey. See 29 CFR 

1.3(a). Many of the shortcomings in the surveys arise from the voluntary nature of 

the survey process. 

There is also a discussion in the 2011 GAO Report about reporting errors. The 

errors mentioned in the report were found in the data verification process of the 

survey and typically (if not always) resulted from errors in the information provided 

by survey respondents, not from errors by WHD employees. WHD’s survey submission form (WD-10) asks responders to report on the multiple types of work performed by each classification for which they are reporting data. WHD then bases 

rates on the work performed by the classification. While the 2011 GAO Report 

states that 19 of 27 interested parties (70%) interviewed by GAO found the forms 

easy to use, WHD believes any confusion by any stakeholder is undesirable. It is 

important to note, however, that many of the errors discovered during on-site 

verification do not impact the accuracy of the wage rates, such as recording the 

wrong name or address of the contractor, or not reporting the correct contract 

amount. These all get counted as errors but have no impact on the wage rates themselves. 

The 2011 GAO Report at page 27 indicates that errors may have occurred because 

WHD did not pretest a redesigned form. However, this form is not a new form. It 

is the old WD-10 data placed on a scannable format. Over time there has been a 

substantial increase in electronic wage determinations submissions; and therefore, 

a decision was made to make changes to this format to allow respondents to save 

data, etc. so as to ease the information collection process on the part of the participant. As noted in the 2011 GAO Report, WHD has indicated that another update 

is planned to address portions of the form that respondents find confusing. These 

changes may only be implemented with the approval of the Office of Management 

and Budget (OMB) in coordination with the U.S. Census Bureau, and in conjunction 

with changes to ASDS. The effectiveness of these changes cannot be assessed until 

after implementation. 

The 2011 GAO Report indicated that stakeholders found problems with the transparency of the process. WHD agrees that greater transparency would enhance the 

process and the agency has already identified a number of improvements that could 

be implemented. These improvements range from improvement to the WHD 

website, including additional information on the surveys and survey data, to more 

descriptive language on the wage determinations. 

In every WHD wage survey, contact is made with unions and contractor associations. For the Florida and New York surveys mentioned in the 2011 GAO Report, 

the contractor associations did not respond to WHD’s offers of pre-survey briefings. 

WHD will continue to work with the contractor associations, unions, and other interested parties to increase participation and to solicit the necessary wage information. As surveys are conducted more regularly, WHD anticipates that participation 

in the pre-survey briefings and in the surveys themselves will become routine for 

the stakeholders, thus decreasing confusion and increasing overall response rates. 

2011 GAO Recommendations 

The 2011 GAO Report contains two recommendations for WHD. The first recommendation suggests that the Secretary of Labor direct WHD to enlist the National Academies or other independent statistical organization to evaluate and provide objective advice on the wage survey. WHD has previously enlisted McGraw Hill 

Construction Analytics, a firm of leading industry economists with expertise in construction analysis, trends, and forecasts, to assess WHD’s process and operations. 

The recommendations from McGraw Hill, which WHD provided to the GAO auditor, 

have been implemented and are beginning to bear fruit. Given that further changes 
16 

to the process are currently being implemented or will be implemented in the near 

future, contracting to a different organization to evaluate the efforts of WHD may 

be premature, especially in light of cost considerations. WHD will, nevertheless, explore options for seeking independent evaluation of the survey methodology and 

identify organizations or academics that may have expertise in this area. 

The second recommendation states that the transparency of wage determinations 

needs to be improved. The wage determinations are housed on the website ‘‘WDOL.’’ 

The WDOL website is the result of a collaboration of the Department of Labor, 

OMB, National Technical Information Service, General Services Administration, and 

Department of Defense. Consequently, any changes to the Website must be made 

in collaboration with these other entities and cannot be made unilaterally by the 

Department of Labor. WHD, however, agrees with the recommendation that the 

public should have more information to clearly understand the information being requested and the calculations and codes that are used on the wage determinations. 

As indicated above, WHD is already undertaking steps to address these concerns. 

DBA Enforcement and Compliance Assistance 

In Fiscal Year (FY) 2010, in addition to focusing on reengineering the DavisBacon Survey Program, WHD also increased and enhanced its DBA enforcement 

and outreach activities, pursuing opportunities made possible with funds from the 

Recovery Act to implement new enforcement and outreach strategies with the objective of realizing Secretary Solis’ vision of Good Jobs for Everyone. 

DOL’s commitment to improving compliance for workers on DBA covered construction projects is particularly important because the DBA does not provide for 

a private right of action to collect prevailing wages that are legally owed to them. 

Additionally, enforcement of the DBA provisions, as stated earlier, ensures that 

wage rates in local communities are not adversely impacted by an influx of workers 

who are willing to work at wages below those paid in the local area. Construction 

workers who work in high wage areas should not lose out on opportunities to work 

on Federal projects in their communities because workers from other areas are willing to take the jobs for less pay. The infusion of Federal dollars into communities 

should never be the trigger that depresses wages. 

In FY 2010, WHD pursued an aggressive enforcement and outreach program, targeting for DBA compliance 660 contractors and 51 projects funded under the Recovery Act. In addition, WHD reinforced its policy to accept third party complaints regarding DBA noncompliance. As a result, in FY2010, WHD found over $7.4 million 

in back wage compensation owed to 3,716 employees on DBA-covered projects. Additionally, in FY 2010, WHD completed 1,087 DBA and Recovery Act investigations. 

As a comparison, in FY 2008, WHD completed 406 DBA investigations. 

In part, WHD was able to achieve this measurable improvement after creating a 

new Senior Investigator Advisor (SIA) position, deploying 33 existing investigators 

to serve as SIAs in various locations across the country. These advisors were responsible for overseeing all Recovery Act investigations, training, and coaching other 

WHD investigators in DBA enforcement principles, and providing training and outreach to various stakeholders in the Federal contracting community. Because basic 

skills in DBA enforcement had diminished throughout the agency over the last ten 

years, training was undertaken at various levels of the organization on a nationwide 

basis. 

WHD also expanded its efforts to educate contractors and workers about their 

rights and responsibilities on DBA-covered work. To reach as large an audience as 

possible, WHD conducted a series of free Prevailing Wage Conferences on the laws 

and regulations applicable to Recovery Act projects. Specifically, these conferences 

included program seminars on the Davis-Bacon Act, the McNamara-O-Hara Service 

Contract Act and the Fair Labor Standards Act; the process of obtaining wage determinations and adding classifications; WHD’s compliance and enforcement processes; 

and the process for appealing wage rates, coverage and compliance determinations. 

The initial conferences in Washington, D.C.; Chicago; Orlando; Long Beach; San 

Antonio and Boston were intended to reach all geographic areas of the country. In 

FY 2010, WHD conducted three more Prevailing Wage Conferences in Guam, New 

Orleans, and Cleveland. Altogether, total registrations at these conferences exceeded 

2,170. Due to the success and positive response WHD received from these conferences, the agency announced that it will host five more conferences in FY2011 

in Melbourne, FL; New York City; Phoenix; Denver; and Las Vegas. 

In addition to the Prevailing Wage Conferences, WHD also increased its specific 

outreach to employers and employer associations to provide compliance assistance 

and education. The agency made presentations to the National Association of 

Women in Construction, the Independent Electrical Contractors, the Power and 

Communication Contractors Association, the Professional Services Council, and the 
17 

Associated General Contractors of America, and met with 370 minority/womenowned construction companies. WHD also developed a webpage dedicated to providing all of our government contract stakeholders with up-to-date compliance assistance materials regarding the DBA, SCA, and the prevailing wage requirements 

under the Recovery Act. 

In addition, WHD provided compliance assistance to various contracting agencies 

and hundreds of contracting officers, and responded to technical assistance requests 

from many prime contractors and recipients of federal financial assistance awards, 

including grant recipients of the U.S. Department of Agriculture and the U.S. Department of Commerce for construction of fiber optic lines under the Broadband 

USA program, as well as recipients and contractors performing work under various 

Department of Energy programs, including the Weatherization Assistance Program. 

WHD participated in outreach events hosted by the President’s Recovery Accountability and Transparency Board including the production of a You Tube video that 

highlights DBA requirements on Recovery Act funded projects. WHD also found opportunities to conduct Recovery Act workshops and staff information booths at 

broader events such as the 2010 DOL Informational and Outreach forum at Rice 

University in Houston, TX. 

On March 31, 2011, the DOL Office of the Inspector General (OIG) published an 

audit of WHD’s DBA wage determinations and enforcement processes, particularly 

the agency’s utilization of Recovery Act funding. The objectives of the audit were 

to determine whether WHD: (1) provided adequate compliance assistance/outreach 

to ensure Recovery Act contractors and subcontractors complied with the DBA; (2) 

conducted timely prevailing wage complaint and directed investigations, in accordance with applicable policies and regulations; and (3) issued timely and reliable prevailing wage determinations in response to the Recovery Act, in accordance with applicable policies and regulations. 

The OIG’s published report validates WHD’s efforts to improve outreach, enhance 

enforcement of the DBA provisions, and reengineer the Davis-Bacon Survey Program. Specifically, the OIG determined that: (1) WHD outreach efforts were extensive and effective; (2) WHD used Recovery Act funds to shift the overall focus of 

DBA investigations using initiatives that have resulted in lasting improvements to 

the investigation program; and (3) WHD conducted timely surveys and established 

reliable prevailing wage determinations required by the Recovery Act as illustrated 

by WHD’s use of Recovery Act funds to update 10 DBA highway surveys, and quickly issue rates for DOE’s weatherization program. The OIG did not make any recommendations for improvement. 

WHD has implemented program goals and objectives for FY 2011 that will continue targeting Recovery Act project investigations for DBA compliance, providing 

outreach opportunities for educating stakeholders on the DBA requirements, and 

aggressively pursuing complaints of DBA violations with an emphasis on targeting 

and debarring contractors who commit repeat or serious DBA violations. 

Conclusion 

Secretary Solis has consistently stated that all of the work of the Department of 

Labor is focused on achieving Good Jobs for Everyone. The Labor Department’s vision of a ‘‘good job’’ includes jobs that: 

• increase workers’ incomes and narrow wage and income inequality; 

• assure workers are paid their wages and overtime; 

• are in safe and healthy workplaces, and fair and diverse workplaces; 

• provide workplace flexibility for family and personal care-giving; 

• improve health benefits and retirement security for all workers; and 

• assure workers have a voice in the workplace. 

To achieve this goal, the Department is using every tool in its toolbox, including 

increased enforcement actions, increased education and outreach, and targeted regulatory actions. These unifying themes seek to foster a new calculus that strengthens 

protections for workers and results in significantly increased compliance. 

Eighty years after its enactment, the Davis-Bacon and related Acts continue to 

protect the wages of hard-working Americans as they build our nation’s infrastructure. In addition to providing a stable and fair contracting environment for businesses that perform construction covered by Davis-Bacon labor standards, the Acts 

ensure that construction workers receive appropriate prevailing wages that contribute to the quality of their lives and to the communities in which they live. 

WHD is doing its part in this endeavor by reengineering the Davis-Bacon Survey 

Program and enhancing enforcement of the DBA requirements to ensure workers 

are paid the wages they are legally owed and that the injection of Federal construction funds into communities does not depress the wages of the local workforce. 

These efforts help to increase workers’ incomes and narrow wage and income in-
18 

equality, and they ensure the sustainability of American’s hard-working middle 

class. 

Again, thank you for the opportunity to testify today. I am happy to answer any 

questions the Subcommittee may have on the Department of Labor’s work to improve the accuracy and timeliness of DBA wage determinations and to enhance DBA 

enforcement. 

Chairman WALBERG. Thank you, Mr. Markey. 

Mr. Eisenbrey? 

STATEMENT OF ROSS EISENBREY, ESQ., VICE PRESIDENT, 

ECONOMIC POLICY INSTITUTE 

Mr. EISENBREY. Thank you, Mr. Chairman. Congress enacted 

Davis-Bacon to assure workers on federal—— 

Chairman WALBERG. Make sure your mic is on. 

Mr. EISENBREY. Congress enacted Davis-Bacon to assure workers 

on construction projects a fair wage and to provide local contractors 

a fair opportunity to compete. The requirement to pay no less than 

locally prevailing wages is absolutely essential to protect local 

standards and to prevent competition based on low wages rather 

than on productivity, efficiency and quality. 

The act has achieved those goals for 80 years so it is easy to forget its importance. Like many things in life it is only when it is 

gone that we realize just how valuable its protections really are. 

Hurricane Katrina is a case in point. After the hurricane struck the 

Gulf coast President Bush suspended the act by executive order. 

What happened? 

Well, workers didn’t get a fair wage because contractors could bid 

the work at the minimum wage instead of the prevailing wage. 

They brought in itinerant crews from outside the Gulf Coast, even 

from outside the U. S., and paid rock-bottom wages. 

Workers, for example, were reportedly hired at $60.00 per day, 

no benefits and a long workday. Local contractors were underbid 

and got passed over at their hour of greatest need and opportunity. 

They watched multi-nationals sweep in and take millions of dollars 

of federal clean-up contracts. Finally President Bush reinstated the 

act. 

When local workers are hired there is a benefit to local businesses beyond construction firms. Local workers spend locally. Out 

of state crews take their wages with them. There are huge regional 

and state variations in construction industry pay just as there were 

in 1931. State hourly wages range from about $18.00 in Alabama 

to about $36.00 in Alaska. Construction wages in adjacent counties 

can also differ remarkably which is why Davis-Bacon’s preference 

for county-based wage determination makes some sense. 

Using OES data from the Bureau of Labor Statistics in the 

Chairman’s home state we see enormous differences between 

Washtenaw County where electricians average about $34 and hour 

and next door in Livingston County where they average about $27. 

Tile and marble setters in Livingston County earn about $32.00 an 

hour on average but next door in Genesee they earn far less, about 

$22.00 an hour. 

The Davis-Bacon Act serves another extremely important purpose. It supports high quality training by encouraging the oper-
19 

ation of union apprenticeship programs and compelling the nonunion sector to try to compete. 

The typical contractor has little incentive to invest in skills training since the worker can carry that investment to another employer. Unions overcome contractors’ natural reluctance to make 

the investment by compelling employers to contribute to joint apprenticeship funds. 

Every signatory contractor pays his fair share and benefits equally from the training provided. The Davis-Bacon Act incentivises 

(sic) these apprenticeships by permitting payment of lower wage 

rates to employers enrolled in bone fide a apprenticeship programs. 

Contractors can submit lower bids when they employ bone fide a 

apprentices as part of their work force. 

Critics claim that the act raises the cost of construction benefiting the workers at the expense of taxpayers. But a great deal of 

empirical research refutes that. There have been natural experiments—elegant natural experiments where states have repealed 

their laws or passed laws and then you see what happens following 

that change in state law. And it shows without question that these 

laws do not raise construction costs. 

Higher wages lead employers to invest in labor saving tools and 

equipment which increases productivity. Better paid, more skilled 

workers are safer, work more efficiently and deliver a better product. 

Construction workers in states that have little Davis-Bacon Act 

prevailing wage laws are 13 percent to 15 percent more productive 

on average than construction workers in non-prevailing wage 

states. Given that construction wages and benefits are only about 

30 percent of construction cost it is easy to see how higher productivity offsets the increased cost of prevailing wages. 

The GAO does identify some problems. The surveys are not—the 

response rates are not very good. And I have a couple of ideas in 

addition to what GAO suggests which I think makes a lot of sense. 

They should do more outreach. The Labor Department should do 

more outreach. 

They should use Webinars, they should get on the phone and call 

contractors. They should really make an effort to get a higher response rate. But there are other things that could be done and two 

in particular I think make a lot of sense. 

One would be to pay small employers—contractors—especially 

ones who aren’t bidders on contracts. Pay them $100 for their time 

to fill out the surveys. That would give them the incentive—if he 

says there is no incentive or little incentive now. That would give 

them an incentive. 

The other thing that could be done—and I think this is very important—is to amend the Federal Acquisition Regulations to require that anyone who does work on a federal construction contract 

has to respond. Mandate a response to any relevant appropriate 

survey. That would, by itself, greatly increase the response rate. 

Mr. Sherk will suggest using an alternative—— 

Chairman WALBERG. Mr. Eisenbrey, your time is up. 

Mr. EISENBREY. I—just to sum up I would just say that there are 

problems using the OES. It doesn’t have benefits. I think he recog-
20 

nizes that and the sample sizes are too small to cover all of the 

classifications at the metropolitan survey area. 

[The statement of Mr. Eisenbrey follows:] 

Prepared Statement of Ross Eisenbrey, Vice President, 

Economic Policy Institute 

Good morning, Mr. Chairman and members of the subcommittee. I am Ross 

Eisenbrey, Vice President of the Economic Policy Institute, a non-partisan think 

tank whose mission is to document the impact of the economy on working and middle class families and to develop policies to ensure shared prosperity. 

The subject of today’s hearing, the Davis Bacon Act and its implementation by 

the Department of Labor, is important to middle class Americans. The Act helps stabilize a sector of the economy which is fundamental to our overall economic performance and which provides good jobs to millions of non-college educated men and 

women. Congress enacted the Davis Bacon Act to assure workers on federal construction 

projects a fair wage and to provide local contractors a fair opportunity to compete 

for construction contracts. The requirement to pay no less than locally prevailing 

wages is essential to protect local standards and to prevent competition based on 

low wages rather than on productivity, efficiency and quality. 

The Act has succeeded in those goals for 80 years, so it’s easy to forget its importance. Like many things in life, it’s only when it’s gone that we realize just how 

valuable its protections really are. Hurricane Katrina is a case in point. After the 

hurricane struck the Gulf Coast, President Bush suspended the Act by executive 

order. What happened? 

Workers didn’t get a fair wage because contractors could bid the work at the minimum wage instead of the prevailing wage. They brought in itinerant crews from 

outside the Gulf Coast—even from outside the U.S.—and paid rock bottom wages. 

Roofers, for example were reportedly hired at $60 per day. 

Local contractors couldn’t compete and got passed over at their hour of greatest 

need and opportunity. Stories in the Baltimore Sun, Atlanta Journal Constitution 

and New Orleans Times Picayune reported on the unhappiness of local businesses 

that watched multinationals sweep in and take millions of dollars of federal cleanup contracts. An editorial in the Times Picayune under the headline ‘‘Rebuilding effort should be localized’’ hit the nail on the head: 

‘‘[W]e are already moving quickly and boldly in the wrong direction * * * 

[Y]ou can hardly entice [our citizens] back if you’re only willing to pay poverty wages. But in the wake of the disaster, President Bush suspended the 

Davis-Bacon Act. * * * In essence, there’s no ceiling preventing sky-high 

profits for these [out-of-state] contractors and not much of a floor to ensure 

that wages to workers are not abysmally low. There is an intelligent way 

to rebuild our city. This, however, isn’t it.’’ 

When local workers are hired there’s a benefit to local businesses beyond the construction firms themselves because local workers spend locally. Out-of-state crews 

take their wages with them. 

The importance of the locally prevailing wage requirement in the Act goes beyond 

disaster situations, of course. There are huge regional and state variations in construction industry pay, just as there were in 1931. In 2010, we have data available 

for the hourly wage of all workers in the construction industry by state in 43 states. 

They averaged $24.54. However, the range of state hourly wages was quite large: 

from a low of $18.33 in Alabama to a high of $36.15 in Alaska. Five states had hourly wages in construction below $20 an hour (Alabama, Arkansas, Maine, Mississippi, 

Texas), and six states’ wages were above $30 an hour (Alaska, Illinois, Massachusetts, New Jersey, New York, Washington). Likewise, within-state differences can 

be extreme. 

Construction wages in adjacent counties can differ remarkably, which is why the 

Davis-Bacon Act’s preference for county-based wage determinations makes sense. In 

the Chairman’s home state, it’s perhaps no surprise that carpenters average $9 an 

hour more in urban Washtenaw County than in rural Charlevoix County, according 

to BLS data (which do not account for further differences in fringe benefits). But 

there are enormous differences even between Washtenaw County, where electricians 

average $33.71 an hour, and next door in Livingston County, where they average 

$27.41. Tile and marble setters in Livingston County earn $31.69 on average, 

whereas next door in Genessee County they earn far less—$22.27 an hour. 

The Davis Bacon Act serves another extremely important purpose that was not 

foreseen by Congress in 1931. It supports high quality training by encouraging the 
21 

operation of union apprenticeship programs and compelling the non-union sector to 

try to compete. The typical contractor has very little incentive to invest in skills 

training since the worker can carry that investment with him to another employer. 

Unions overcome contractors’ natural reluctance to make the investment by compelling employers to contribute to joint apprenticeship funds: every signatory contractor pays his fair share and benefits equally from the training provided. 

The Davis Bacon Act incentivizes apprenticeships by permitting payment of lower 

wage rates to employees enrolled in bona fide apprenticeship programs. Contractors 

can submit lower bids when they employ bona fide apprentices as part of their 

workforce. 

Critics claim these goals are achieved at too high a price, that the Act raises the 

cost of construction, benefitting the workers at the expense of taxpayers. But a great 

deal of empirical research refutes the claim that prevailing wage laws inflate construction costs. Work by Professors Peter Philips and Garth Magnum of the University of Utah, by Prof. Dale Belman of Michigan State University, and Prof. Hamid 

Azari-Rad of the State University of New York, among others, shows that prevailing 

wage laws lift workers’ wages and compensation without significantly increasing 

construction costs. 

Higher wages lead employers to invest in labor-saving tools and equipment, which 

increases productivity. Better paid, more skilled workers are safer, work more efficiently, and deliver a better product. Prof. Philips has calculated that construction 

workers in states with ‘‘little Davis Bacon’’ prevailing wage laws are more productive, on average, than construction workers in non-prevailing wage states. Their 

value added is 13-15% higher per employee. Given that construction wages and benefits are only about 30% of construction costs, it is easy to see how higher productivity offsets the increased cost of prevailing wages. 

The GAO report 

GAO makes three recommendations, one for Congress and two for the Department 

of Labor: 

1. Congress should consider giving DOL more flexibility in the requirement that 

wage rates be issued by civil subdivision. 

2. DOL should obtain expert advice on its survey design and methodology. 

3. DOL should take steps to increase transparency in its wage determinations. 

None of these recommendations is earth-shaking, and the report makes clear that 

DOL is engaged in the process of making improvements. The Department seems to 

be on the verge of ending a long period of neglect, when many wage determinations 

were not updated for more than a decade and the survey process itself was allowed 

to drag on interminably. Highway surveys, for example, which have taken an average of 42 months, will be completed in eight months. 

GAO admits that it is too early to fully assess the effects of changes DOL made 

in 2009, but it goes on to criticize the timeliness of survey data nevertheless. It is 

important, however, to remember that the use of older data usually means that 

wage rates are set lower than would otherwise be the case. It is employees, first 

and foremost, who pay the price for delays. 

With respect to the first recommendation, it is clear that DOL already has considerable flexibility in choosing the survey area for wage determinations and uses it. 

If there aren’t sufficient responses in a county, DOL combines nearby counties in 

groups and super groups, only resorting to statewide data when absolutely necessary. The large use of statewide data in the four states GAO examined is an indication that DOL needs to do more to improve the survey response rate. 

As we saw earlier, there are very real differences, county by county, in how construction workers are compensated. To prevent the federal government from altering 

the market, wage determinations based on surveys that perfectly reflect county 

wage patterns would be ideal. The Bureau of Economic Affairs and the Bureau of 

Labor Statistics do not collect and report wage data consistently at the county level 

for all of the construction industry’s occupational classifications. The most direct solution is to improve the DOL surveys and collect more complete information. 

The surveys are voluntary, and that is a major source of the response rate problem. Many reasons have been offered for the lack of participation: some people don’t 

understand the survey’s importance, others don’t trust or want to assist the government, while others feel they can’t afford to take the time to respond. The oddest 

reason GAO proffered was that some people think the surveys lead to inaccurate 

wage determinations, even though their non-participation is a cause of the inaccuracy they complain about. 

GAO’s recommendations for greater outreach and transparency seem like obvious 

pieces of the puzzle. And I have trouble understanding DOL’s reluctance to seek expert advice on ways to increase the survey response rate. The quality of the surveys 
22 

depends on maximizing the rate and accuracy of the responses. Getting help can 

never be premature. 

But two other solutions seem to be called for and could make a bigger difference. 

First, OMB could require as a precondition for bidding on federal contracts that 

contractors participate in every relevant Davis-Bacon survey. This would be a small 

price to pay for the privilege of working on a federal construction project. And second, paying the respondents for their time—even $100 per completed survey—might 

substantially increase the response rate, especially among small businesses. I am 

told the surveys actually take even a small contractor very little time to complete— 

about 55 minutes for first-time filers, and less thereafter. 

Suggestions that DOL abandon the Davis Bacon Act survey process and rely on 

the Bureau of Labor Statistics Occupational Employment Statistics (OES) for wage 

determinations have been made for many years and rejected after serious consideration. Among the many problems with the OES are the fact that it doesn’t collect 

benefits data—which can make up 20% or more of a worker’s compensation, and 

that its sample size is much too small to report data at the county or even MSA 

level on all of the construction occupations in each of the separate, key market 

areas: residential, building, highway and heavy. There would be considerable cost 

involved in redesigning the OES and increasing its sample size, and even then it 

could not meet the statutory requirement of determining the prevailing wage in the 

sense of identifying the single wage paid to a majority of workers in the locality of 

the construction, because the OES is an estimate constructed from a three-year average of reported wages in various ranges. 

Chairman WALBERG. Thank you for your testimony. 

Move on to Mr. Sherk. 

STATEMENT OF JAMES SHERK, SENIOR POLICY ANALYST IN 

LABOR ECONOMICS, THE HERITAGE FOUNDATION 

Mr. SHERK. Chairman Walberg, ranking member Woolsey and 

members of the sub-committee, thank you for inviting me to testify. 

My name is James Sherk and I am a senior policy analyst in Labor 

Economics at The Heritage Foundation. However, the views I express in this testimony are my own and they should not be construed as representing an official position of the Heritage Foundation. 

I want to explain to you this morning that the Wage and Hour 

Division’s prevailing wage estimates in our survey is deeply flawed. 

And these flaws hurt both workers and taxpayers. 

There are three facts about the Davis-Bacon survey that Congress should be aware of. The first fact is that the Wage and Hour 

division uses an unscientific methodology incapable of accurately 

estimating prevailing wages. The importance of a representative 

sample is a fundamental statistical principle. Accurate estimates 

are impossible without them. 

To see this just consider what would happen if Rush Limbaugh 

polled his audience about whether President Obama deserves reelection. Presumably an overwhelming majority would say he does 

not. Would this mean the President is headed for a landslide defeat? Not necessarily. 

Limbaugh has a more conservative audience than the country as 

a whole. Drawing conclusions from an unrepresentative sample is 

unscientific and inaccurate. Nonetheless, that is what the Wage 

and Hour Division does. Many businesses ignore the Davis-Bacon 

Surveys and Wage and Hour does little to follow up with them. The 

survey responders who do respond are disproportionately large, 

unionized employers. Wage and Hour does not apply the standard 
23 

statistical corrections for this problem, such as waiting and imputation. 

As a result, 63 percent of Davis-Bacon wages are union rates, 

while only 13 percent of construction workers belong to a union. 

The Davis-Bacon survey is not a representative sample and there 

is no reason to expect that it would reflect clear wages. But even 

if Wage and Hour properly randomized its survey, it is too few responses to be accurate. Surveys become less accurate as their sample size drops. When the sample size drops below 30, it becomes 

impossible to even estimate the survey’s margin of error. 

No professional pollster would conduct a survey of 28 voters. If 

the GAO finds that three-quarters of Davis-Bacon wage determinations are based on the wages paid to six or fewer workers, only onequarter of them are based on wages paid to six or fewer workers. 

These small sample size make the results meaningless. The DavisBacon survey methodology is unscientific. Only by chance will it report clear wages. The second fact that Congress should know is 

that Davis-Bacon surveys are highly inaccurate. 

When Labor puts garbage in, they get garbage out. Now in most 

cities, these errors inflate Davis-Bacon rates—wages above market 

rates. For example, plumbers in Jackson, Michigan earn $28 an 

hour. But the Davis-Bacon rates there are $33 an hour, a 16 percent premium. 

Electricians in Sonoma County, California earn $20-odd an hour, 

but Davis-Bacon rates there are $44 an hour, 54 percent higher. 

But in other cities, Davis-Bacon rates are well below market wages. 

In Spartanburg, South Carolina the Wage and Hours Division 

contends that carpenters there earn federal minimum wage of 

$7.25 an hour. That is less than half of what they actually make. 

Nationwide, Davis-Bacon rates are 22 percent above market pay, 

and this inflates the cost of federal construction by about 10 percent. These inaccuracies have caused the government to hire four 

construction workers for the price of five, hurting both workers and 

taxpayers. 

Accurate data would reduce the deficit and allow Congress to 

build more construction without additional appropriations. This 

would create extra jobs for tens of thousands of unemployed construction workers without diverting resources from productive sectors of the economy. 

The third fact that Congress should keep in mind is that the Bureau of Labor Statistics estimates prevailing wages much more accurately than what the Wage and Hour Division does. 

Wage and Hour is an enforcement agency, its job is to enforce 

federal laws like the Family and Medical Leave Act, or the Minimum Wage. It has no expertise in surveying wages and that is 

why you got such a bad methodology. The Bureau of Labor Statistics has exactly this—this expertise. 

That is why it exists. BLS methodology, accuracy and data quality are internationally respected. Now The Bureau of Labor Statistics already conducts two nationwide occupational wage surveys. 

Unlike the Davis-Bacon survey, these surveys are based on representative samples. 

They have large sample sizes and are updated annually. They 

are scientific. They are accurate. That is why the Department of 
24 

Labor already uses these surveys to enforce prevailing wages for 

the Foreign Labor Certification Program and for the Service Contract Act. The chief obstacle to using BLS data is calculating hourly 

fringe benefit rates as required by the act. No existing nationwide 

survey covers employee benefits at the local level. 

This problem could be solved either by expanding the geographic 

scope of the National Compensation Survey or by collecting information on construction benefits through the Occupational Employment Statistics Survey. If Congress wants accurate prevailing wage 

rates, it should direct the Bureau of Labor Statistics to calculate 

them. 

Thank you. I appreciate the opportunity to talk to you today 

about the deep flaws with the Davis-Bacon survey and how it hurts 

both workers and taxpayers. 

[The statement of Mr. Sherk follows:] 

Prepared Statement of James Sherk, Senior Policy Analyst in Labor 

Economics, the Heritage Foundation 

Chairman Walberg, Ranking Member Woolsey, and members of the Subcommittee 

on Workforce Protections, thank you for inviting me to testify before you today. My 

name is James Sherk and I am a senior policy analyst in labor economics at The 

Heritage Foundation. The views I express in this testimony are my own, and should 

not be construed as representing any official position of The Heritage Foundation. 

The GAO has identified many severe flaws in the process used to calculate DavisBacon prevailing wages. However, two aspects of the Department of Labor’s methodology are particularly problematic: the use of a non-representative sample and excessively small samples. These errors render Davis-Bacon wage estimates scientifically meaningless. 

As a result of these flaws, Davis-Bacon wages vary wildly from market rates. In 

some states, such as South Dakota, Davis-Bacon rates are below market rates. In 

other states, such as California, Davis-Bacon rates are well above market wages. On 

average, the Davis-Bacon rates are 22 percent above market wages. 

These errors hurt both workers and taxpayers. My estimates show that paying 

true prevailing wage rates—instead of inaccurate Davis-Bacon rates—would reduce 

government construction costs by $10.9 billion this year. Those savings could be 

used to either reduce the deficit or build more infrastructure at no additional cost 

to the public. The latter choice would mean jobs for an additional 155,000 construction workers. 

Congress should insist that the Department of Labor produce scientific and accurate estimates of prevailing construction wages. The best way to do this is by transferring the resources and responsibility for conducting Davis-Bacon surveys to the 

Bureau of Labor Statistics. The Bureau of Labor Statistics has expertise in producing scientific wage estimates and could meet this responsibility by expanding its 

existing compensation surveys. The Department of Labor has no excuse for relying 

on unscientific and error-riddled prevailing wage estimates. 

The Davis-Bacon Act 

The Davis-Bacon Act (DBA) requires contractors on federally funded construction 

projects to pay their employees at least as much as other construction workers in 

the area earn—the ‘‘prevailing wage.’’ This prevents construction contractors from 

winning federal construction projects by bringing in outside workers earning below 

local wages. 

Congress passed the Davis-Bacon Act in 1931 to prevent African-American workers from underbidding white union members on federal construction projects.1 During the Great Depression many African-Americans moved to the North to search for 

employment opportunities. In many cases they won federal construction contracts 

that would have otherwise gone to white union members. The Davis-Bacon Act intentionally made it much more difficult for minorities to compete against white 

workers for these jobs.2

Despite this origin, the Davis-Bacon Act remains on the books and applies to almost all federally funded construction projects. The Wage and Hour Division (WHD) 

of the Department of Labor estimates the local prevailing wages that federal contractors must pay. 
25 

Unscientific Survey Methodology 

The Government Accountability Office (GA) and the Office of Inspector General 

have frequently criticized the Wage and Hour Division’s survey methodology.3 A recent GAO report finds that serious flaws persist with Davis-Bacon surveys.4 Some 

of these problems can be solved by improving existing methods. These include processing delays and confusing surveys that lead to high error rates in returned forms. 

However, the most significant problem with Davis-Bacon rates is the WHD methodology itself. The Wage and Hour Division uses unscientific methods to estimate 

construction wages. The GAO criticized WHD for not consulting with survey experts 

to design its survey and this lack of expertise shows.5

Two fundamental flaws render WHD wage estimates scientifically invalid. First, 

WHD does not calculate Davis-Bacon wages using a representative sample. The importance of a representative sample is a fundamental statistical principle. A nonrepresentative sample of wages reveals nothing about true prevailing wage rates. 

Second, WHD bases the majority of its wage estimates on too few responses to 

be accurate. GAO reports that only one-quarter of Davis-Bacon wages are based on 

estimates of 29 or more workers. Fully 26 percent of Davis-Bacon estimates are 

based on the wages paid to six or fewer workers. Even if WHD properly randomized 

its surveys, these small sample sizes would make the results meaningless. 

The WHD survey methodology is unscientific and incapable of accurately estimating construction wages. It will only approximate market pay by chance. 

Representative Samples 

Professional statistical agencies estimate statistics by conducting surveys. The Bureau of Labor Statistics (BLS) does not have to interview every business every 

month to determine how many jobs the economy created. Instead it surveys a representative sample of businesses. Statistical agencies achieve representative samples through random sampling. Using statistical principles they can extrapolate 

from a randomly sampled survey to the overall economy. 

Without a representative sample surveys say nothing about the overall economy. 

As Nobel Prize-winning economist James Heckman has noted, ‘‘Wage or earnings 

functions estimated on selected samples do not in general, estimate population wage 

functions.’’6 Any introductory statistics text will make the same point.7

Non-representative samples are not scientifically valid. They only provide information about those who respond to the survey. They provide no statistical information about wages or other aspects of the overall economy. 

To see this, consider if Rush Limbaugh and Rachel Maddow hosted on-air polls 

about whether President Obama should be re-elected. Rush Limbaugh has a much 

more conservative audience than the country as a whole. He would probably find 

an overwhelming majority of respondents wanting to see Obama defeated. Rachel 

Maddow has a much more liberal audience than the country as a whole. Her viewers would probably say overwhelmingly that Obama deserves a second term. These 

straw-polls might provide interesting information about the audience of the Rush 

Limbaugh and Rachel Maddow shows, but they would provide no useful information 

about President Obama’s actual re-election prospects. Concluding that President 

Obama was headed for a landslide defeat or landslide victory based on a non-representative survey would be unscientific and inaccurate. 

Davis-Bacon Survey Is Self-Selected 

A representative sample is unnecessary if the government knows the wages of 

every worker. Then the government could calculate average wages directly without 

generalizing from a sample. The Wage and Hour Division purports to have this information for construction workers. WHD sends surveys to every construction firm 

in a given region.8 WHD bases Davis-Bacon wages on the responses to this ‘‘census.’’ 

This will provide scientifically valid wage figures—if every business responds. 

However, most businesses do not return Davis-Bacon wage surveys. Davis-Bacon 

surveys take considerable time and effort to complete and many contractors do not 

expend staff resources to complete them.9 The surveys also ask for information in 

a form that many construction companies do not track.10 If contractors do not respond to the survey, WHD sends them a follow-up letter asking them to complete 

the forms.11 If that letter goes unanswered, they are ignored. 

This methodology leads to very high non-response rates. Response rates are so low 

that WHD reduced its minimum data standards to wages of three workers from two 

companies. Too few employers responded to meet the old standard of data on six 

workers from at least three employers.12 Those employers who do respond tend to 

be those with large staffs. Unions also devote considerable effort to facilitate unionized employers completing and returning the surveys.13
26 

Consequently, Davis-Bacon rates are based on neither a representative sample 

nor a universal census of construction workers. They are based on a self-selected 

sample of large, unionized businesses. The GAO report confirms this. Nationwide 

only 13.7 percent of construction workers are covered by union contracts.14 Nonetheless 63 percent of Davis-Bacon rates are collectively-bargained union wage rates.15

Union rates are more than four and a half times more common in the WHD survey 

than would occur in a representative sample. The Davis-Bacon survey is far from 

representative. 

As a result it is scientifically useless. Accurate estimates of prevailing construction wages cannot be made from a non-representative sample. Davis-Bacon rates 

will only approximate actual prevailing wages by chance. 

Statistical Corrections Ignored 

Professional statistical surveys do not suffer from these problems. The Bureau of 

Labor Statistics, for example, does not estimate job creation by conducting a census 

of all employers. Instead BLS selects a smaller sample of businesses and takes several steps to make that sample representative. 

First the BLS strives to make its surveys as easy as possible to understand and 

complete. They test their surveys with employers before they put them in the field 

to ensure ease of use. The Wage and Hour Division does not do this.16

Second, professional statistical agencies like the BLS follow up with employers 

who do not initially respond. This includes telephone calls and in some cases onsite visits to collect the required information.17

As a result of these measures BLS surveys have high response rates. For example, 78.4 percent of employers respond to the Occupational Employment Statistics 

survey.18 These high responses help make BLS surveys representative of the overall 

population. 

Third, professional statistical agencies do not ignore employers that do not respond. Instead they make adjustments to correct for their absence. The two principle adjustments statistical agencies make are weighting and imputation. 

Weighting involves adjusting the importance given to the respondents of the survey based on how likely they are to respond. Those groups who were more likely 

to respond count for less and vice versa. Pollsters do this on a regular basis. For 

example, a pollster might survey a state and get a sample with 60 percent men and 

40 percent women. In fact that state has equal numbers of men and women— 

women simply responded in lower numbers. The pollster would adjust the weight 

given to men and women’s responses so that both groups contributed equally to the 

final results. Statistical agencies weight responses by variables like firm size so that 

large businesses are not overrepresented.19

Imputation involves substituting a missing response with a response from a similar respondent or respondents. For example, if a small construction firm does not 

return the Occupational Employment Statistics survey the BLS does not assume 

that there are not any workers. Instead the BLS would randomly select another 

nearby small construction firm that did respond and treat its response as the response of the missing firm.20 This introduces some error into the sample—but much 

less error than by completely ignoring non-responders. 

The Wage and Hour Division does not weight Davis-Bacon survey responses or 

impute missing data. The Wage and Hour Division does not conduct any analysis 

at all of contractors who do not respond.21 WHD does not take basic statistical steps 

to obtain a representative sample. Their methodology has no scientific justification. 

Inappropriately Small Samples 

The Davis-Bacon methodology suffers from a second fundamental scientific flaw. 

Even with a proper representative sample the Wage and Hour Division surveys too 

few workers to make statistically accurate estimates. 

Averages in a representative sample are unlikely to exactly match the average in 

the overall economy. The power of statistical inference is that it allows researchers 

to estimate their margin of error. The sample may not exactly match the overall 

population, but researchers can determine how far off they are likely to be. 

As sample size decreases, surveys become less accurate and their margin of error 

increases. For example, a representative poll of 1,000 Americans has a margin of 

error of +/¥ 3.1 percent while a poll of 100 Americans has a margin of error +/¥ 

10.0 percent.22

If sample sizes become too small, however, estimating even the margin of error 

becomes impossible. Statistical inference is based on the central limit theorem.23

The central limit theorem only applies to samples of sufficiently large size, in most 

cases requiring a sample of at least 30 observations.24 Researchers cannot estimate 

how inaccurate the results of smaller samples are. 
27 

The Wage and Hour Division routinely uses samples of less than 30 workers. The 

GAO found that only 25 percent of Davis-Bacon rates are based on data from 29 

or more workers. A greater proportion of wage rates (26 percent) are based on data 

from 6 or fewer workers.25

Even a properly randomized representative sample of 6 workers would be too 

small from which to make statistical inferences. No professional pollster would conduct a survey of 6 voters. 

The WHD minimum data standards are observations on three workers from two 

employers. That minimum standard should be data on at least 30 randomly selected 

workers. The Wage and Hour Division’s existing methodology lacks statistical validity. 

Inaccurate Wage Determinations 

The Wage and Hour Division uses unscientific methods and unrepresentative data 

to estimate prevailing wages. Unsurprising, Davis-Bacon rates typically bear little 

relation to actual prevailing wages. The table below shows Davis-Bacon and market 

wages (estimated by the Bureau of Labor Statistics) for several U.S. cities.26 The 

appendix to this testimony explains the methodology for these comparisons. DavisBacon rates vary wildly from actual market pay. 

For most cities, Davis-Bacon rates are well above market wages. Plumbers in 

Jackson, Michigan, earn $28.23 an hour, but their Davis-Bacon rates are $32.79 an 

hour—a 16 percent premium. Carpenters in the Twin City region in Minnesota earn 

$23.92 an hour, but the Wage and Hour Division requires federal contractors to pay 

$31.77 an hour—a 33 percent premium. Electricians in Sonoma County, California, 

earn $28.55 an hour, but Davis-Bacon rates are 54 percent higher at $44.00 an 

hour. 

In some cities, however, the Wage and Hour Division’s flawed methodology reports Davis-Bacon rates below prevailing market wages. Davis-Bacon rates for 

plumbers in Sioux Falls, South Dakota, are 17 percent below market wages. The 

Wage and Hour Division contends that prevailing wages for electricians in 

Spartanburg, South Carolina, are only $7.85 an hour—55 percent below their actual 

level of $17.47 an hour. Davis-Bacon rates for carpenters in Spartanburg are even 

worse—the federal minimum wage of $7.25 an hour. 

Nationwide the Wage and Hour Division reports Davis-Bacon wages that average 

22 percent above actual market pay. These inaccurate rates inflate the cost of federal construction projects by 9.9 percent.27

DAVIS–BACON AND MARKET RATES FOR VARIOUS CITIES 

Market Davis-Bacon % Difference 

Jackson County, MI: 

Carpenters ...................................................................................................... $20.98 $23.89 13.90% 

Electricians .................................................................................................... $27.14 $38.57 42.10% 

Plumbers/Pipe-fitters ..................................................................................... $28.23 $32.79 16.20% 

Minneapolis-St. Paul, MN: 

Carpenters ...................................................................................................... $23.92 $31.77 32.80% 

Electricians .................................................................................................... $29.44 $34.56 17.40% 

Plumbers/Pipe-fitters ..................................................................................... $33.06 $36.62 10.80% 

Sioux Falls, SD: 

Carpenters ...................................................................................................... $15.57 $12.17 ¥21.8% 

Electricians .................................................................................................... $19.38 $23.61 21.80% 

Plumbers/Pipe-fitters ..................................................................................... $17.56 $14.57 ¥17.0% 

Erie County, PA: 

Carpenters ...................................................................................................... $16.89 $26.23 55.30% 

Electricians .................................................................................................... $23.72 $26.40 11.30% 

Plumbers/Pipe-fitters ..................................................................................... $22.54 $33.38 48.10% 

Sonoma County, CA: 

Carpenters ...................................................................................................... $26.88 $37.65 40.10% 

Electricians .................................................................................................... $28.55 $44.00 54.10% 

Plumbers/Pipe-fitters ..................................................................................... $29.71 $55.25 86.00% 

Lafayette, IN: 

Carpenters ...................................................................................................... $18.46 $25.32 37.20% 

Electricians .................................................................................................... $24.84 $30.83 24.10% 

Plumbers/Pipe-fitters ..................................................................................... $21.23 $33.91 59.70% 

Terre Haute, IN: 

Carpenters ...................................................................................................... $19.75 $26.16 32.50% 

Electricians .................................................................................................... $27.20 $32.95 21.10% 
28 

DAVIS–BACON AND MARKET RATES FOR VARIOUS CITIES—Continued 

Market Davis-Bacon % Difference 

Plumbers/Pipe-fitters ..................................................................................... $26.81 $33.91 26.50% 

Spartanburg County, SC: 

Carpenters ...................................................................................................... $15.40 $7.25 ¥52.9% 

Electricians .................................................................................................... $17.47 $7.85 ¥55.1% 

Plumbers/Pipe-fitters ..................................................................................... $20.48 $7.36 ¥64.1% 

Polk County, FL: 

Carpenters ...................................................................................................... $15.37 $15.19 ¥1.2% 

Electricians .................................................................................................... $17.62 $22.07 25.30% 

Plumbers/Pipe-fitters ..................................................................................... $18.31 $17.00 ¥7.2% 

Contra Costa and Alameda Counties: 

Carpenters ...................................................................................................... $28.96 $37.65 30.00% 

Electricians .................................................................................................... $35.46 $45.20 27.50% 

Plumbers/Pipe-fitters ..................................................................................... $32.85 $50.81 54.70% 

Newark and Union, NJ: 

Carpenters ...................................................................................................... $26.57 $39.07 47.00% 

Electricians .................................................................................................... $33.57 $46.63 38.90% 

Plumbers/Pipe-fitters ..................................................................................... $29.54 $45.04 52.50% 

Cleveland-Elyria-Mentor, OH: 

Carpenters ...................................................................................................... $20.89 $28.37 35.80% 

Electricians .................................................................................................... $26.01 $33.91 30.40% 

Plumbers/Pipe-fitters ..................................................................................... $27.73 $31.43 13.30% 

Nassau-Suffolk, NY: 

Carpenters ...................................................................................................... $28.62 $37.21 30.00% 

Electricians .................................................................................................... $30.76 $44.75 45.50% 

Plumbers/Pipe-fitters ..................................................................................... $31.49 $49.98 58.70% 

Honolulu County, HI: 

Carpenters ...................................................................................................... $31.61 $36.20 14.50% 

Electricians .................................................................................................... $32.86 $39.75 21.00% 

Plumbers/Pipe-fitters ..................................................................................... $26.95 $35.60 32.10% 

Source: Heritage Foundation calculations using data from the Department of Labor, Bureau of Labor Statistics and Wage and Hour Division, 

as explained in the appendix. 

Harmful Consequences 

These inaccurate Davis-Bacon rates harm both workers and taxpayers. In most 

cities Davis-Bacon rates unnecessarily raise construction costs. In essence the government hires four construction workers for the price of five. The construction workers fortunate enough to work on a federal project no doubt appreciate this premium. 

However, these inaccuracies will inflate the cost of federally funded construction 

projects by $10.9 billion this year.28

In other cities the Davis-Bacon inaccuracies depress market pay. Davis-Bacon 

rates are minimum wages, so below-market determinations do not force contractors 

to pay substandard wages. They do, however, encourage contractors to reduce their 

bids—putting downward pressure on wages. 

If the Department of Labor used accurate wage determinations, Congress could 

build the same amount of infrastructure at substantially lower cost. The savings 

from paying market wages would reduce the deficit. 

Alternatively, accurate wage determinations would allow Congress to build more 

infrastructure at no extra cost to taxpayers. This would enable the government to 

provide more public services and employ an additional 155,000 construction workers 

in 2011.29 This is not a minor consideration when unemployment in the construction 

industry is above 20 percent. If Congress is going to keep the Davis-Bacon Act on 

the books it should require the Department of Labor to estimate prevailing wages 

scientifically. Taxpayers receive no value from overpaying some workers and underpaying others. 

Bureau of Labor Statistics 

The Wage and Hour Division estimates prevailing wages so poorly because it is 

not a professional statistical agency. The Wage and Hour Division is an enforcement 

agency. WHD enforces federal laws regulating wages and many working conditions, 

such as minimum wages, prevailing wages, child labor, overtime, and the Family 

and Medical Leave Act. WHD has no expertise in conducting scientific wage surveys. 

The Bureau of Labor Statistics does. The BLS has extensive experience in conducting scientific wage surveys. Bureau of Labor Statistics methodology, accuracy, 
29 

and data quality are internationally respected. They have the expertise in scientifically estimating wages that the Wage and Hour Division lacks. 

The Bureau of Labor Statistics already conducts two nationwide wage surveys 

that scientifically estimate occupational wages: the National Compensation Survey 

(NCS) and the Occupational Employment Statistics. Unlike the WHD survey, these 

surveys have high response rates and BLS corrects for non-response with weighting 

and imputation. Both surveys have large sample sizes, are conducted in a timely 

manner, and are updated annually. The Department of Labor uses OES data to enforce prevailing wages for the Foreign Labor Certification program and the Service 

Contract Act. If Congress wants accurate Davis-Bacon rates it should require the 

Department of Labor to use BLS data. 

Better Geographic Coverage 

The Department of Labor previously rejected the idea of using BLS data. One of 

the reasons they gave for doing so was concerns about BLS’s geographic coverage. 

While the Wage and Hour Division issues Davis-Bacon rates for individual counties, 

the Bureau of Labor Statistics reports wages for Metropolitan Statistical Areas 

(MSAs). Some large counties are their own MSA, but most MSAs are agglomerations 

of multiple economically linked counties. 

The Davis-Bacon Act states: ‘‘The minimum wages shall be based on the wages 

the Secretary of Labor determines to be prevailing for the corresponding classes of 

laborers and mechanics employed on projects of a character similar to the contract 

work in the civil subdivision of the State in which the work is to be performed, or 

in the District of Columbia if the work is to be performed there.’’ 30

The GAO argues that this provision prevents the Department of Labor from estimating prevailing wages at the MSA level. The Wage and Hour Division disagrees 

with this legal analysis. In response to a 2004 Inspector General report, the Wage 

and Hour Division stated that ‘‘the Davis-Bacon Act does not prohibit issuing wage 

determinations for broader geographic areas such as an MSA, and we routinely 

issue such wage determinations when sufficient data are not available on a county 

basis.’’ 31

The GAO report reveals just how routine those broader geographic determinations 

are. Only 11 percent of Davis-Bacon rates are based on data from a single county. 

Forty-two percent of Davis-Bacon rates are based on groupings of counties analogous to an MSA, while 40 percent of job classifications are based on statewide 

data.32

Switching to BLS data at the MSA level would eliminate wage determinations 

based on statewide data. This would much more closely approximate prevailing local 

wages than the WHD currently does. 

Steps Forward 

Congress should transfer responsibility for collecting Davis-Bacon prevailing wage 

data to the Bureau of Labor Statistics. The OES already provides annual wage data 

for most construction jobs across the country. WHD could currently use OES wage 

data to set Davis-Bacon wage rates. The chief obstacle to using OES data is calculating hourly fringe benefit rates as required by the Davis-Bacon Act—the OES does 

not cover employee benefits. 

The National Compensation Survey covers benefits and the WHD determined that 

the NCS provides the information necessary to enforce the Davis-Bacon Act in the 

areas that it surveys.33 However, the NCS provides local wage information for only 

154 metropolitan and non-metropolitan statistical areas. These MSAs cover just half 

of the U.S. population. Consequently, neither the OES nor the NCS directly provides 

all of the information necessary to enforce the Davis-Bacon Act. 

These problems are solvable. To calculate prevailing construction benefits the Bureau of Labor Statistics could: 

• Expand the National Compensation Survey. The BLS could expand the construction portion of the NCS to provide nationwide coverage of construction workers. 

The Inspector General suggested this approach in 2004.34

• Collect Construction Benefits with the OES. The BLS could collect benefits data 

from construction employers through the OES. This would require overhauling the 

OES survey and would take some time to set up and train staff to conduct properly. 

• Econometrically Model Benefits. A third approach involves using NCS data to 

econometrically model the relationship between wages and benefits in the construction industry. That model could be applied to the existing OES data to estimate 

fringe benefits for different construction occupations. 

These solutions are not trivial undertakings. They would require Congress to 

transfer the resources for conducting Davis-Bacon surveys from WHD to the BLS. 
30 

However, if Congress did so the BLS could do what the WHD does not: scientifically 

and accurately estimate prevailing construction wages. 

Conclusion 

The Department of Labor’s methods for calculating prevailing construction wages 

are scientifically unsound. The Government Accountability Office report demonstrates that the Wage and Hour Division calculates Davis-Bacon rates with a selfselected sample instead of a representative sample. Non-representative samples do 

not provide reliable information. WHD does not use basic statistical techniques, 

such as measuring non-response and weighting their data to mitigate this bias. 

Even if WHD did use a representative sample they have too few responses to be 

accurate. 

Unsurprisingly, Davis-Bacon rates bear little correlation to market wages. In 

some cities they are below market rates, while in others they are well above market 

rates. On average, Davis-Bacon rates are inflated 22 percent above market pay. 

These inaccuracies hurt both workers and taxpayers. 

Congress already spends $600 million a year on another agency with professional 

expertise in calculating labor market statistics: the Bureau of Labor Statistics. BLS 

surveys do not suffer from the methodological shortfalls that plague WHD prevailing wage estimates. The BLS is internationally respected for conducting scientific and accurate surveys. If Congress wants accurate Davis-Bacon surveys it 

should direct the Bureau of Labor Statistics to conduct them. 

APPENDIX

Bureau of Labor Statistics (BLS) and Wage and Hour Division (WHD) wage estimates are not directly comparable. To report comparable wage rates, The Heritage 

Foundation was guided by the methodology outlined by the Beacon Hill Institute on 

their comprehensive report comparing market and Davis-Bacon wages.35

Market wage data come from the Occupational Employment Statistics program 

within the BLS. This data can be found online at http://www.bls.gov/oes/. Data 

on Davis-Bacon wages came from the U.S. Government Printing Office, ‘‘DavisBacon Wage Determinations,’’ at http://www.gpo.gov/davisbacon. 

Three job categories were selected for comparison: carpenters, electricians, and 

plumbers/pipefitters. The Davis-Bacon rate for each category was determined as follows. The Davis-Bacon rates for ‘‘Building’’ construction were identified from the online postings. Davis-Bacon rates often specify wages for general and specific tasks 

within an occupation. There may be wages for general ‘‘electricians,’’ but also separate rates for electricians who perform specialized tasks. In these cases, the wages 

of the most general category was selected. 

The BLS and WHD estimate wages for different geographic areas. The WHD 

issues wage rates at the county level, while the OES estimates wages for metropolitan statistical areas. The Heritage Foundation used county-level Davis-Bacon wages 

to create MSA-level Davis-Bacon wage rates. In MSAs with only one county, DavisBacon rates were calculated as explained above and directly compared to BLS data. 

In MSAs with multiple counties, Davis-Bacon rates were calculated separately for 

each county. A weighted average of Davis-Bacon rates was constructed, using as 

weights the relative population of each county according to Census Bureau estimates from the year 2009, which can be found online at http:// 

quickfacts.census.gov/qfd/index.html. This weighted average was the final DavisBacon rate compared to BLS data. 

In a few cases, the Davis Bacon rate is not the same for the entire county—for 

example, a certain occupation’s wage rate may vary for different geographic regions 

within a single county. In these cases, The Heritage Foundation used the rate from 

the most populous part of the county. 

MSAs examined and their constituent counties: 

MSA: Jackson, MI MSA 

Counties: Jackson County 

MSA: Minneapolis—St. Paul-Bloomington, MN—WI MSA 

Counties: Anoka County, MN; Carver County, MN; Chisago County, MN; Dakota 

County, MN; Hennepin County, MN; Isanti County, MN; Ramsey County, MN; Scott 

County, MN; Sherburne County, MN; Washington County, MN; Wright County, 

MN; Pierce County, WI; St. Croix County, WI 

MSA: Sioux Falls, SD MSA 

Counties: Lincoln County, McCook County, Minnehaha County, Turner County 

MSA: Erie, PA MSA 

County: Erie County 
31 

MSA: Santa Rosa—Petaluma, CA MSA 

County: Sonoma County 

MSA: Lafayette, IN MSA 

Counties: Benton County, Carroll County, Tippecanoe County 

MSA: Terre Haute, IN MSA 

Counties: Clay County, Sullivan County, Vermillion County, Vigo County 

MSA: Spartanburg, SC MSA 

County: Spartanburg County 

MSA: Lakeland—Winter Haven, FL MSA 

County: Polk County 

MSA: Oakland—Fremont—Hayward, CA MSA 

Counties: Alameda County, Contra Costa County 

MSA: Newark—Union, NJ—PA MSA 

Counties: Essex County, NJ; Hunterdon County, NJ; Morris County, NJ; Sussex 

County, NJ; Union County, NJ; Pike County, PA 

MSA: Cleveland—Elyria—Mentor, OH MSA 

Counties: Cuyahoga County, Geauga County, Lake County, Lorain County, Medina County 

MSA: Nassau—Suffolk, NY MSA 

Counties: Nassau County, Suffolk County 

MSA: Honolulu, HI MSA 

County: Honolulu County 

ENDNOTES

1See, for example, statements made during the Congressional debate. ‘‘I have received numerous complaints in recent months about southern contractors employing low-paid colored mechanics getting work and bringing the employees from the South.’’ Rep. John Cochran, Employment 

of Labor on Federal Construction Work, Hearings on H.R. 7995 and H.R. 9232 Before the House 

Committee on Labor, 71st Congress, 2nd Session, March 6, 1930, p. 26—27. See also Rep. Clayton Allgood: ‘‘Reference has been made to a contractor from Alabama who went to New York 

with bootleg labor. This is a fact. That contractor has cheap colored labor that he transports, 

and he puts them in cabins, and it is labor of that sort that is in competition with white labor 

throughout the country.’’ Legal compilation; ‘‘Statutes and Legislative History, Executive Orders, 

Regulations, Guidelines and Reports,’’ Part 1, Volumes 3-4, U.S. Environmental Protection 

Agency, 1973, p. 1688. 2 It still has this effect. States that repeal their own prevailing wage laws see the the earnings 

of African-American construction workers rise and the earnings of unionized white construction 

workers fall. See Daniel Kessler and Lawrence Katz, ‘‘Prevailing wage laws and construction 

labor markets,’’ Industrial and Labor Relations Review, vol. 54(2), pages 259-274, January 2001. 3 U.S. Department of Labor, Office of Inspector General, ‘‘Concerns Persist with the Integrity 

of Davis-Bacon Act Prevailing Wage Determinations,’’ Report No. 04-04-003-04-420, March 30, 

2004, pp. 12—13, at http://www.oig.dol.gov/public/reports/oa/2004/04-04-003-04-420.pdf 

(April 13, 2011); U.S. Department of Labor, Office of Inspector General, ‘‘Inaccurate Data Were 

Frequently Used in Wage Determinations Made Under the Davis-Bacon Act,’’ Report No. 04-97- 

013-04-420, March 10, 1997, at http://www.oig.dol.gov/public/reports/oa/pre—1998/04-97- 

013-04-420s.htm (April 13, 2011); and U.S. General Accounting Office, Davis-Bacon Act: Labor 

Now Verifies Wage Data, but Verification Process Needs Improvement, HEHS-99-21, January 

1999, at http://www.gao.gov/archive/1999/he99021.pdf (April 13, 2011). 4Government Accountability Office, ‘‘Davis-Bacon Act: Methodological Changes Needed to Improve Wage Survey,’’ Report No. GAO-11-152, March 2011, at http://www.gao.gov/new.items/ 

d11152.pdf (April 13, 2011). 5 Ibid., p. 19. 

6 James Heckman, ‘‘Sample Selection Bias As a Specification Error,’’ Econometrica, Vol. 47, 

No. 1 (January 1979), pp. 153—154. 7See, for example, James McClave, Frank Dietrich, and Terry Sincich, Statistics, Seventh Ed., 

(Upper Saddle Hill, NJ: Prentice Hall, Inc.: 1997), pp. 11—15, 131—136. 8Government Accountability Office, ‘‘Davis-Bacon Act: Methodological Changes Needed to Improve Wage Survey,’’ pp. 57—58. 9 Ibid., pp. 24—26. 

10For example, asking for wage rates using union job classifications that do not reflect the 

practices of nonunion construction contractors. 11Government Accountability Office, ‘‘Davis-Bacon Act,’’ p. 8. 12 Ibid., p. 19. 13 Ibid., p. 26. 14Department of Labor, Bureau of Labor Statistics, ‘‘Union Members—2010,’’ Table 3, at 

http://www.bls.gov/news.release/pdf/union2.pdf (April 13, 2011). 15Government Accountability Office, ‘‘Davis-Bacon Act,’’ p. 20. 16 Ibid., p. 27. 17Polly A. Phipps and Carrie K. Jones, ‘‘Factors Affecting Response to the Occupational Employment Statistics,’’ Bureau of Labor Statistics, Office of Survey Methods Research, 2007, at 

http://www.bls.gov/osmr/abstract/st/st070170.htm (April 13, 2011). 
32 

18 U.S. Department of Labor, Bureau of Labor Statistics, ‘‘BLS Handbook of Methods,’’ Chapter 3, at http://www.bls.gov/opub/hom/pdf/homch3.pdf (April 13, 2011). 19 Ibid. 20 Ibid. 21Government Accountability Office, ‘‘Davis-Bacon Act,’’ p. 19. 22These error margins are at the 95 percent level, so the polls will be within that margin 

of the true value 19 times out of 20. 23The central limit theorem (CLT) states that for a sufficiently large sample the sample mean 

is normally distributed around the true population mean. Knowing that the sample mean follows the normal distribution allows statisticians to estimate how far off it is likely to be from 

the population mean. 24 James McClave, Frank Dietrich, and Terry Sincich, Statistics, pp. 240—241. 25Government Accountability Office, ‘‘Davis-Bacon Act,’’ p. 23. 26The author thanks Heritage Foundation intern Thomas Capone for his invaluable help in 

compiling this data. 27Sarah Glassman, Michael Head, David G. Tuerck, and Paul Bachman, ‘‘The Federal DavisBacon Act: The Prevailing Mismeasure of Wages,’’ Suffolk University, Beacon Hill Institute, 

February 2008, at http://www.beaconhill.org/BHIStudies/PrevWage08/ 

DavisBaconPrevWage080207Final.pdf (April 13, 2011). 28 James Sherk, ‘‘Repealing the Davis-Bacon Act would Save Taxpayers $10.9 Billion,’’ Heritage Foundation WebMemo No. 3145, February 14, 2011, at http://www.heritage.org/Research/ Reports/2011/02/Repealing-the-Davis-Bacon-Act-Would-Save-Taxpayers-$10-9-Billion. 29 Ibid. 30 U.S. Code Title 40, §3142(b) 31 U.S. Department of Labor, Office of the Inspector General, Concerns Persist with the Integrity of Davis-Bacon Prevailing Wage Determinations, Audit Report No. 04-04-003-04-420, 2004, 

p. 2 of Appendix B, at http://www.oig.dol.gov/public/reports/oa/2004/04-04-003-04-420.pdf 

(April 13, 2011). 32Government Accountability Office, ‘‘Davis-Bacon Act,’’ pp. 20—22. Note that the GAO was 

unable to determine the geographic level for 7 percent of job classifications. 33 Bernard Anderson, Assistant Secretary of Labor for the Employment Standards Administration, letter to Congress, attachment, ‘‘Evaluation of the Reinvention vs. Reengineering Alternatives for Improving the Davis-Bacon Wage Survey/Determination Process,’’ January 17, 2001, 

p. 1. 34 U.S. Department of Labor, ‘‘Concerns Persist with the Integrity of Davis-Bacon Act Prevailing Wage Determinations,’’ p. 17. 35Sarah Glassman, Michael Head, David G. Tuerck, and Paul Bachman, ‘‘The Federal DavisBacon Act: The Prevailing Mismeasure of Wages,’’ Suffolk University, Beacon Hill Institute, 

February 2008, at http://www.beaconhill.org/BHIStudies/PrevWage08/ 

DavisBaconPrevWage080207Final.pdf (April 13, 2011). 

Chairman WALBERG. Thank you Mr. Sherk. 

Mr. Mistick? 

STATEMENT OF D. TOM MISTICK, PRINCIPAL, CHURCH RESTORATION GROUP, ON BEHALF OF THE ASSOCIATED BUILDERS AND CONTRACTORS, INC. 

Mr. MISTICK. Chairman Walberg, thank you. 

Member Woolsey, members of committee. Good morning and 

thank you for the opportunity to testify before you today. In the interest of time I request that my full written testimony be included 

in the record. My name is Tom Mistick. I am the owner of the 

Church Restoration Group based in Pittsburgh, Pennsylvania, and 

during my 35-year career, I have completed hundreds of projects 

under the Davis-Bacon Act as a general contractor and a subcontractor. 

I also appear before you today on behalf of Associated Builders 

and Contractors. ABC represents 23,000 merit shop construction 

contractors that employ nearly 2 million workers. ABC’s membership is bound by a shared commitment to the merit shop philosophy based on principles of non-discrimination due to labor affiliation and the awarding of construction contracts through competitive bidding. 

Repeated criticisms of the Government Accountability Office over 

many years have highlighted significant problems with the administration of the Davis-Bacon Act. The GAO report published last 
33 

week again makes clear that the U.S. Department of Labor is incapable of setting fair or accurate federal construction wages. 

ABC and others have proposed numerous recommendations for 

common sense reforms for several decades, and unfortunately 

DOL’s inability to implement meaningful changes illustrates that 

the process cannot be fixed and that the act should therefore be repealed. Davis-Bacon hinders economic growth, increases the federal 

deficit and imposes significant burdens on the contractors and taxpayers. 

These burdens both increase costs and make it nearly impossible 

for small merit shop firms to competitively bid on federal projects, 

raising costs by eliminating competition. A recent CBO estimate 

found that Davis-Bacon raises federal construction costs by $15.7 

billion annually. For years contractors and experts have voiced serious concern about the waste and abuse of taxpayer dollars associated with Davis-Bacon, yet nothing has really been done to fix the 

obvious defects in the law. 

I would like to highlight in some ways in which the DOL has 

failed to carry out its statutory mandates and contributes to construction industry unemployment rate of 20 percent by imposing 

inaccurate and artificially inflated wages. Instead of using sound 

statistical analysis, as Mr. Sherk mentioned, DOL sets DavisBacon wage rates by relying upon voluntary wage surveys with extraordinarily low response rates. The new GAO report finds the 

Davis-Bacon wage survey lacks transparency and most often does 

not reflect true prevailing wages. 

Furthermore, the GAO found that most survey forms verified 

against payroll data were in error. The report also stated that almost one-quarter of the final wages for key job classifications were 

based on wages for six or fewer workers. I have personal knowledge 

of the dysfunctional DOL wage survey process, having formally 

challenged Davis-Bacon wage rates set for residential construction 

in Western Pennsylvania. They dramatically and inaccurately increased project costs. 

Unions represent less than 10 percent of residential construction 

workers in Western Pennsylvania, yet DOL found that union wage 

rates prevailed for most of the public job classifications, although 

they couldn’t produce enough job classifications to provide enough 

people to build a house. There were—the plumber was missing and 

the plasterer was missing, you couldn’t even get accurate wage 

rates for the small subset that was there. This problem isn’t unique 

for Pennsylvania. 

The—again, the BLS has reported 13 percent of the construction 

workers are unionized, yet only—yet 63 percent of the GAO finds 

that the DOL reported union wage rates. Now after a 3 year legal 

battle and costs of—considerable costs, we received a favorable 

union ruling from DOL’s Administrative Review Board. It found 

that DOL had indeed violated its own rules in conducting wage 

surveys. 

But rather than demand any revision in the survey process or 

order a new survey, the board only required the agency to recalculate a few wages that it determined to be in error and left in 

place all the systemic failures of the DOL’s wage survey process, 
34 

which the GAO report has again highlighted in the last week’s report. 

Like many other non-partisan government surveys before it, the 

GAO report illustrates a long-term systematic failure to achieve 

true reform of the survey process across several administrations. 

It is clear to us that DOL will never accept meaningful reform 

and repeal is now the only solution. At a time of shrinking construction budgets, Davis-Bacon’s fundamentally flawed system is 

arbitrarily limiting the amount of construction that could be built 

by needlessly increasing project costs. The taxpayers are getting six 

buildings for the price of seven because of this broken process. The 

clear answer to the problems created by the fatally flawed, and 

unfixable system is to repeal Davis-Bacon. 

Let the market set acceptable wage rates through open and competitive bidding, just as it successfully does in the private industry 

and private construction market. The act needs to return to the 

neutrality that was once its original instance and its goal. 

Mr. Chairman that concludes my formal remarks and I am prepared to answer any questions you may have. Thank you. 

[The statement of Mr. Mistick follows:] 

Prepared Statement of D. Thomas Mistick, on Behalf of 

Associated Builders and Contractors 

Chairman Walberg, Ranking Member Woolsey and members of the Subcommittee 

on Workforce Protections: Good morning and thank you for the opportunity to testify 

before you today on ‘‘Examining the Department of Labor’s Implementation of the 

Davis-Bacon Act.’’ 

My name is Tom Mistick. I am the owner of Church Restoration Group, based in 

Pittsburgh, Pennsylvania. My company restores historic and sacred spaces across 

the United States, and offers a broad range of emergency and consulting services. 

For 35 years, I have directed the activities of two general contracting companies, 

a disaster recovery firm, a real estate management office and a millwork company. 

Much of the work performed by my companies has been performed under the DavisBacon Act. 

I also appear before you today on behalf of Associated Builders and Contractors 

(ABC). ABC is a national trade association representing 23,000 merit shop contractors, employing nearly 2 million workers, whose training and experience span all 

of the 20-plus skilled trades that comprise the construction industry. ABC’s membership is bound by a shared commitment to the merit shop philosophy. This philosophy is based on the principles of nondiscrimination due to labor affiliation and the 

awarding of construction contracts through competitive bidding based on safety, 

quality and value. 

The Davis-Bacon Act 

The Davis-Bacon Act is an 80-year-old wage subsidy law administered by the U.S. 

Department of Labor (DOL) that mandates so-called ‘‘prevailing’’ wages for employees of contractors and subcontractors performing work on federally financed construction projects. ABC has long advocated for the full repeal of the Davis-Bacon 

Act, though we also have recommended numerous reforms over the years that could 

have mitigated some of the Act’s damage to our economy through fairer implementation of its provisions by DOL. However, despite repeated criticisms from the Government Accountability Office (GAO) and DOL’s own Office of Inspector General 

(OIG),1 the agency has implemented few if any meaningful reforms in its administration of the Act since the early years of the Reagan administration. The latest 

GAO report published last week2 makes clear that DOL is simply incapable of implementing the Davis-Bacon Act’s provisions in a fair and common-sense manner. 

Therefore, ABC sees no alternative to repealing the Act entirely. 

The Davis-Bacon Act, as administered by DOL, unnecessarily hinders economic 

growth, increases the federal deficit, and imposes an enormous paperwork burden 

on both contractors and the federal government. It stifles contractor productivity by 

raising costs, ignores skill differences for different jobs, and imposes rigid craft work 

rules. In addition, Davis-Bacon fails to provide equal access to work opportunities 
35 

because the complexities and inefficiencies in the Act’s implementation make it 

nearly impossible for many qualified, small merit shop firms to competitively bid on 

publicly funded projects. These businesses—and the construction industry in general—are at an even greater disadvantage due to our current unemployment rate 

of 20 percent,3 and the traditionally low net profit margins on which we operate.4

From a fiscal standpoint, a recent Congressional Budget Office (CBO) estimate 

found the Davis-Bacon Act raises federal construction costs by $15.7 billion annually, which ABC believes may be a conservative estimate.5 Numerous academic 

studies have shown that repeal of the Act would create real and substantial savings 

to the government without affecting workplace productivity, safety or market wages. 

The main reason the Davis-Bacon Act causes so many problems is that DOL has 

failed to achieve the Act’s stated objective of determining true ‘‘prevailing’’ wages 

and instead has repeatedly issued wage determinations that are vastly inflated 

above the true market rates seen on private sector construction projects. The evidence of DOL’s failed wage survey method is easily shown by comparing two numbers: According to the Bureau of Labor Statistics (BLS), only 13 percent of construction workers in the United States are covered by any union agreement;6 yet, according to the latest GAO Report, 63 percent of all DOL wage determinations report 

that wages set by union agreements are ‘‘prevailing.’’ 7

Despite these facts and findings, Davis-Bacon remains in effect and continues to 

inflate the cost of federal construction by as much as 22 percent.8 For years, economists, legal and policy experts, and merit shop contractors across the country have 

voiced serious concerns about the waste and abuse of taxpayer dollars associated 

with Davis-Bacon—yet nothing has been done to fix the obvious defects in the law. 

DOL’s unwillingness to engage in meaningful corrective actions and reforms, 

along with the process’ continuing burden on taxpayers and contractors, illustrate 

that the Act cannot be fixed, and must instead be repealed. In the remainder of my 

testimony, I would like to highlight some of the specific ways in which DOL is failing to properly carry out its statutory mandate, leading us to conclude that the Act 

must be repealed. 

Wage Rates and Surveys 

The methodology by which DOL determines Davis-Bacon Act wage rates is inaccurate and unscientific. It relies on voluntary wage surveys—often with an extremely low response rate—instead of using sound statistical samples already made 

available through other government data collections. The resulting wage rates are 

usually poor reflections of actual local wages. The problems associated with DavisBacon wage calculations have been well documented in previous Congressional testimony from ABC and, more importantly, reports by GAO and OIG.9

In addition, due to the systematic delays associated with the final publication of 

many Davis-Bacon rates, ABC is concerned that wage determinations made during 

an economic ‘‘boom’’ in construction are now being applied to a ‘‘bust’’ economy. In 

the case of government-backed loans and other projects that are subsidized by the 

government, these inaccurate determinations have resulted in projects being 

scrapped because of cost. 

The new GAO report shows that the current Davis-Bacon wage survey process 

lacks transparency and does not reflect true prevailing wages. The report concludes 

that efforts to improve the Davis-Bacon wage survey process—both with respect to 

data collection and internal processing—have not addressed key issues with wage 

rate accuracy, timeliness and overall quality.10

GAO identifies ‘‘persisting shortcomings in the representativeness of survey results and the sufficiency of data gathered for Labor’s county-focused wage determinations,’’ notwithstanding cosmetic changes in DOL’s survey collection and processing procedures. In addition, GAO points out that many of the agency’s surveys 

are still years behind schedule. 

The GAO report also finds that DOL ‘‘cannot determine whether its wage determinations accurately reflect prevailing wages,’’ and ‘‘does not currently have a program to systematically follow up with or analyze all non-respondents.’’ DOL procedure identifies nonresponse as a ‘‘potential source of survey bias and indicates there 

is a higher risk non-respondents will be nonunion contractors because they may 

have greater difficulty in compiling wage information or be more cautious about reporting wage data.’’ 

Just as the 2004 DOL-OIG report revealed that nearly 100 percent of published 

wage determinations contained errors, the GAO report found that ‘‘most survey 

forms verified against payroll data had errors.’’ In addition, the report stated that 

more than ‘‘one-quarter of the final wage rates for key job classifications were based 

on wages reported for six or fewer workers.’’ 
36 

Reaffirming yet another longtime ABC concern, GAO found that ‘‘contractors have 

little or no incentive to participate in the Davis-Bacon wage survey’’ as it is currently administered. The report cited insufficient resources with which to complete 

the surveys, the inability to provide all information requested and a justifiable lack 

of confidence in DOL’s process as contributing factors. 

GAO also recommended ‘‘technical guidance from experts is considered critical to 

ensure the validity and reliability of survey results,’’ remarking that better survey 

response prediction models ‘‘such as statistical sampling rather than the current 

census survey’’ could be aided by collaboration with survey experts. However, instead of obtaining an evaluation of its wage survey process from experts in survey 

design and methodology, DOL informed GAO that it prefers to institute such 

changes based mainly on staff experience.11

I have personal knowledge of the dysfunctional DOL wage survey process, having 

witnessed and challenged the 2000 wage survey in Western Pennsylvania, which 

dramatically increased Davis-Bacon wage rates on residential construction in the 

Pittsburgh metropolitan area when its results were published in 2003.12 Keep in 

mind that during this time, the union market share of residential construction in 

Western Pennsylvania was (and still is) in the single digits. Yet as a result of the 

wage survey, DOL found that union wage rates ‘‘prevailed’’ in a great majority of 

the wage classifications for which survey results could be determined, while many 

of the most common classifications had no determined wage rates at all. After reviewing the data DOL collected to issue its new wage determination, and checking 

the math, it was clear to me that the results occurred because DOL relied on a totally inadequate number of responses (as few as a half-dozen wage reports setting 

the wage rates for thousands of workers), and that DOL had violated its own rules 

for calculating which rates prevailed in the region. One obvious reason why the responses were inadequate was because DOL failed to properly notify the largest nonunion construction trade groups.13 The calculations were also wrong because DOL 

improperly counted union workers who were paid different wage rates as if they 

were all paid the same wages. There were many other flaws in the survey process 

as well.14

Along with ABC’s Western Pennsylvania Chapter, I filed a legal challenge at DOL 

against the results of the flawed wage survey. Three years later, and at considerable 

cost, we received a favorable ruling from DOL’s own Administrative Review Board, 

which found that the Wage and Hour Division (WHD) had indeed violated DOL’s 

rules on conducting wage surveys. But the Board did not order a new survey with 

instructions to obtain more meaningful responses from the nonunion contractors 

that comprised the vast majority of the residential contractors. Instead, the Board 

simply told the WHD Administrator to recalculate the wages that we had shown to 

be in error, leaving in place all of the other systemic failures of the wage survey 

process. 

More recently, ABC learned DOL issued wage determinations that repeat the 

same errors identified in 2003. In addition, DOL has committed new errors, leading 

to newly inflated wage determinations in other parts of the country. One of the errors, confirmed by the GAO report, is that DOL has greatly expanded its issuance 

of ‘‘statewide’’ wage determinations which combine wage surveys from large and 

small metropolitan areas hundreds of miles apart into single wage determination 

rates. This practice plainly violates the language of the Act, and is currently the 

subject of a legal challenge. 

At a time of shrinking public construction budgets, these inflated wage determinations arbitrarily limit the amount of construction that can be built by increasing the 

projected costs. Jobs have been lost and businesses have closed because of DOL’s 

bizarre implementation of the wage survey process, and because of the Davis-Bacon 

Act itself. 

For years, ABC and other government studies and reports have pointed out these 

problems. We believe the GAO report illustrates a long-term systematic failure to 

achieve true reform of the survey process across several administrations. It is clear 

to us that DOL will never accept meaningful reform, and that repeal is now the only 

solution. 

Job Classifications 

Another key concern pertaining to Davis-Bacon is DOL’s lack of clarity regarding 

the job duties that apply to a particular job classification, which are determined by 

local practice. When DOL determines the prevailing wage rate for a classification 

is based on a union collective bargaining agreement, the job duties for that classification also likely will be governed by the union’s work rules in that agreement. 

Generally, union work rules require that only a certain job classification perform 

certain work. For example, the work rules may require a carpenter to perform a cer-
37 

tain task in one location, but sheet rock hangers or perhaps even laborers are the 

only workers allowed to perform that work in another jurisdiction. 

While each DOL wage determination lists several different classifications of workers (painters, carpenters, laborers, etc.), limited information is available on the actual job duties that apply to the classifications. Although the published wage determinations may identify the relevant local union for each of the listed job classifications (where the rate is based on the union’s collective bargaining agreement), DOL 

does not provide detailed information as to whether there are any work rule restrictions attached to those wage rates and, if so, what those restrictions are. DOL’s failure to provide such information makes it almost impossible for merit shop contractors to figure out the correct wage rate for many construction-related jobs. Not surprisingly, GAO’s report agreed, finding DOL’s current method of handling job classifications ‘‘confusing’’ and ‘‘challenging’’ for contractors. 

Certified Payrolls and Fringe Benefits 

Another burden on small business compliance with the Davis-Bacon Act—and also 

the Copeland Act—is the requirement that contractors submit weekly certified payroll reports to the government. This is a paperwork nightmare for many contractors 

and a significant administrative cost factor for every contractor. Recent upgrades of 

the system by DOL to include electronic filing are a small step in the right direction, but do nothing to solve the complexities of the certified payroll form itself, and 

in particular the confusion surrounding the proper credits allowed to nonunion contractors for their bona fide fringe benefit costs. 

Repeated Failure to Implement Reforms 

ABC has repeatedly called on DOL to follow the findings of past independent government studies, some dating back more than 10 years, to explore using alternative 

data to determine wage rates—such as data collected through the BLS Occupational 

Employment Statistics (OES) program. To date, DOL has not given serious consideration to utilizing these, or any other alternatives to its traditional survey method. 

ABC also has requested that DOL provide better clarity about job duties that correspond to each wage rate. Many states that have adopted prevailing wage laws 

similar to Davis-Bacon have at least published the job duties that are to be performed by each wage classification. DOL, however, has repeatedly refused to give 

contractors fair notice of what the job assignment rules are on the published wage 

determinations. A 2009 WHD All Agency Memorandum offered no relief to contractors lacking access to unpublished union work rules.15 ABC has received reports 

from its members that the current DOL is misdirecting contractors seeking guidance 

on the job classification issue. For example, DOL has told some contractors to contact a project contracting officer, even though the law is clear that only DOL officials are authorized to make final rulings on worker classification issues. Instead 

of fixing these problems with Davis-Bacon, the last Congress and this administration only made matters worse by expanding the Act’s coverage in unprecedented 

ways under last term’s stimulus bill.16

Conclusion 

The clear answer to the problems created by the present system is to let the market set the acceptable wage rate through open and competitive bidding, as we see 

in the private sector. Multiple bills to repeal the Davis-Bacon Act have been introduced during this Congressional session alone, indicating that the time is right for 

Members of Congress to act. 

ABC is pleased to see the Education and the Workforce Committee take a renewed interest in the problems associated with Davis-Bacon Act. We look forward 

to working with the Subcommittee on Workforce Protections on this issue. Mr. 

Chairman, this concludes my formal remarks—I am prepared to answer any questions that you may have. 

ENDNOTES

1 U.S. Department of Labor, Office of the Inspector General, Concerns Persist with the Integrity of Davis-Bacon Prevailing Wage Determinations, Audit Report No. 04-04-003-04-420, 2004, 

at http://www.oig.dol.gov/public/reports/oa/2004/04-04-003-04-420.pdf. See also, Government 

Accountability Office, Davis-Bacon Act: Process Changes Could Raise Confidence That Wage 

Rates Are Based on Accurate Data, May 1996, at http://www.gao.gov/archive/1996/ 

he96130.pdf. 2Government Accountability Office, Davis-Bacon Act: Methodological Changes Needed to Improve Wage Survey, April 6, 2011, at http://www.gao.gov/new.items/d11152.pdf. 3 Bureau of Labor Statistics, Construction Sector at a Glance: Employment, Unemployment, 

Layoffs, and Openings, Hires, and Separations, March 2011. See http://www.bls.gov/iag/tgs/ 

iag23.htm. 
38 

4 Construction firms often operate on extremely low net margins. According to the 2009 Construction Industry Annual Financial Survey, published by the Construction Financial Management Association (CFMA), an average construction firm’s operating margin was only 3.4 percent, 

with many firms operating at even lower margins. Contract retainage further exacerbates this 

cash flow issue. 5Office of Rep. Steve King, King’s Davis-Bacon Repeal Bill Saves Taxpayers $15.7 Billion, 

April 4, 2011, at http://1.usa.gov/f0ioXw. 6 U.S. Department of Labor, Bureau of Labor Statistics, Economic News Release: Union Members Summary, January 2011, at http://www.bls.gov/news.release/union2.nr0.htm. 7Government Accountability Office, Davis-Bacon Act: Methodological Changes Needed to Improve Wage Survey, April 6, 2011, at http://www.gao.gov/new.items/d11152.pdf. 8The Beacon Hill Institute at Suffolk University, The Federal Davis-Bacon Act: The Prevailing Mismeasure of Wages, February 2008, at http://www.beaconhill.org/bhistudies/ 

prevwage08/davisbaconprevwage080207final.pdf. 9 U.S. Department of Labor, Office of the Inspector General, Concerns Persist with the Integrity of Davis-Bacon Prevailing Wage Determinations, Audit Report No. 04-04-003-04-420, 2004, 

at http://www.oig.dol.gov/public/reports/oa/2004/04-04-003-04-420.pdf. See also, Government 

Accountability Office, Davis-Bacon Act: Process Changes Could Raise Confidence That Wage 

Rates Are Based on Accurate Data, May 1996, at http://www.gao.gov/archive/1996/ 

he96130.pdf. 10Government Accountability Office, Davis-Bacon Act: Methodological Changes Needed to Improve Wage Survey, April 6, 2011, at http://www.gao.gov/new.items/d11152.pdf. 11 ABC takes issue with only one aspect of the GAO report, namely the report’s recommendation that the Act be amended to allow DOL to expand the geographic scope of wage surveys 

beyond the civil subdivision of the state in which the work is to be performed. See, General Accountability Office, Davis-Bacon Act: Methodological Changes Needed to Improve Wage Survey, 

April 6, 2011, at http://www.gao.gov/new.items/d11152.pdf (page 35). Such an amendment 

would not ‘‘improve the quality’’ of DOL’s wage determinations but would instead encourage 

DOL to combine wage data from totally separate wage markets, thereby undermining any prospect of determining the true prevailing wage in the smaller market. Indeed, as GAO confirmed, 

DOL is already conducting statewide surveys that violate the plain language of the Act, because 

such surveys do not determine the prevailing wage for a ‘‘civil subdivision of the state.’’ A legal 

challenge is pending against DOL’s unlawful wage survey practice. 12 A more detailed summary of this case is contained in the decision of DOL’s Administrative 

Review Board, which considered ABC’s challenge to DOL’s wage determination and overturned 

it after three years of litigation. See Mistick Construction, Inc., No. 04-051 (ARB 2006) (attached 

hereto) 13DOL later admitted it had obsolete addresses for the two largest residential construction 

trade associations in Western Pennsylvania. Mistick Construction, supra, at p. 6 14 An independent study of DOL’s Western Pennsylvania wage determination found more than 

a dozen systemic flaws in the wage survey process, which virtually guaranteed an inflated and 

inaccurate result. See Thieblot, Armand, The Twenty-Percent Majority: Pro-Union Bias in Prevailing Rate Determinations, 26 J. Lab. Research 99 (2005). 15 U.S. Department of Labor, Job Duties of Employee Classifications in Davis-Bacon Wage Determinations (All Agency Memorandum 205), January 16, 2009. The current administration has 

failed even to make public the limited guidance contained in this AAM. 16 Under the American Recovery and Reinvestment Act (ARRA), 40 federal programs (33 existing, seven newly created) became subject to Davis-Bacon, several of which found the wage requirements to have a ‘‘moderate to large’’ negative impact on program costs and efficiency. See, 

Government Accountability Office, Recovery Act: Views Vary on Impacts of Davis-Bacon Act Prevailing Wage Provision, February 2010, at http://www.gao.gov/new.items/d10421.pdf. One 

such program, the U.S. Department of Energy’s (DOE) Weatherization Assistance Program, received $5 billion under ARRA. However, delays stemming from the Davis-Bacon wage survey 

process resulted in fewer projects undertaken (including some ‘‘shovel-ready’’ projects) and fewer 

jobs created under this program. See DOE’s Progress in Implementing the Department of Energy’s Weatherization Assistance Program under the American Recovery and Reinvestment Act, 

February 2010, at http://ww.ig.energy.gov/documents/OAS-RA-10-04.pdf. 

Chairman WALBERG. Thank you, Mr. Mistick, and all the members of the panel. I appreciate that. Pretty good use of the time as 

well. 

Mr. Sherk, I think I can safely say not only myself, but all of us 

here in the room and at this panel, are fully supportive of a fair 

day’s pay for an honest day’s work. However I see some very interesting facts in your testimony that you have given this morning. 

And in my own district, you mentioned, in Jackson, Michigan, 

the Davis-Bacon prevailing wage calculations paying electricians 

roughly 40 percent more than the market wage while in one of our 

committee member’s, Congressman Noem’s, home state in Sioux 

Falls, South Dakota, plumbers and carpenters are being paid be-
39 

tween 17 and 20 percent below market wages. We know that the 

GAO has found some serious flaws in the calculations of this. 

How do you believe we can smooth out these inaccuracies and 

bring Davis-Bacon wage calculations back into line with what the 

market demands? 

Mr. SHERK. The only way you are going to actually—or accurately survey wages is using a scientific methodology. When you 

have got such implausibly small sample sizes and when you have 

got an unrepresentative sample, you are simply not going to get accurate rates out of the existing survey, it is just not possible. 

You can do the—you can turn the results, you know, overnight, 

you would have no errors, no return forms, but with these fundamental methodological flaws, you wouldn’t get any accuracy. 

I think what you want to do is move to the BLS, which has expertise in conducting these surveys. There are two surveys that 

they do right now, one is the Occupational Employment Statistics 

Survey. That covers nationwide every metropolitan statistical area. 

It gives you the wage data. 

What it doesn’t give you is the hourly fringe benefits data. Another survey is the National Compensation Survey, which the 

Wage and Hour Division has previously determined provides all 

the information they need, wage and—information for intricate levels of work. 

The problem is it, doesn’t have nationwide coverage. It only covers about half the population, and so you wouldn’t be able to go 

into every, you know, metropolitan statistical area and get estimates. 

So either expanding the Occupational Employment Survey to 

cover fringe benefits or expanding the geographic scope of the construction portion of the NCS survey, both of you—would give you 

accurate, timely and scientific wage estimates. You simply—you 

can’t improve the existing methodology, it is too deeply flawed. 

Chairman WALBERG. Okay, thank you. 

I have another question and we can come to that but let me get 

a few of the questions I want to ask first. I am sure we can get 

back those. 

Mr. Mistick? 

Mr. MISTICK. Yes, sir? 

Chairman WALBERG. You are a brave man in suing the Department. We will leave it at that. 

Mr. MISTICK. Thank you, sir. 

Chairman WALBERG. But in your 35 years of doing business, 

could you give a rough estimate of how much more your company 

has paid above market demand as a result of Davis-Bacon? 

Mr. MISTICK. I could. I can actually give you a specific example 

of how Davis-Bacon was applied by the Pittsburgh Redevelopment 

Authority. They had a program that fixed commercial facades in elderly neighborhood commercial districts and commercial DavisBacon wages applied. You couldn’t get commercial contractors to 

bid these $5, $10, $15,000 jobs, so they did the work without DavisBacon. 

And at the end of the job, which was completed on time, on budget and of sufficient quality, the contractors simply turned in his 
40 

payroll data to the Authority and the Authority wrote checks to the 

employees and that was generally—— 

Chairman WALBERG. That is not a normal occurrence you 

would—— 

Mr. MISTICK. That is not the normal occurrence, and I doubt that 

anybody in D.C. would approve that process, but it is what they did 

to get the work done. And generally you paid 15 to a 30 percent 

premium on the contract cost to satisfy the commercial wage rates 

that were required to be paid by Davis-Bacon. Instead of commercial contractors, you had remodeling contractors that did $5 to 

$25,000 projects, and that was the differential or premium that the 

government was paying on that work. 

Chairman WALBERG. And so you would—I would assume that 

you believe that this has hurt your productivity and the ability to 

hire employees and create jobs? Is that an accurate statement? 

Mr. MISTICK. It certainly reduces the amount of federal construction and thereby limits the amount of work that the—a contractor 

can get and the opportunities for additional employment for his 

workers. 

Chairman WALBERG. Okay. Okay, thank you. 

In the remaining minute or so, Mr. Markey, I will give latitude 

for you to answer. 

Mr. MARKEY. Mr. Sherk talks about using BLS data—— 

Chairman WALBERG. Turn your mic on, please. The time is running out. 

Mr. MARKEY. He talks about using BLS data. The statute talks 

about prevailing, the regulations, which happen to have been 

amended in 1985, defines prevailing as more than 50 percent. All 

BLS data is averaged, you will never get prevailing rate if you use 

BLS data. 

If more than 50 percent earn $35, and the remainder earned 

somewhere between $25 and $30, the average BLS data that would 

come back would be like 33 or something like that. That is not prevailing, according to the statute in the current regulations. 

Chairman WALBERG. Thank you. I am sure that there will be follow up questions to that and the opportunity to answer from the 

other side as well. 

And I now turn to our ranking member, a gentlelady from California, Ms. Woolsey. 

Ms. WOOLSEY. Mr. Chairman, I want to go on record for this 

hearing and all hearings in the future that any of our witnesses 

who bring testimony using the logo and the label of their organization when they present their testimony and refer to their organization cannot argue that they are not representing that organization 

when they provide their testimony. 

We, as members of Congress, if we write a letter on our letterhead, we are congress people when we talk about that and the 

same thing goes for our witnesses. I really want you to know I discount testimony that would use that double standard. 

Chairman WALBERG [continuing]. I just know that it is a fairly 

normal process for a number of entities that—— 

Ms. WOOLSEY. [Off mike.] 

Chairman WALBERG [continuing]. Represent—— 
41 

Ms. WOOLSEY. I mean if they don’t use the logo, don’t say this 

is who sent me, this is who I am—I work for. That is an entire different thing than to—use the heft of the organization and then 

deny that they are part of it. 

Chairman WALBERG. Duly noted, your time is running. 

Ms. WOOLSEY. Okay, I would like to ask you Mr. Eisenberg (sic) 

about in your testimony you state that a great deal of empirical research refutes the claim that prevailing wage inflates construction 

costs, so could you tell us how that can be? I mean if prevailing 

wage requirements lifts workers’ wages, how does it not increase 

the overall cost, and how do we calculate how—the benefits of that 

overall cost to the community? 

Mr. EISENBREY. Well the, you know, at first glance, it is true. 

You think that having a higher wage will necessarily lead to higher 

cost in construction. But it turns out that if you are paying a higher wage to a more skilled worker, someone, you know, a journeyman who has had a 5 year apprentice program and a lot of experience as opposed to, you know, someone with much less experience, 

you get a higher quality work, you get the work done more efficiently. 

And these productivity improvements more than make up for or 

can more than make up for the costs. After all, the wages are only 

30 percent, 25 to 30 percent of the cost of construction. So that 

when Mr. Sherk for example says that 22 percent higher pay leads 

to 10 percent higher costs, that almost can’t be because the percent 

of the construction costs that is attributed to wages is only 25 to 

30 percent and the math just doesn’t work out. 

But, you know, on the one hand you have the theory on the other 

hand we have actual experience. We have states, we had in the 

middle and late 1990s Michigan suspended its state prevailing 

wage law because of a judicial decision. Kentucky passed a prevailing wage law for school construction and Ohio repealed it. 

So various researchers studied what happened following that, the 

expectation was some people claim that construction costs would 

rise 22 percent or 25 percent. In fact, at the end of the day, school 

construction costs were unchanged. There was no significance statistically significant difference. And the reason was—— 

Ms. WOOLSEY. That was in Kentucky? 

Mr. EISENBREY. That was in Kentucky, Michigan and Ohio. 

Ms. WOOLSEY. Oh. 

Mr. EISENBREY. Going back farther, the same thing in Kansas. 

Kansas repealed its state prevailing wage law in 1987 and the results were no higher—the construction costs didn’t fall, there was 

no statistical difference in construction costs before and after. 

Apprenticeship training however, fell off almost, you know, just 

fell off the table—38 percent drop in apprenticeships, 54 percent 

drop in minority apprenticeships and safety and health suffered as 

well. By bringing in younger, less experienced, less skilled workers, 

it raised the serious injury rate by 21 percent. So all of these 

things, you know, come along with the notion of doing away with 

prevailing wages. 

Ms. WOOLSEY. So, Mr. Mistick, it seems like you said that you 

think federal construction is limited because of prevailing wage. 
42 

But it seems like you said that you didn’t have any problem with 

hiring and quality even though you were—had to—— 

Mr. MISTICK. You know there are other ways besides a simple 

wage rate to drive up the cost of federal construction. When a collective bargaining rate is determined to prevail, it imports into the 

process all of the work practices that are covered by that collective 

bargaining process. 

Western Pennsylvania for example on jobs that—on Davis-Bacon 

jobs that are subject to the collective bargaining agreement, carpenters have to unload the trucks and distribute the material on 

site, and electrician unloads the truck and distributes the materials 

on site rather than a laborer. 

Now the laborer can make a Davis-Bacon wage that is quite comfortable, but he is not allowed by the enforcement division to cost 

effectively prosecute the federal construction. 

Ms. WOOLSEY. Okay, thank you. 

Mr. MISTICK. Thank you. 

Chairman WALBERG. I recognize now the full committee chairman, Chairman Kline. 

Mr. KLINE. Thank you Mr. Chairman. 

I thank the witnesses for being here today. I have got a couple 

of questions, and I am going to of course abide by the 5 minute 

rule. I was just struck by the ranking member’s assertion that 

when we have witnesses who appear and have a logo on their letterhead that they have to agree that they are speaking for the entire organization. 

And Mr. Sherk, I think you recognize that you are indeed an employee of the Heritage Foundation and appropriately use the letterhead, but your position would be that you haven’t got an agreement from the Heritage Foundation board and the 700,000 or so 

members that you are indeed representing the entire Heritage 

Foundation, is that correct? 

Mr. SHERK. That would be exactly correct. 

Mr. KLINE. Thank you. And the ranking member then asserts 

that because she is a member of Congress, and has the congressional seal at the top of her letter, that she is of course speaking 

for herself, but I doubt if the ranking member really believes that 

she is speaking for all 435 members of Congress. Let us see—— 

Ms. WOOLSEY. Oh, wait a minute—— 

Mr. KLINE. I think—— 

Ms. WOOLSEY. Will you yield—— 

Mr. KLINE. I am happy to yield. 

Ms. WOOLSEY. Yes, I actually am on record speaking to and representing my entire constituency. If they don’t like it then they 

have to—they will dis-elect me. 

Mr. KLINE. Thank you and now reclaiming my time, I am no 

doubt that you are representing your position of your constituents, 

but the congressional seal doesn’t mean you are representing all 

435 members of Congress. 

I think that all of us would agree that shortchanging workers 

and overcharging taxpayers is unacceptable and it looks like that 

may be what we are getting in many cases according to the GAO 

report. 
43 

Dr. Sherrill, it is nice to have you back again. It seems like only 

a week or so, you were here with a controller general. 

For this report, the GAO interviewed contractors who stated, 

quoting that ‘‘DOL’s current method of handling job classifications 

was confusing and challenging’’. Can you help us with any further 

detail about the issues raised by these stakeholders, the confusing 

and challenging? 

Mr. SHERRILL. Yes, one of the key issues that were raised is, especially I think by some of the smaller contractors is that they 

would in some cases have a worker doing a certain type of job activity part of the time and a different job activity another part of 

the time so they were confused about how they ought to be 

classifying that worker with regard to which specific job classification. 

So there were issues like that where some of the smaller employers really needed more guidance and instruction about, you know, 

you know how to fill out the survey form properly. 

Mr. KLINE. And so this would be information presumably coming 

from Wage and Hour that they need or? 

Mr. SHERRILL. I mean this would be the kind of thing that could 

be done in better—the Department of Labor hasn’t pretested the 

survey. I mean we have—one of the themes that GAO—the I.G. 

has noted is that there is a fairly high level of errors that are identified in the way survey data reported. 

And I think part of the issue is that the labor survey form has 

never really been pretested to get a better idea of, you know, what, 

where, what could have been made more comprehensible, where 

are the issues. 

Labor is planning to do that to revise the survey, but we think 

it is critical that they really incorporate sort of methodological expertise as they revise the survey to help avoid some of those kinds 

of errors and confusion. 

Mr. KLINE. Thank you. It appears that there have been studies 

going back for years and decades complaining about this process 

and the many inaccuracies and the current GAO report was again, 

pretty negative about the Department of Labor’s attempts to 

change the current practices. 

But I am—we have heard from the Department of Labor that it 

has made improvements to the process. Could—do you agree that 

these improvements are significant? It is really going to improve 

things? Can you address that? 

Mr. SHERRILL. The Department of Labor has taken a number of 

steps to make improvements. In recent years they have really focused on different strategies to increase the timeliness of conducting the surveys. They have taken efforts to better verify the 

data. 

But one of our key findings was they haven’t sufficiently addressed some of the fundamental issues with the survey dealing 

with the quality of the survey, how representative is it. Do you 

have sufficient data to make a representative judgment? Those 

kind of sort of more fundamental issues. So they made progress in 

some areas, but in others haven’t gone far enough. 

Mr. KLINE. Okay, thank you. 
44 

And Mr. Markey, the Wage and Hour division has previously 

used McGraw-Hill Construction Analytics and there is a study I 

think came from 2005. Could you produce that for us for the record 

please? 

Mr. MARKEY. Yes I can. 

Mr. KLINE. Thank you. 

I yield back Mr. Chairman. 

Mr. BUCSHON [presiding]. The chair now recognizes the gentleman from New Jersey, Mr. Payne. 

Mr. Miller? 

Mr. MILLER. Just quickly, on the question—Mr. Kline just raised 

a question about the McGraw-Hill. From the GAO’s point of view, 

is that a legitimate undertaking by Department of Labor? 

Mr. SHERRILL. The McGraw-Hill review was conducted in 2004. 

It was really a view of Department of Labor’s processes for doing 

the—— 

Mr. MILLER. But are they not now using them on an ongoing 

basis? 

Mr. SHERRILL. I think you would have to ask the Department of 

Labor, sir what they are doing here. They are—— 

Mr. MILLER. Well, let me ask the Department of Labor then 

quickly. 

Mr. MARKEY. As my testimony indicated, it had several recommendations and we acted on all of those. And, you know, where 

it went through the IT personnel training, and we are seeing real 

progress. With the new surveys, we are receiving a much greater 

response rate that we had in the past. These are the surveys we 

initiated in 2009 and 2010. 

Mr. MILLER. But that—the McGraw-Hill is not an ongoing process it was used and you are responding to the recommendations 

that McGraw-Hill made, is that correct? 

Mr. SHERRILL. That is correct. 

Mr. MILLER. Let me just say, I have—I guess I have seen this 

process sort of both ways. I am fortunate to represent an area that 

over the last 20 years has had billions of dollars of heavy construction in the refining, chemical industries, steel mills, and I have 

seen when these private contracts were left a number of years ago, 

over the last 10 years, the influx of people from all over the country 

coming and sleeping in their cars, camping in the parks, bunking 

up five, six, seven people to a motel room, using county facilities, 

law enforcement facilities, county hospital, health care clinics, 

using all of those facilities and then leaving the minute the job was 

over. 

Today, all of those fields, the major oil companies, the chemical 

companies, that work is now done under project labor agreements. 

It is entirely different situation. For the residents of that area who 

are employed in those jobs, who get the benefits, who return the 

revenues to the, if you will, their pay to the community and it is 

a much different proposition. 

And it took time to evolve over to that process, but I think it is 

clear that Davis-Bacon provides much of that same benefit to communities. I mean I—actually when I was a young man working my 

way through college, I worked alongside people, and everybody I 

worked alongside of came from long distances to work in those re-
45 

fineries and turnaround times or refurbishing or modernization in 

those trades. But they put nothing back into the community. 

And that is the world of difference. Today, that is the case and 

I think that we are all better off for that reason. And obviously 

those negotiations are carried on with some of the largest entities 

in the world. They are mature negotiators they have made that determination to go in that direction. 

So I would hope that we wouldn’t be considering the repeal here. 

I do think that the GAO report—I get a little sense here that we 

have got sort of two different photographs and there is the number 

of things that have been going on to improve this, if I look at Mr. 

Markey’s testimony, to improve the timeliness and the responses to 

the surveys. But some of the GAO work was on previous work to 

that. 

I think we need somehow to reconcile both of your testimonies 

to see if we get an accurate picture of where it yet needs to be to 

be done. And then to the question of whether or not the response 

rate is sufficient or not, and accurate enough I think is an issue 

that we should continue to look at. 

But I would like to get some, maybe I can formally ask the GAO 

if you would look at—if the testimony of DOL, I don’t know if you 

have prior to this hearing because it appears that there is a little 

bit of mismatch in sequencing if you will. 

I am not putting intent anywhere here, I just—the question of 

sequencing. Some things that have been done subsequent to the 

surveys that you may have been looking at that were an earlier 

iteration. That is—does that make any sense to you? 

Mr. SHERRILL. That is fair because we did our analysis based on 

the data, the surveys that were available at the time for us look 

at that. 

Mr. MILLER. Okay. 

Mr. SHERRILL. So some of it was a snapshot of where they were 

at that time. 

Mr. MILLER. I think that would be helpful to us. 

Finally I just want to say I think Mr. Mistick, the $15.7 billion 

is not annually, it is over 10 years. And it is a result of a CBO— 

informal CBO estimate. It is not a formal finding of CBO, just to 

clarify the record. It is—there is a little bit of difference between 

us two as you might imagine. 

Mr. MISTICK. It is still on the plus side. 

Mr. MILLER. No I understand, I understand. But you could also 

argue, I think, that the issue of the timeliness drags the wages 

back in time as opposed to being current, but more to be said later. 

Mr. MISTICK. I agree with that observation, Mr. Miller. 

Mr. BUCSHON. The chair yields 5 minutes to himself for a few 

questions. Mr. Mistick, you have a lot of experience as a stakeholder in all of this and trying to understand how to comply with 

the Davis-Bacon, and in your opinion, what is really the most troubling that you find with the findings of the GAO report? 

Mr. MISTICK. It is—part of it consistent series over literally decades in which the department fails to produce accurate numbers. 

And we can talk about—computers and doing things faster, but all 

we are going to do is produce wrong numbers more quickly. What 
46 

it has produced most generally by the Department of Labor’s survey are numbers that are wrong. 

We have to be able to say out loud that if 13 percent of the workforce belongs to a union and 65 percent of our data points are 

union rate, prima facie, that is wrong. And that is what we need 

to address. We already pay to collect a great deal of data, as Mr. 

Sherk has mentioned, in the occupational waste surveys. 

Advantages of which are that it is done on a county by county 

basis so that we can get to that fine granularity that is important 

in doing these surveys, plus the occupational waste survey has 

written classifications for the job. 

That doesn’t exist and it is part of the problems that Dr. Sherrill 

mentioned with people participating in the survey because there is 

no written description of what a carpenter, or painter, or plasterer 

does and that can vary from locality to locality. That is the biggest 

problem in my mind. And I don’t see any impetus after 80 years 

of trying to really get it right at the Department. 

Mr. BUCSHON. If a contractor has a question regarding a job classification issue, what type of guidance does DOL offer? 

Mr. MISTICK. Well, you can certainly call DOL and ask them and 

you might get a piece of oral tradition. For example, if I say, what 

is carpentry work to the DOL? They say well, what is ever done 

with the tools of the trade. Well that is not really an answer, is 

it? 

There have been instances more recently where the DOL has referred contractors to the contracting officer, who is the last person 

in the world to decide what job classifications are, this is a procurement specialist that has no background in the labor issues. So it 

is very difficult. It is not written down. It is also true in many state 

prevailing wage situations where there are no written guidelines 

for what the classifications are. 

Mr. BUCSHON. Mr. Eisenbrey, I am a physician. I found it interesting that you were trying to correlate the incidence of workplace 

accidents and that type of safety issues related to how much people 

are paid on the job. 

And how that—I am trying to find out how that—make that 

mental leap why, I mean this is a traditionally held view I think 

about labor, that if a union isn’t involved in a project that people 

are going to be more—are more going to be, are more likely to be 

injured and hurt on the job which is a view, by the way, that I 

don’t hold. 

So I want to know, what specific data do you have, you know, 

that related to David-Bacon Act that there is any correlation at all 

with workplace accidents and injuries that just doesn’t seem to 

apply to me. 

Mr. MISTICK. What I cited was a study by Professor Peter Phillips from the University of Utah of what happened in Kansas after 

the repealed their state prevailing wage law. And I am not saying 

that there is a direct cause, but I am just reporting what happened 

afterward and—— 

Mr. BUCSHON. But I mean—I think—can interrupt for just a second. I think you wanted to get across to the committee that, like 

I said, a typical labor opinion that if labor isn’t involved that there 
47 

will be injuries on the job to try to muddy the water about the 

whole issue. 

Mr. MISTICK. No, no, no, no. 

Mr. BUCSHON. But the intent of this is not to say that people 

shouldn’t have a prevailing wage, but the question in mind is, what 

are the statistics behind it? 

Mr. MISTICK. Well actually what I said was, that there is a rationale for why that would happen, which is it—I didn’t say anything about unions, what I said was, if you pay less, you are going 

to get less experienced workers who will be more likely to get hurt 

on the job. That if you pay—and take physicians. If you paid physicians half as much, would you get as high quality physicians? I 

mean I think the answer—— 

Mr. BUCSHON. Actually you would because they are all trained 

the same and my time has expired. Mr. Bishop? 

Mr. BISHOP. Thank you. Thank you Mr. Chairman and thank you 

for having this hearing. You know, I am having a hard time believing that this hearing is about a survey methodology or survey quality. I think it is important for us to note that in the debate on 

H.R.1 there was an amendment offered by Mr. King of Iowa to repeal Davis-Bacon. 

Thankfully that amendment failed 189 to 233 but with one exception, every member of this sub-committee including the chairman of the full committee, voted for that amendment. So this hearing is much, much, more than about survey methodology. 

I would also note for the record that Congressman Bacon preceded me as the representative of New York One and he was a Republican I should point out, and I will also point out that Mr. 

Shrek (sic) you use—Sherk, pardon me, you use a lot of data from 

Long Island. I represent about half of Suffolk County, so chances 

are the carpenters and the electricians and the sheet metal workers you are referring to are people that I represent. 

And in preparing for this I read a document that you wrote Mr. 

Sherk, and I will just read the opening sentence of the last paragraph which says, ‘‘Repeal Davis Bacon. America can no longer afford such special interest handouts’’. Do you recall writing that? 

Mr. SHERK. I have written words to that affect many times. 

Mr. BISHOP. Okay, well so am I to understand that a carpenter 

making $77,000 a year constitutes a special interest? 

Mr. SHERK. The special interest that I was particularly referring 

to is unions. So there have been studies of what happens when you 

repeal prevailing wage law. 

Mr. BISHOP. All right, let us go to that. The difference between 

the prevailing wage and the market rate for Long Island, carpenter 

who is, if he is fortunate enough to work 40 hours a week for 52 

weeks a year would make approximately $77,000. The market rate, 

person would make about $59,000 a year. 

Now these $77,000 a year guy, remember, he is the guy I represent, okay. Now, if we were to impose a tax rate on that person, 

that reduced his take home pay by 30 percent, is it fair to say— 

I know you don’t speak for the Heritage Foundation, but is it fair 

to say that the Heritage Foundation would refer to that tax rate 

as confiscatory? 
48 

Mr. SHERK. We would oppose certainly any such taxes. But if you 

had say a subsidy, basically we believe people should keep what 

they earn. 

Mr. BISHOP. Okay. 

Mr. SHERK. But—— 

Mr. BISHOP. But, but, but in order to keep what you earn you 

first have to earn it, correct? 

Mr. SHERK. If you are earning it—— 

Mr. BISHOP. But you are asking a person to take a 40 percent 

reduction in pay to do the same job, is that not correct? 

Mr. SHERK. What you are basically requiring them to do is work 

on the open competitive market and not have, basically government—— 

Mr. BISHOP. But the fact is that if your construct were to take 

place. If we were to repeal Davis Bacon, that laborer or that carpenter now making 77 grand a year, would be making 59 grand a 

year, right? 

Mr. SHERK. [Off mike.] 

Mr. BISHOP. And so let us stay with that for a second. So he now 

has $18,000 less per year to spend. Now if we were to tax everyone, 

so that such that they had $18,000 a year less to spend, would 

there not be some enormous human cry that that is a job killing 

tax rate because we would be taking money out of the economy and 

out of circulation. Isn’t that how that tax rate would be dealt with, 

perhaps reasonably? 

Mr. SHERK. Well effectively, what you are having is not a tax but 

a subsidy. So again, there are—— 

Mr. BISHOP. This is the individual who now has $18,000 less per 

year to spend, call it a subsidy call it a tax. He has got 18 grand 

less per year to support his family. And he has 18 grand less per 

year to buy goods and services which have a ripple effect through 

the economy. Is that not correct? 

Mr. SHERK. No, I don’t believe that is correct. 

Mr. BISHOP. Why is it not correct? If we were to tax that person 

$18,000 you would claim that we were taking money out of the 

economy. And that is the best thing for us to do is leave the money 

in the hands of the people because they know how to spend it better than the federal government. Is that not the case? 

Mr. SHERK. But what you have essentially got a law that requires—is your hiring of four construction workers for the price of 

five. If you paid the individuals market rates and assume that—— 

Mr. BISHOP. I am trying to deal with the people I represent. And 

if your recommendation were to ever take on the force of law, those 

people would be very, very adversely impacted. 

Mr. SHERK. Those fortunate enough to work on the federal construction jobs, some of them would see lower pay. Those who are 

unemployed right now might benefit from—— 

Mr. BISHOP. All right, let us try this. The prevailing wage, not 

the union wage, the prevailing wage for all counties in Virginia for 

a backhoe operator, which I guess would be called a laborer, is 

$11.28 an hour. That is around $450 a week, so roughly 23 grand 

a year. Is that what we have come to? We have come to arguing 

about whether or not we can afford to pay somebody 23 grand a 

year? 
49 

Mr. SHERK. We did a study actually on Davis-Bacon rates in Virginia a couple years back. I haven’t updated it since then, it was 

2008. But what we found was actually that the Davis-Bacon rates 

in Virginia, because of the inaccuracies,were about 5 percent lower 

than the market rates and that you had inflated rates in northern 

Virginia, in the rest of Virginia they are substantially below the 

market rates. So it is—if you have got the—survey, I—— 

Mr. BISHOP. It increased it—let us say that it is—let us say you 

are right. I am sorry, my time—— 

Chairman WALBERG [presiding]. The gentleman’s time is expired. 

Mr. BISHOP. Thank you. 

Chairman WALBERG. We will now go to the gentlelady from Hawaii, Ms. Hirono. 

Ms. HIRONO. Thank you Mr. Chairman. I would like to insert 

into the record of this hearing a letter that was sent to the chairman of the full committee and the ranking member of the full committee from the Congressional Black Caucus, the Congressional 

Hispanic Caucus, Congressional Asian—Pacific American Caucus 

in response to the fact that we are having this subcommittee hearing wherein they say prior to the enactment of Davis-Bacon in 

1931, there were many shocking examples of abusive labor practices and wholesale exploitation of female workers and workers of 

color. 

That is just part of what was in the letter to the full committee 

chairs and a ranking member. I would like to insert the rest of that 

letter for the record of this hearing. 

[The information follows:] 
50 
51 

Chairman WALBERG. Without objection. So ordered. 

Ms. HIRONO. Thank you. I found the exchange that we just heard 

very interesting, and, Mr. Sherk, I am curious to know is the position of the Heritage Foundation, which does advocate market rates 

in this arena, whether or not the position of the Heritage Foundation or your own position for that matter, is that government not 

set minimum wage either? 

Mr. SHERK. Certainly my personal position would be that the 

minimum wage is destructive to those it tries to help, that it produces employment opportunities and the ability of people to get a 

start on the job ladder and move up. So generally speaking, I 

would be against that. But, in this case, it means that the DavidBacon rates—they even—the market rates. They are so far above 

and beyond even the minimum wage that they—it is apples and oranges. 

Ms. HIRONO. So, the answer is that you would rather that—you 

don’t think that the government should set minimum wages either? 

Mr. SHERK. I, generally believe—speaking—I believe that minimum wage laws hurt those they are trying to help. 

Ms. HIRONO. Thank you very much. We obviously have a disagreement on that. 

Mr. Eisenbrey, I don’t think that you were able to complete your 

testimony, and it is very clear from this hearing that apart from 

the survey design and methodology, which we hope will be, you 

know, appropriate, that we don’t have enough people participating 

in the survey, and I don’t think you had a chance to finish your 

thoughts on some of the ideas that you would have to ensure a 

higher and more representational participation. 

Mr. EISENBREY. Well, thank you. Can I make one other point before I answer your question? 

Ms. HIRONO. Please. 

Mr. EISENBREY. I just like the record to be, clear that when Mr. 

Sherk talks about the market rate, you shouldn’t take that as a 

fact that he is asserting that the occupational employment statis-
52 

tics rate is the market rate, and he compares it to I think the 

building rate under Davis-Bacon, which is actually an unfair comparison because the OES includes residential construction where 

the rates can be half as much as the building rate. 

So, he is lumping in a lot of very low wage people and comparing 

them to people with higher skills in a narrower segment of the 

market, and it really isn’t a fair comparison, and I would say everything that he said based on that has to be therefore taken with 

a grain of salt. 

Ms. HIRONO. Thank you for that clarification. 

Mr. EISENBREY. But in answer to your question, I think that the 

Department should be doing everything it can and it is making 

new efforts—you have heard from Mr. Markey—to get better responses to the surveys. I think that there are tools that the department hasn’t looked at that they should. 

In Michigan one of the world’s greatest survey institutions is at 

the University of Michigan, and they will pay people to complete 

surveys. That is an incentive that ought to be looked at. 

But, the more obvious one is to say that anyone—any subcontractor, anybody who is doing federal construction work and being 

paid by the government should complete these surveys. They 

should be required to complete the surveys as a condition of working on federal projects and getting federal taxpayer dollars. That 

would do a lot to increase the response rate. 

Ms. HIRONO. Mr. Markey, would you like to respond to these two 

suggestions to improve your return rate? 

Mr. MARKEY. Well, we are taking—— 

Chairman WALBERG. Microphone, please. 

Mr. MARKEY [continuing]. We are taking efforts to improve the 

response rate. As I indicated it has usually been a series of mailings and with the low response rate in residential construction we 

have changed that methodology. We are supplementing mailings 

with telephone calls and visits to contractors and contractor associations. We have started that in—2010, and we have several surveys ongoing regarding that. 

After we cleaned up all the old surveys, as I talked about, we 

started piloting surveys under this new methodology where we 

don’t have a one size fits all, and we don’t survey every type of construction at the same time. 

If we look at the response rate in Georgia that we published in 

2009, I think the survey was 2003 or 2004—and we look at the response rate in Georgia which we are currently surveying now, I 

think we have, just for a building in heavy, over 7,000 responses, 

for Georgia. We didn’t have anywhere near that back in 2003 when 

we did this survey. 

Chairman WALBERG. Thank you, the gentlelady’s time has expired. 

Ms. HIRONO. Thank you. 

Chairman WALBERG. Move on to the gentleman from New Jersey, Mr. Payne. 

Mr. PAYNE. Thank you very much. It is a very interesting discussion, and it has been around for a long time. I, unfortunately, had 

to run to another committee so I know that many of the questions 
53 

were asked and answered although I do have a question of Mr. 

Markey. 

You know, today’s statement, and this is what the discussion 

even to the previous member had made claims that the Department of Labor survey is difficult to complete and presents a major 

problem. 

The GAO study found that 19 of 27 contractors and interested 

parties, 70 percent are interviewed, said that the survey was generally easy to understand though some identified challenges with 

completing specific sections such as how to apply the correct job 

classifications. Does the Department frequently receive complaints 

about the form, and what support do you provide to contractors 

completing this form? 

Mr. MARKEY. Well, when we do a survey, we conduct extensive 

pre-survey briefings. That includes all stakeholders. It—the building trades. It is contractors’ associations. It is small contractors. 

Besides stressing the importance of responding to the survey, we 

go through the data collection form block by block. We send out to 

everybody who we determine has been involved with construction 

activity a letter requesting a response. With that is a two page instruction sheet that indicates how you complete the form. 

We have a—on our Web site we have our phone number that— 

if they have any problems. And probably, most importantly, we get 

in a form and it indicates that—there are questions as to something on the survey, and I will direct one of Mr. Mistick’s concerns 

about area practice. 

We immediately called that respondent and we say, did you 

mean this? Okay, you have put a question mark next to the classification as to whether it is really a carpenter or an electrician or 

whether they do a subspecialty of hanging sheetrock or pulling low 

voltage wiring. And we question them regarding that. So, I think 

there is a lot of technical assistance going on in the survey process. 

GAO in its report said that 70 percent of the respondents indicated they had no problems with the form. It was rather simple. 

We do on site verification through a private accounting firm, and 

one of the things they always ask is, did you have any problems 

with the form? What do you think about this? What do you think 

about that? And the response is, it is not particularly difficult or 

time consuming to fill out. 

Mr. PAYNE. Thank you. Also, you know, the whole question about 

prevailing wages and so forth, I—of course if, you know, I was the 

builder, I certainly would want to have wages as low as possible. 

I mean, I wish I can dictate the rate that my doctor charges. But, 

that is just not the way it happens. I mean, it would be great to 

have you know, what needs to be supplied as inexpensive as it can 

be, therefore the profit would be much greater. 

So, I, you know, I think in some of these instances, we have to 

look at the value of work done. What is the—how do we determine 

that? You know, someone comes in and just say the prevailing 

wage is just too high, and that is what many of the entrepreneurs 

say. The workers say that what they are doing, they think that 

what they are providing is equal to what they are paid. 

So, I guess this is an argument that, you know, we are going to 

see, you know, on and on according to what side of the shovel you 
54 

are on. So, you know, I think it is driving down wages. I am not 

so sure, as have been indicated, to get more productivity. That is 

a new concept. 

We really have to, I think, make sure that we have qualified people. I am glad that the letter from the minority caucuses was introduced because there is a misconception that people feel that minority workers don’t support Davis-Bacon, and we have our labor task 

force members who signed the letter just to the contrary. 

And so, I certainly think that this discussion is important, and 

hopefully we can improve it. But, I think to try to eliminate the 

Davis-Bacon Act would be a step in the wrong direction. 

Chairman WALBERG. I thank you, gentlemen. And now turn to 

the gentleman from Ohio, Mr. Kucinich. 

Mr. KUCINICH. Thank you very much Mr. Chairman, and I am 

going to ask some questions of the—for Mr. Markey from The Department of Labor. You know, in reading over the GAO report and 

you may have answered this already, so excuse me for asking it if 

you have, is it your position that if you had more people who were 

able to inspect, you could keep up with the flow of the work and 

therefore ensure better enforcement? 

Mr. MARKEY. Well, no, agencies are always looking—— 

Mr. KUCINICH. Could you speak into the mic? 

Mr. MARKEY. Agencies are always looking for more people but 

this is more related to the wage determination process. I indicated 

we have added people. As we continue to re-engineer the processes, 

we are timing each segment of how long it takes and we will add 

staff in the field as necessary. 

Mr. KUCINICH. What can you see are the major challenges that 

you face with respect to having staff in the field to make sure that 

you keep up with the workflow? Are you facing budget cuts in 

terms of cutting back staff that would be able to seek proper enforcement? 

Mr. MARKEY. The Department has received a budget cut in wage 

now, and we are sharing it. 

Mr. KUCINICH. How will that affect the work? 

Mr. MARKEY. With regard to this particular function of wage determinations, at this point in time we consider it critical enough 

that it is not affecting the work. 

Mr. KUCINICH. You consider it what, please? 

Mr. MARKEY. We consider the wage determination process in our 

efforts to improve it and to shorten the timeframes of the age of 

wage rates, important enough that any cuts will not be absorbed 

in that portion of our operations. 

Mr. KUCINICH. I am glad to hear you say that because in looking 

at your testimony you point out the historical importance of the 

Davis-Bacon Act, and I think that in this debate over Davis-Bacon 

wages that it is important that we talk about the construction benefits to the taxpayers, quality of work, workplace safety issues that 

may not be easily monetized, but once they are, actually indicate 

that the taxpayers overall are not just getting quality but they are 

getting value. Would you agree with that? 

Mr. MARKEY. Yes, I would. 

Mr. KUCINICH. I would like to ask Mr. Sherk—I read your report 

repealing Davis-Bacon, which you advocate, and I heard you an-
55 

swer one of my colleagues. What do you—I am going to pick up on 

your comments about minimum wage. Do you think there should 

be a minimum wage? 

Mr. SHERK. Well, again, it is—the minimum wage only—you are 

talking basically 3 percent or so of workers. The—it doesn’t—construction workers—— 

Mr. KUCINICH. Philosophically though. 

Mr. SHERK. But, generally speaking I think it hurts those it is 

intended to help that it prices low skilled—very low skilled—workers out of the labor market. 

Mr. KUCINICH. So, right now the minimum wage is about $7.25. 

Mr. SHERK. Yes. 

Mr. KUCINICH. Would you say that maybe more people would 

work if the minimum wage was like, say, $5? 

Mr. SHERK. Certainly you would have—right now if you are 

among skilled workers—say you are a high school dropout and you 

can only provide $6 an hour worth of value to the company. Well 

then nobody is going to pay you $7.25 an hour and benefits to bring 

you on. But, what you find is that when workers—they starve on 

minimum wage. It is an entry level wage. The two-thirds of minimum wage workers get a raise within a year. 

It is the bottom rung of a career ladder, and you work your way 

up. Cut off that bottom rung, don’t give them the opportunity to 

develop skills, and you wind up hurting them and preventing them 

from, you know, working their way up and earning higher pay. 

Mr. KUCINICH. I am just doing some off the cuff math on minimum wage 15—the minimum wage at a yearly rate would be 

$15,080. That is at the $7.25 an hour. Let us say we made it $5 

an hour, it would be, I don’t know, over $10,000, I guess. When you 

look at the federal poverty numbers, because you have to put this 

in a broader perspective, people would actually have a job and be 

driven into poverty. 

This is a conflict that we have here. So, what I would suggest 

to you, respectfully, is that the philosophy that brings any of us to 

these tables, on this side and on your side, have to meet some real 

world realities about, you know, what people need to make a living. 

And I know that in your testimony you sketch out—actually with 

respect to the minimum wage—with respect to Davis-Bacon wages, 

I know you try to establish the difference between the Davis-Bacon 

Act and the market wages in various communities. I looked at that. 

But the question is though, if you monetize all the value—— 

Chairman WALBERG. I thank the gentleman for his philosophy 

and appreciate that—— 

Mr. SHERK. Thank you for that, Mr. Chairman. 

Chairman WALBERG [continuing]. Yes. I thank you for that 

and—— 

Mr. KUCINICH. So is my time expired? 

Chairman WALBERG. Your time has expired—— 

Mr. KUCINICH. I thought you were just thanking—— 

Chairman WALBERG [continuing]. Significantly. [Laughter.] 

Philosophy, philosophy, we all have it, and I thank you for yours 

whether I agree or disagree. I also thank the members of the panel 

for being here today to provide checks and balances to each other, 
56 

to provide philosophy in the process and provide more information 

as we go forward in our committee deliberations. 

And now I turn to the gentlelady from California, ranking member Woolsey for closing comments. 

Ms. WOOLSEY. Thank you, Mr. Chairman, and I also thank the 

witnesses today and would like to ask the Department of Labor if 

they have items that they would like to submit for the record? 

Mr. MARKEY. Yes, we would. 

Ms. WOOLSEY. Mr. Chairman, would that be acceptable to you? 

Chairman WALBERG. Without objection. 

Ms. WOOLSEY. Thank you. It is clear from today’s testimony that 

the Department of Labor is taking steps to improve its prevailing 

wage survey process. They have instituted several reforms aimed 

at producing more timely, more accurate wage rates, and they continue to look at ways to advance the survey procedures. 

We have also learned of the problems with using Bureau of 

Labor statistics data in place of a true prevailing wage survey, 

which amounts actually to an imprecise wage rate and a wage cut 

for construction workers. 

So, as I said before, Mr. Chairman, the last thing construction 

workers need in this economy is to have their wages cut. We need 

to ensure that prevailing wage protections exist so that the federal 

government does not subsidize a race to the bottom with our nation’s construction investments. Instead, we must continue to encourage competition, contribute to the development of a skilled 

workforce for the future and pay livable wages. 

I yield back. 

Chairman WALBERG. I thank the gentlelady and would concur. 

We certainly want to see jobs, efficiency, all of that expand. We 

also want to make sure that there are no unnecessary hindrances 

to hiring and completing jobs. 

I have had the benefit of having a youngest son who is working 

in jobs probably as we speak. Today he will work for prevailing 

wage and he will work for non prevailing wage. He will do the 

same process at each site and will do the same quality work. 

But there will be significant difference in the wages that he receives. He understands that. He doesn’t complain about the bottom 

line of the check at the end of the month. 

But he does complain about the fact that he knows there are jobs 

that he will not be on and there will be additional employees that 

will not assist him on some of those jobs in construction because 

of additional costs that to him, seem unnecessary. 

Now we know that it goes the other way as well, according to the 

GAO report. And I think that is the purpose of this hearing, this 

subcommittee and our deliberations, to find what moves this nation, its workforce, its economy forwards. I love Michigan. It is a 

state of my choosing. 

But I also know that state led the nation in an unrivaled unemployment recession, depression as it were, for too long and sadly, 

a couple other states have now joined it at the bottom of the pile. 

And regulations, cost structures, prevailing wages, requirements 

by the government in Davis-Bacon—whatever it might be that destroys the opportunity to move forward must be dealt with. 
57 

And so we will continue looking at these issues and hopefully 

come to a conclusion that will benefit the worker, the employer, the 

regulator—I noticed I put regulator third, though I appreciate the 

work that is done, what you are asked to do, but nonetheless, ultimately it benefits the economy and moving forward in this great 

nation. It is too great to hold it back. 

So having said that, there being no further business, the subcommittee stands adjourned. 

[Additional submissions of Mr. Walberg follow:] 

Prepared Statement of Women Construction Owners & Executives, USA 

Women Construction Owners & Executives, USA (WCOE) is pleased to submit 

testimony before the Subcommittee to share our views about prevailing wages rates 

under the Davis-Bacon Act. WCOE is a national association representing women 

owners and executives in the construction industry. Members of WCOE include general contractors, architects, engineers, manufacturers, construction project managers, and trade subcontractors. 

Women represent a small, but growing, segment of the construction industry. According to the most recent U.S. Census Bureau Survey of Business Owners from 

2007, 10% of construction firms nationwide are women-owned businesses. The Center for Women’s Business Research 2008 Biennial Update reported that there were 

nearly 500,000 women-owned construction firms nationwide. American Express 

OPEN’s 2011 ‘‘State of Women-Owned Businesses Report’’ highlighted the recent 

growth for women-owned businesses in the construction industry. Between 2002 and 

2010, there has been a 41% growth in the number of women-owned construction 

firms. Furthermore, construction is one of only two industries in which the growth 

of women-owned businesses regarding number of firms, employment and revenues 

has outpaced industry-level growth. 

The issue of prevailing wage rates determined by the Department of Labor (DOL) 

under the Davis-Bacon Act is critical to women construction company owners. 

WCOE’s membership includes both union signatory and non-union companies and 

they mirror the overall industry statistics (2010 Bureau of Labor Statistics) with 

nine out of ten companies operating under ‘‘open shop’’ guidelines. 

The majority of our members are classified as small businesses according to SBA 

criteria and since 87+% are non-union or ‘‘open shop’’, they are at a significant disadvantage when federal, state and local construction contracts require union wages 

and benefits. In addition, the March 2011 Government Accountability Office (GAO) 

report ‘‘Davis-Bacon Act: Methodological Changes Needed to Improve Wage Survey’’ 

findings that DOL does not provide a fair determination of local prevailing wages 

comes as no surprise to us. The 50 percent rule under Davis-Bacon requires DOL 

to collect wage data on at least three workers from two different employers. This 

calculation is not likely to be representative of the actual wages paid to construction 

workers especially when both of the employers surveyed are paying union rates. 

Union signatory construction companies (13%), which tend to pay higher total compensation (wages and benefits) than non-union companies (87%), are not representative of the entire industry. 

We understand the repeal of Davis-Bacon is nearly impossible in the current climate, however we urge the Subcommittee to focus on redirecting the wage and benefit research to the states and localities who have a better understanding of local 

dynamics within the construction industry. At a minimum, DOL should be mandated to include non-union wages and benefits when deciding the prevailing wage 

for any area. After all, these wages do represent 87% of the construction industry 

work force. 

Recently, the Small Business Administration (SBA) implemented its women 

owned small business procurement program to provide women-owned businesses 

greater access to federal contracting. The Women Owned Small Business Federal 

Contract Program (WOSB-8m), which has taken eleven years to enact, permits contracting officers, for the first time, to restrict competition for federal contracts to 

women-owned businesses in 83 industries where women-owned firms were determined to be underrepresented. Twelve of these broad 4-digit NAICS industry codes 

(which encompass 60 six-digit specific NAICS codes) are in the construction industry. The Davis-Bacon requirements are a barrier to women-owned construction companies securing government contracts. Implementation of the WOSB-8m Program in 

these 60 construction NAICS codes may not do much to help open the doors to federal construction projects unless the Davis-Bacon requirements are revised. If the 
58 

WOSB-8m program is about providing parity, then we submit the prevailing wage 

methodology and requirements currently utilized will severely limit women-owned 

construction companies’ ability to compete for government contracts. 

In summary, we believe Congress should re-examine the industry standards for 

determining prevailing wage rates and take into consideration the established fact 

that 87% of construction companies in this country are non-union. WCOE would like 

to thank the Subcommittee for giving us the opportunity to share our views. 
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[Additional submission of Mr. Eisenbrey follows:] 

May 4, 2011. 

Hon. TIMOTHY WALBERG, Chairman, 

Subcommittee on Workforce Protections, U.S. House of Representatives, Washington, 

DC 20515. 

DEAR CHAIRMAN WALBERG: The Economic Policy Institute submits this supplemental statement to correct the hearing record and respond to serious errors in testimony submitted by James Sherk of the Heritage Foundation. Dr. Sherk’s testimony grossly misrepresents the relationship between wages paid under the DavisBacon Act and what Dr. Sherk misleadingly calls ‘‘the market wage’’—local construction wage rates published by the Bureau of Labor Statistics in its Occupational 

Employment Statistics (OES). In his written testimony, Dr. Sherk, a Senior Policy 

Analyst in Labor Economics at the Heritage Foundation, claimed that Davis-Bacon 

rates are generally set ‘‘well above market wages,’’ so high that they will increase 
96 

1 James Sherk, ‘‘Examining the Department of Labor’s Implementation of the Davis-Bacon 

Act,’’ Testimony before the Education and Workforce Committee, U.S. House of Representatives, 

April 14, 2011, page 1. 2Sherk testimony, page 7. 

the government’s construction costs by more than $10 billion this year.1 As we will 

show, this claim is false. 

Dr. Sherk contends that, ‘‘The Wage and Hour Division uses unscientific methods 

and unrepresentative data to estimate prevailing wages. Unsurprising, Davis-Bacon 

rates typically bear little relation to actual prevailing wages. * * * Davis-Bacon 

rates vary wildly from actual market pay.’’ 2

To support his contention, Dr. Sherk’s testimony includes a table which compares, 

for selected cities and counties, the wage obtained from the OES with what Sherk 

labels the ‘‘Davis-Bacon’’ rate. The ‘‘Davis-Bacon’’ rates in his table are usually considerably different from the OES rate, and are more often above the OES rate than 

below the OES rate. 

In fact, there is no reason to expect the rates to be the same because they measure different things. The Davis-Bacon rates are segmented among four types of construction and construction labor markets, they are collected from different geographic areas than the OES and at different times, and they typically collect information on much more detailed occupational breakdowns than the OES. As currently 

constructed, the OES is both significantly different and quite incapable of meeting 

the statutory requirements that the Davis-Bacon surveys have been designed to 

meet. The OES is not an appropriate benchmark for comparison and should not be 

idealized as the true ‘‘market rate.’’ 

In any event, the wild variation and the upward bias Dr. Sherk found in his 

Davis-Bacon rates are the product of Sherk’s own invention and do not accurately 

represent the relationship between either the ‘‘market rate’’ or the OES and wage 

determinations under the Act. In truth, they are caricatures that result from misues 

of the data: selecting only the Davis-Bacon rates for building construction while excluding the typically lower rates for residential construction, using different time periods for the Davis-Bacon and OES rates, and misunderstanding the difference between an occupational survey and a wage determination. 

Failure to Include Residential Rates 

To support his claim that Davis-Bacon rates are generally too high, Sherk reports 

an hourly Davis-Bacon rate for electricians in Jackson, MI of $38.57. This is the 

published Davis-Bacon rate for building and heavy construction in Jackson County 

and is far above the OES estimate of the hourly rate for electricians of $27.14. However, the Davis-Bacon residential construction rate for Jackson County is only 

$22.79. If we take as a rule of thumb that about half of construction workers are 

employed in residential work, the average hourly wage of electricians is $30.68, 

about 13% above the OES hourly wage, rather than the 42% Sherk reports. Inclusion of residential rates for the other trades Sherk sampled—carpenters and plumbers—actually eliminates the upward bias Sherk identified. The estimated difference 

between the Davis-Bacon and OES hourly wage changes from one in which the 

Davis-Bacon rate is substantially above to one in which it is somewhat below the 

OES rate. 

Reviewing Sherk’s table of ‘‘Davis-Bacon and Market Determined Rates for various cities,’’ 3 we added information on the residential rate by trade for the county, 

averaged this rate with the building rate provided in Sherk’s testimony, and calculated the difference between the OES and the more appropriately averaged building and residential rates. The differences between the OES and Davis-Bacon rates 

are generally smaller than those reported by Sherk, and we find that the OES rate 

is above the averaged Davis-Bacon rate more often than not. 

Comparing Davis-Bacon Rates from 2010 and 2011 to OES Rates from May 2009 

Dr. Sherk’s second mistake is in comparing Davis-Bacon wage determinations 

which were in effect in 2011 with OES data from May 2009. When Davis-Bacon 

rates which were in effect in May 2009 are used, the apparent differences between 

the Davis-Bacon and OES rates are substantially narrower. 

The Davis-Bacon wage determinations for Alameda and Contra-Costa Counties 

cited in the Heritage study went into effect between June 2010 and January 2011, 

between a year and a year and a half after the OES rates. The determinations for 

Sonoma County used in the Heritage study were closer in time to the OES rates 

for electricians (June 2009) and plumbers (August 2009) but the carpenter rate 

dated from July 2010, more than a year after the period covered by the OES data. 

Using this non-comparable data, and neglecting to adjust for residential rates, the 
97 

4These are conservative assumptions as the apprenticeship programs for electricians and carpenters last at least five years. Further, the proportion of apprentices in the labor force may 

well be greater than 10%: the Northern California Brotherhood of Carpenters reports that apprentices comprise 20% of the workforce in their region. 5 Another issue, one which is more difficult to examine, is whether the definition of an occupation used in Davis-Bacon surveys is comparable to that used in OES surveys. The Davis-Bacon 

rate is the rate paid to a journey level worker, a worker who is broadly trained in an occupation. 

OES definitions of construction occupations are broader, and may include less skilled workers, 

than the standards used for Davis-Bacon definitions. For example, the OES definition of a carpenter’s work—‘‘Construct, erect, install, or repair structures and fixtures made of wood, such 

as concrete forms; building frameworks, including partitions, joists, studding, and rafters; and 

wood stairways, window and door frames, and hardwood floors. May also install cabinets, siding, 

drywall and batt or roll insulation. Includes brattice builders who build doors or brattices (ventilation walls or partitions) in underground passageways.’’—would allow a worker who was 

trained in a relatively narrow set of skills, such as installation of concrete forms, to be classified 

Continued 

Heritage study reported differences between Davis-Bacon rates and OES rates of between 27.5% and 86%. 

The difference between the Davis-Bacon determination and the OES rate is considerably smaller when the Davis-Bacon rate which was in effect in May 2009 is 

used. As shown in Table 2, the second set of columns, the comparable rate for carpenters in all three counties was $34.75, not $37.75 as reported in the Heritage report. The rates for electricians in Sonoma County were $42.33 for non-residential 

and $33.25 for residential electricians, rather than $44.00 and $36.11 as reported 

by Heritage. The correct rates for plumbers in Sonoma were $45.90 and $40.80 rather than $55.25 and $51.11. Parallel reductions occur for electricians and plumbers 

in Contra Costa and Alameda counties. 

Using the appropriate Davis-Bacon rates considerably narrows the difference between the OES and Davis-Bacon. For example, Heritage reports that the DavisBacon rate was 40.1% above OES hourly wages for Sonoma carpenters, 54.1% for 

electricians and a remarkable 86% for plumbers. Averaging in the lower residential 

rates, and using the Davis-Bacon rates which were in effect in May 2009, the differences were a far more modest 29.3% for carpenters, 16.5% for electricians and 

45.9% for plumbers. 

We have not checked to see whether the rest of the time periods used in Dr. 

Sherk’s comparisons are equally inappropriate, but we suggest that the committee 

do so before citing any of Dr. Sherk’s calculations. 

Failure to Adjust Davis-Bacon Rates for the Use of Apprentices 

To put Dr. Sherk’s third mistake into the simplest terms, he does not take into 

account that the surveyed Davis Bacon rate does not include apprentice rates and 

will therefore be higher than the average rates actually paid on a project. 

Davis-Bacon rates are determinations of the hourly rate paid to journey level 

trades workers. They differ from wage survey data in that lower legally permissible 

rates, such as those paid to workers in certified apprenticeship programs, are not 

incorporated into the determinations. For example, under the apprenticeship adjustment allowed by the Davis-Bacon Act, apprentices in certified four-year carpentry 

apprenticeship programs will typically be paid 60% of the journey rate in their first 

year, 70% in their second year, 80% in their third year, and 90% in their fourth 

year in their program. While these lower rates are captured by OES data, DavisBacon wage determinations do not reflect the lower rates of apprentices. 

How would adjusting the Davis-Bacon wage determinations for the presence of apprentices affect the apparent differential between the Davis-Bacon and OES rates? 

This will vary with the number of apprentices in the construction labor force in an 

area and the length of the apprenticeship program, and the reduction in journey 

level wages. Carpentry apprenticeship programs usually take four years, plumbers’ 

and electricians’ take at least five years. We examined the effect of allowing for apprenticeship rates in Sonoma, Alameda and Contra Costa counties assuming that 

programs take four years and that wages start at 60% of the journey wage in the 

first year of the program and rise by ten percentage points annually.4 If 10% of the 

workers in a trade are enrolled in four-year apprenticeship programs, the adjusted 

Davis-Bacon wage would be 97.5% of the Davis-Bacon journey level determination. 

Adjusting for the lower rates paid apprentices reduces the Davis-Bacon rate by 

between 83 cents and $1.10 per hour. As a result, the Davis-Bacon rate for carpenters is between 17 and 26% above the OES rate, the electrician rate is between 

14 and 21 percent above the OES rate, and the plumbing rate is between 21 and 

42% above the OES rate. These differences are far smaller than the 27.5% to 86% 

differences reported by Dr. Sherk.5
98 

as a carpenter. In contrast, such a narrowly trained worker is less likely to be classified as a 

carpenter under the Davis-Bacon definition. 

Looking again at Sherk’s first example, and taking into account the lower wage 

rates for apprentices, the OES-Davis-Bacon comparison for Jackson County is vastly 

different from how it was portrayed in the Heritage Foundation testimony. Rather 

than the Davis-Bacon rate for carpenters being 13.9% more than the OES rate, it 

is 3% less ($20.39 vs. $20.98). Rather than being 42% higher than the OES rate, 

the Davis-Bacon rate for electricians is only 10% more ($29.91 vs. $27.14). And rather than the plumbers/pipefitters rate being 16.2% higher than the OES rate, as Dr. 

Sherk claimed, it is actually 4% lower ($27.17 vs. $28.23). 

Conclusion 

After correcting for Dr. Sherk’s many errors, and in particular for his failure to 

include the Davis-Bacon residential rate in his comparison, it becomes evident that 

Davis-Bacon rates are not remarkably different from the OES rates, let alone an 

idealized market rate. There are significant differences in a few areas, but overall 

the Davis-Bacon wage determinations Dr. Sherk selected tend to be lower than the 

OES rates once the appropriate corrections are made. The savings Dr. Sherk purports to estimate from more accurate Davis-Bacon wage determinations are fictitious. 

Please let us know if you have any questions about this analysis. And thank you 

again for the opportunity to testify before the subcommittee on this important matter. 

Sincerely, 

ROSS EISENBREY, Vice President, 

Economic Policy institute. 

DALE BELMAN, Professor, 

School of Labor and Industrial Relations, Michigan State University. 

[Questions submitted for the record and their responses follow:] 

Questions for the Record Submitted by Ms. Woolsey 

QUESTION FOR DR. ANDREW SHERRILL, DIRECTOR, EDUCATION, WORKFORCE, AND

INCOME SECURITY ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

Critics of the Davis-Bacon prevailing wage survey process rely a statement on 

page 20 of GAO Report 11-152 that ‘‘about 63 percent [of the Davis-Bacon prevailing 

wage rates published by the Department of Labor as of November 12, 2010] were 

union-prevailing, in contrast, about 14 percent of construction workers nationwide 

were represented by unions in 2010, according to BLS figures, as support for their 

contention that it is ‘‘far from representative’’ (written testimony of James Sherk, 

Senior Policy Analyst in Labor Economics with the Heritage Foundation) and fails 

to determine ‘‘true ‘prevailing’ wages and instead has repeatedly issued wage determinations that are vastly inflated above true market rates seen on private sector 

construction projects’’ (written testimony of D. Thomas Mistick appearing on behalf 

of the Associated Builders and Contractors, Inc.), accordingly please describe in sufficient detail so that it can easily and promptly be retrieved the source of information that supports the above-referenced statement on page 20 of GAO Report 11- 

152; and explain in detail how GAO determined that ‘‘about 63 percent [of DOL’s 

published Davis-Bacon prevailing wage rates] were union-prevailing?’’ 

QUESTION FOR MR. THOMAS M. MARKEY, DEPUTY ADMINISTRATOR, OFFICE OF PROGRAM

OPERATIONS, WAGE AND HOUR DIVISION, U.S. DEPARTMENT OF LABOR

Mr. John Fraser, Acting Administrator, Wage and Hour Division of the Department of Labor testified in a hearing on July 30, 1997 held jointly by the Subcommittee on Workforce Protections and the Subcommittee on Oversight and Investigations of the House Education and the Workforce Committee that only about 29 

percent of the Davis-Bacon prevailing wage determinations issued by DOL were 

based on collectively-bargained ‘‘union’’ wage rates while 48 percent were based on 

‘‘non-union’’ wage rates (weighted averages), and 23 percent included a mixture of 

‘‘union’’ wage rates and ‘‘non-union’’ wage rates; (1) please state whether the relative 

percentage of ‘‘union,’’ non-union,’’ and ‘‘mixed’’ Davis-Bacon prevailing wage determinations has changed since Mr. Fraser testified in 1997 and, if so, please describe 

the current portion of Davis-Bacon prevailing wage determinations that are ‘‘union,’’ 

non-union,’’ and ‘‘mixed;’’ (2) please describe in sufficient detail so that it can easily 
99 

and promptly be retrieved the source of information that supports your answer to 

the prior request; and (3) please explain in detail how you determined the answer 

to question (1). 

Response From Mr. Markey to Questions Submitted for the Record 

Question: Mr. John Fraser, Acting Administrator, Wage and Hour Division of the 

Department of Labor, testified in a hearing on July 30, 1997, held jointly by the 

Subcommittee on Workforce Protections and the Subcommittee on Oversight and Investigations of the House Education and the Workforce Committee that only about 

29 percent of the Davis-Bacon prevailing wage determinations issued by DOL were 

based on collectively-bargained ‘‘union’’ wage rates wile 48 percent were based on 

‘‘non-union’’ wage rates (weighted averages), and 23 percent included a mixture of 

‘‘union’’ wage rates and ‘‘non-union’’ wage rates; (1) please state whether the relative 

percentage of ‘‘union’’, ‘‘non-union,’’ and ‘‘mixed’’ Davis-Bacon prevailing wage determinations has changed since Mr. Fraser testified in 1997, and if so, please describe 

the current portion of Davis-Bacon prevailing wage determinations that are ‘‘union,’’ 

‘‘non-union’’ and ‘‘mixed;’’ (2) please describe in sufficient detail so that it can easily 

and promptly be retrieved the source of information that supports your answer to 

the prior request; and (3) please explain in detail how you determined the answer 

to question (1). 

Response: The relative percentage of union, non-union, and mixed Davis-Bacon 

prevailing wage determinations has changed since 1997. Union vs. non-union rates 

vary considerably based on the type of construction, and new wage determinations 

often reflect a different distribution of union, non-union, and mixed wage classifications than was reflected on the wage determinations they replace. 

A breakdown by wage determination shows a different picture in 2011 than in 

1997. Only 5% of the total building wage determinations are 100% union wage determinations, 4% are 100% non-union, and 91% are mixed (union and non-union) 

wage determinations. For residential construction, 3% are union, 50% are nonunion, and 47% are mixed wage determinations. For highway construction, 17% are 

union, 44% are non-union, and 39% are mixed wage determinations. Lastly, for 

heavy construction, 12% are union, 20% are non-union, and 68% are mixed wage 

determinations. 

At the hearing it was stated that the Government Accountability Office’s report 

indicated that 63% of all Davis-Bacon and Related Act wage rates were the collective bargaining agreement (CBA) rate. It appears that the 63% figure was derived 

by counting every wage rate for each different classification (occupation) for each 

type of construction (building, heavy, highway, and residential). As explained below, 

this methodology results in a somewhat misleading statistic. 

A predominantly union wage determination will contain many more classifications 

and rates than a non-union wage determination because CBA classifications are 

more narrowly defined, with work performed broken down into finer categories and 

each with a separate rate. There may be as many as 6 to 8 different rates for a 

union crane operator and the same could apply to other classifications, particularly 

the heavy equipment operator and truck driver classifications. For example, the Hawaii wage determination is a CBA/union wage determination that applies to building, heavy, highway, and residential construction. There are 120 union classifications and rates on the Hawaii wage determination, and each rate is counted separately for each construction type and for each county covered by the wage determination. 

Conversely, for predominantly non-union wage determinations such as those applicable to Crenshaw County, Alabama, there are 23 non-union rates and 6 union 

rates for building construction, for heavy construction there are 12 non-union and 

5 union rates (all 5 rates are for varying sizes of a crane), for highway construction 

there are 45 non-union rates, and for residential construction there are 17 nonunion rates. 

Additionally it is noted that the surveys for building construction usually result 

in considerably more classifications than the other types of construction. This is 

probably due to the required number of crafts necessary on a building construction 

site. Even though 91% of building wage determinations are mixed, mostly union 

rates are more likely to prevail in building construction as opposed to the other 

three construction types, each of which requires considerably fewer classifications. 

The Wage Determination Generation System (WDGS) enables the generation of 

publishable wage determinations and generates reports and details of wage determinations. The Wage Determinations OnLine (WDOL) website (www.wdol.gov) provides a single location for the public to view and obtain appropriate Davis-Bacon 
100 

wage determinations. Both WDGS and WDOL were used to view and calculate the 

percentage distribution of union, non-union, and mixed wage determinations provided in this response. 

Response From Mr. Sherrill to Questions Submitted for the Record 

Question for the Record: Critics of the Davis-Bacon prevailing wage survey process 

rely on a statement on page 20 of GAO report 11-152 that ‘‘about 63 percent [of the 

Davis-Bacon prevailing wage rates published by the Department of Labor as of November 12, 2010] were union-prevailing; in contrast, about 14 percent of construction workers nationwide were represented by unions in 2010, according to BLS figures,’’ as support for their contention that it is ‘‘far from representative’’ (written 

testimony of James Sherk, Senior Policy Analyst in Labor Economics with the Heritage Foundation) and fails to determine ‘‘true ‘prevailing’ wages and instead has repeatedly issued wage determinations that are vastly inflated above true market 

rates seen on private sector construction projects’’ (written testimony of D. Thomas 

Mistik appearing on behalf of the Associated Builders and Contractors, Inc.). Accordingly, please describe in sufficient detail so that it can easily and promptly be 

retrieved, the source of information that supports the above-referenced statement on 

page 20 of GAO Report 11-152, and explain in detail how GAO determined that 

‘‘about 63 percent [of DOL’s published Davis-Bacon prevailing wage rates] were 

union-prevailing?’’ 

GAO Response: To analyze the percentage of union-and nonunion-prevailing 

Davis-Bacon wage rates we used data from Labor’s Wage Determination Generation 

System (WDGS). Labor uses the WDGS to create, modify, and issue wage determinations based on data collected through the WD-10 survey forms. The dataset we 

received, which included separate files for union-prevailing and nonunion-prevailing 

wage rates, represented published prevailing wage rates as of November 12, 2010. 

We combined the files and then calculated the percentage each type of rate represented of published rates. Our results showed that 63 percent of the published 

wage rates were union-prevailing while 37 percent were nonunion-prevailing. To 

verify our findings, we shared the results of our analysis with Labor officials, who 

conducted the same analysis with similar results. 

The source of the 14 percent figure we cited is Bureau of Labor Statistics, Economic News Release: Union Members—2010, ‘‘Table 3. Union affiliation of employed 

wage and salary workers by occupation and industry’’ (Jan. 21, 2011). 

[Additional submission of Mr. Sherk follows:] 

Washington, DC. 

Hon. TIMOTHY WALBERG, Chairman, 

Subcommittee on Workforce Protections, Room 418 Cannon House Office Building, 

U.S. House of Representatives, Washington, DC 20515. 

DEAR CHAIRMAN WALBERG: The Davis-Bacon Act (DBA) requires contractors on 

federally financed construction projects to pay at least the locally prevailing wage 

to their employees. These minimum Davis-Bacon rates are calculated by the Wage 

and Hour Division of the Department of Labor. The Government Accountability Office (GAO) has identified serious flaws in how the Department of Labor calculates 

Davis-Bacon rates. The GAO report shows that the Labor Department does not use 

a scientifically representative sample and bases wage rates on very few observations—in some cases, as few as three workers.1

Last month, your committee held a hearing to examine this report. At that time, 

I testified that these errors render DBA wage estimates inaccurate and scientifically 

meaningless.2 I compared Davis-Bacon wage determinations with estimates of market pay calculated by the Bureau of Labor Statistics’ Occupational Employment Statistics (OES) survey. I explained that Davis-Bacon rates typically exceed market pay 

and that correcting the flaws in the DBA determinations would result in considerable savings for taxpayers. 

Writing for the Economic Policy Institute (EPI), Ross Eisenbrey and Dr. Dale 

Belman responded to this testimony with a supplemental statement submitted to 

your office.3 They argued that I made ‘‘serious errors’’ and that my testimony ‘‘grossly misrepresents’’ the relationship between DBA and market wages. In particular, 

the EPI strongly objects to comparing DBA rates and OES construction wages. 

I am submitting this letter as supplemental testimony to respond to the EPI’s accusations and correct the record. The EPI makes four principal arguments: (1) OES 

data are incapable of meeting the statutory requirements for DBA prevailing wages 
101 

and are not an appropriate benchmark for market wages; (2) my analysis fails to 

include DBA residential rates; (3) my analysis compares more recent DBA rates to 

older OES rates; and (4) I fail to adjust for the use of apprentices on the job. Adjusting for these factors, EPI contends that DBA rates are similar to OES figures. 

These arguments are either completely inaccurate or highly misleading. As I will 

show, Davis-Bacon rates do in fact considerably exceed market pay. Congress could 

achieve considerable savings by either repealing the act or requiring the Department of Labor to use scientific methods to calculate DBA rates. 

Appropriateness of OES Figures for Prevailing Wage Determinations 

The EPI objects to comparing DBA rates with OES wage estimates. They write 

that: 

As currently constructed, the OES is both significantly different and quite incapable of meeting the statutory requirements that the Davis-Bacon surveys have been 

designed to meet. The OES is not an appropriate benchmark for comparison and 

should not be idealized as the true ‘‘market rate.’’ 4

The Department of Labor disagrees. The Bureau of Labor Statistics conducts the 

OES survey primarily so that Labor can enforce prevailing wage statutes. The Service Contract Act requires federal service contractors to pay their workers existing 

market wages. The Foreign Labor Certification program requires employers of highskill immigrants to pay at least market wages. The Labor Department uses OES 

figures to enforce these programs. 

This is because the OES survey contains none of the flaws the GAO identified in 

DBA determinations. Unlike DBA determinations, the OES uses scientific representative sampling techniques and makes appropriate adjustments for non-response. The survey has a very large sample size, and the BLS updates it annually. 

The OES is the most reliable occupational wage data that the federal government 

produces. 

As I acknowledged in my testimony, the OES cannot—by itself—meet the statutory requirements for DBA enforcement. The DBA covers both wages and benefits, 

but OES does not include data on employee benefits. However, OES figures meet 

the statutory requirements for setting DBA wages and serve as an appropriate 

benchmark for market wages. In a letter to Congress explaining its decision not to 

use OES figures, the Clinton Administration nonetheless expressly acknowledged 

this fact.5

Davis-Bacon Act Covers Little Residential Housing 

The EPI also objects to the specific comparisons between Davis-Bacon and OES/ 

market wages that I made in my testimony. Their main objection is that I compared 

DBA ‘‘building’’ rates with OES figures that include both nonresidential and residential workers. They argue that an average of DBA ‘‘building’’ and ‘‘residential’’ 

rates is much closer to OES wages than the ‘‘building’’ wages are.6 They argue that 

improving the accuracy of DBA determinations would therefore result in relatively 

little saving for taxpayers. 

This argument is highly misleading. The EPI correctly points out that DBA residential wage rates can be significantly lower than building or heavy construction 

rates. These residential determinations are riddled with the same inaccuracies and 

methodological flaws the GAO identified in the building determinations. That they 

differ markedly from each other is not surprising. 

However, the Davis-Bacon Act covers little residential housing. Less than 8 percent of direct federal construction spending goes to residential projects.7 An even 

smaller portion of state and local government construction spending—government 

some of which the federal subsidizes and is covered by the DBA—goes to residential 

projects.8 Most federally funded construction projects build government buildings or 

infrastructure. Lower DBA residential rates do little to reduce federal costs.9 The 

relevant comparison is the difference between market wages and DBA rates on 

projects the government actually pays for. 

Cross Industry and Nonresidential Building Rates Similar 

Contrary to the EPI’s assertions, nonresidential building rates do not differ significantly from the overall construction rates. Looking only at them would not 

change the finding that DBA rates substantially exceed market wages. 

The OES survey collects wage rates by occupation and by detailed industry. These 

detailed industries include residential building, nonresidential building, heavy civil 

and engineering construction, and specialty trade contractors. Unfortunately, the 

OES does not publicly release these industry-level wages for Metropolitan Statistical 

Areas. The MSA-level data only report occupational wages across all industries. 

I used cross-industry MSA data in my testimony to compare local Davis-Bacon 

and OES rates. Although national OES rates for just nonresidential building con-
102 

struction do differ from the cross-industry figures, they do not differ greatly. For example, nationwide, plumbers and pipefitters earn an average hourly wage of $24.10. 

In the nonresidential building sector, they earn $25.42 an hour. 

Table 1 shows national hourly wages for several construction occupations. The 

first line reports the overall cross-industry wage—the local-level figures I reported 

in my testimony. The next two lines report the wages for residential and nonresidential building construction. Nonresidential building wages are usually somewhat 

higher than the cross-industry construction wages. However, the difference is modest: only about 5 percent.10

The flawed DBA methodology significantly inflates the cost of taxpayer-funded 

construction projects. Using nonresidential building rates instead of the cross-industry figures does not change this finding. 

TABLE 1.—HOURLY WAGES BY CONSTRUCTION SECTOR 

Occupation/Industry Average Hourly 

Wage 

Carpenters: 

All Construction Industries .......................................................................................................................... $21.19 

Residential Building Construction .............................................................................................................. $19.72 

Nonresidential Building Construction ......................................................................................................... $23.19 

Cement masons and concrete finishers: 

All Construction Industries .......................................................................................................................... $19.00 

Residential Building Construction .............................................................................................................. $19.47 

Nonresidential Building Construction ......................................................................................................... $20.08 

Drywall and ceiling tile installers: 

All Construction Industries .......................................................................................................................... $19.79 

Residential Building Construction .............................................................................................................. $19.12 

Nonresidential Building Construction ......................................................................................................... $20.73 

Electricians: 

All Construction Industries .......................................................................................................................... $24.25 

Residential Building Construction .............................................................................................................. $21.65 

Nonresidential Building Construction ......................................................................................................... $24.07 

Plumbers, pipefitters, and steamfitters: 

All Construction Industries .......................................................................................................................... $24.10 

Residential Building Construction .............................................................................................................. $22.66 

Nonresidential Building Construction ......................................................................................................... $25.42 

Source: Department of Labor, Bureau of Labor Statistics, Occupational Employment Statistics, ‘‘May 2010 National Industry-Specific Occupational Employment and Wage Estimates’’ at http://www.bls.gov/oes/current/oessrci.htm#23 

Timeliness of Comparisons 

The EPI further objects to ‘‘comparing Davis-Bacon wage determinations which 

were in effect in 2011 with OES data from May 2009.’’ They argue that ‘‘[w]hen 

Davis-Bacon rates which were in effect in May 2009 are used, the apparent differences between the Davis-Bacon rates and OES rates are substantially lower.’’ 11

This argument is completely mistaken. I reported the most recent Davis-Bacon 

and OES rates at the time of the hearing.12 This is the appropriate comparison. Neither survey is, of course, immediately up-to-date. No agency can conduct a survey 

instantaneously. However, OES survey data are processed more rapidly and updated more frequently than Davis-Bacon determinations. This—along with its scientifically valid methodology—is one of the principal reasons to prefer OES figures. 

The Bureau of Labor Statistics updates OES figures each May with data from the 

previous year. Consequently, the OES always reports figures from the previous 12 

to 24 months. DBA surveys are much less current. The Labor Department currently 

takes three years to process DBA survey results. The Labor Department wants to 

reduce that time to 17 months, but—as the GAO reported—it is not close to meeting 

this goal.13

Once it releases determinations, the Labor Department can take years, even decades, to update them.14 For example, the Davis-Bacon building rates in Kent County, Michigan, date to 1987.15 The residential survey for Hillsdale, Michigan, has not 

been updated since 1979.16

The EPI suggests comparing OES surveys conducted in 2009 and released in May 

2010 with Davis-Bacon surveys primarily conducted before 2006 and released by 

May 2009. This comparison makes little sense and reveals nothing about the accuracy of either survey. 
103 

The EPI’s suggested comparison also reveals nothing about taxpayer savings from 

using BLS data. If Labor used OES figures, it would use the most recent data available. These are the correct figures to compare to current Davis-Bacon rates. 

Helpers and Apprentices 

The EPI finally complains that I do ‘‘not take into account that the surveyed 

Davis Bacon rate does not include apprentice rates and will therefore be higher than 

the average rates actually paid on a project.’’ 17 This charge reflects a misunderstanding of how the OES classifies low-skill construction workers. 

OES occupation categories follow the Standard Occupational Classification (SOC) 

system. As the EPI explains, construction unions use a formal apprenticeship system, and apprentices earn lower wages as they develop their skills. Merit shop (nonunion) construction firms typically use craft training programs and also pay entrylevel construction workers lower wages. 

The SOC classifies these less-skilled workers separately. The OES reports the 

wages of ‘‘helper’’ workers separately from the rates for fully experienced employees. 

Table 2 displays the difference in these wages for several occupations. Helpers typically earn about 40 percent less than experienced workers. 

TABLE 2.—WAGES FOR HELPER AND REGULAR CONSTRUCTION WORKERS 

Hourly Wage Rates 

Helpers Regular 

Carpenters ....................................................................................................................................... $12.93 $21.19 

Electricians ...................................................................................................................................... $13.23 $24.25 

Pipelayers, plumbers, pipefitters, and steamfitters ....................................................................... $13.18 $24.10 

Source: Department of Labor, Bureau of Labor Statistics, Occupational Employment Statistics, ‘‘May 2010 National Industry-Specific Occupational Employment and Wage Estimates’’ at http://www.bls.gov/oes/current/oessrci.htm#23 

In my testimony, I compared the journey-level DBA rates with the OES rates for 

fully experienced employees. The EPI objects that this does not include apprentices’ 

lower wages. My figures do not include helpers’ lower wages either. I reported an 

apples-to-apples comparison of the rates paid to fully experienced employees using 

Davis-Bacon rates and OES data. 

The EPI suggests comparing the OES rate for experienced workers to a weighted 

average of apprentice and journey-level DBA rates. This would deflate DBA rates 

to account for low-skill workers without similarly adjusting OES figures. This would 

present an inaccurate and misleading comparison. 

Conclusion 

The flawed Davis-Bacon determination methodology reports wage rates that differ 

significantly from those actually paid to construction workers. The EPI’s arguments 

to the contrary do not withstand scrutiny. The Occupational Employment Statistics 

survey uses a scientifically representative sample, is updated far more frequently 

than Davis-Bacon rates, and is an appropriate benchmark for market wages. Looking at non-residential building wages instead of the cross-industry wages only 

slightly changes the national averages. Comparing an average of apprentice and 

journey-level wages to the rates paid to experienced non-union construction workers 

would be misleading. 

The committee should also note what the Economic Policy Institute did not say. 

Not once did Mr. Eisenbrey and Dr. Belman defend the existing Davis-Bacon methodology as scientific or accurate. They kept silent because the methodology is indefensible. No professional economist could suggest using a self-selected sample to estimate wages or drawing statistical inference from a sample of five workers. They 

did not dispute the main point I made to the committee: The Labor Department 

uses a deeply flawed methodology to determine Davis-Bacon rates. 

This flawed methodology leads to Davis-Bacon rates that significantly exceed market pay. The savings from more accurate DBA wage determinations are real and 

substantial. Congress should seriously examine requiring the Labor Department to 

use scientific methods to estimate Davis-Bacon wages. 

Thank you again for the opportunity to testify about this important matter. 

JAMES SHERK, 

Senior Policy Analyst in Labor Economics, the Heritage Foundation. 

ENDNOTES

1 U.S. Government Accountability Office, Davis-Bacon Act: Methodological Changes Needed to 

Improve Wage Survey, GAO-11-152, March 2011, at http://www.gao.gov/new.items/d11152.pdf. 
104 

2 James Sherk, ‘‘Examining the Department of Labor’s Implementation of the Davis-Bacon 

Act,’’ testimony before the Committee on Education and the Workforce, United States House of 

Representatives, April 14, 2011, at http://www.heritage.org/research/testimony/2011/04/examining-the-department-of-labors-implementation-of-the-davis-bacon-act. 3 Ross Eisenbrey and Dale Belman, ‘‘Supplemental Testimony: The Department of Labor’s Implementation of the Davis-Bacon Act,’’ Economic Policy Institute, May 4, 2011, at http:// 

www.epi.org/analysis—and—opinion/entry/supplemental—testimony—the—department—of—labors—implementation—of—the—davis/. Ross Eisenbrey is Vice President of the Economic Policy 

Institute; Dr. Belman teaches at Michigan State University. 4 Ibid., p. 2. 

5 ‘‘BLS’s Occupational Employment Statistics (OES) survey is a feasible/viable approach for 

wage rates in that it produces: wage rate estimates by occupation for individual Metropolitan 

Statistical Areas (MSAs) and for nonmetropolitan areas; and, data by SIC code which can be 

differentiated between building, residential, and heavy/highway general contractors.’’ Letter 

from Bernard Anderson, Assistant Secretary for Employment Standards, to Senator Arlen Specter and Senator Tom Harkin, January 17, 2001. 6 Eisenbrey and Belman, ‘‘Supplemental Testimony: The Department of Labor’s Implementation of the Davis-Bacon Act,’’ p. 2. 7 U.S. Census Bureau, ‘‘Federal Construction,’’ at http://www.census.gov/const/www/ 

fedpage.html. Figures seasonally adjusted. 8 U.S. Census Bureau, ‘‘State and Local Construction,’’ at http://www.census.gov/const/www/ 

statepage.html. Figures seasonally adjusted. Just 2.7 percent of state and local construction 

spending in 2010 was on residential projects. 9 Additionally, since DBA determinations are minimum rates, lower rates do not necessarily 

imply lower construction costs. The government would need enough market power in a locality 

to drive wages below market rates for an inaccurately low DBA determination to reduce costs. 10The results in particular localities will differ—above and below—from this national figure. 

By definition, this does not affect the average national Davis-Bacon premium. 11 Eisenbrey and Belman, ‘‘Supplemental Testimony: The Department of Labor’s Implementation of the Davis-Bacon Act,’’ p. 2. 12Since then, the BLS released the May 2010 occupational wage estimates. 13 U.S. Government Accountability Office, Davis-Bacon Act: Methodological Changes Needed 

to Improve Wage Survey, pp. 12—18. 14One component of DBA surveys is regularly kept up-to-date: union wage determinations. 

The Labor Department updates union-prevailing DBA rates without conducting a new survey 

when unions negotiate a new collective bargaining agreement. Since union wages are typically 

higher than non-union wages, this raises DBA rates. However, the flawed DBA survey reports 

that union wages prevail in almost two-thirds of sampled jurisdictions. Actual union density 

stands at 13 percent in the construction industry, and union wages prevail in only a handful 

of urban areas. This misreporting of the prevalence of union wages introduces a further inaccuracy into the flawed Davis-Bacon determinations. 15 U.S. Government Printing Office, Davis-Bacon Wage Determinations by State, General Decision MI20100006, at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=DavisBacon&docid=MI20100006. 16 U.S. Government Printing Office, Davis-Bacon Wage Determinations by State, General Decision MI20100043, at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=DavisBacon&docid=MI20100043. 17 Eisenbrey and Belman, ‘‘Supplemental Testimony: The Department of Labor’s Implementation of the Davis-Bacon Act,’’ p. 3. 

[Whereupon, at 11:42 p.m., the subcommittee was adjourned.] 

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