 |
||||
FROM DAVIS-BACON TO MICHIGAN’S PREVAILING WAGE ACT Michigan’s Prevailing Wage Act became law in 1965. Like the provisions of its federal counterpart, the Davis-Bacon Act, the prevailing wage was enacted for two primary purposes:
The idea of legislating a prevailing wage law began in the late 19th Century as a way to assist workers trying to support themselves and their families. Initially, the rationale was poignant but limited: to lessen the economic exploitation of an ever-growing number of hourly wage workers. A second reason that later gained broad, public support – and the one most often voice by political reformers – was that forcing workers to work for low wages was contrary to the nation’s goal of raising the standard of living for all Americans.
In that early industrial era, almost all jobs were low paying and worker protections were non-existent. Even worse, though the courts had ruled otherwise, those who sought change using collective action were still often viewed as part of a ”criminal conspiracy.” For workers, conditions couldn’t be worse. While the economy as whole continued to expand, most industries (and their workers) suffered from fairly regular and sometimes extreme business fluctuations – making work relationships tenuous at best and making job security an all but impossible goal to achieve.
In such an economic environment, employers were free to “bargain” with workers – primarily to see which one would work for the lowest wage. With exploitation so pervasive, workers could find themselves working up to twelve or more hours per day and seven days a week for less than subsistence. For workers with families, their economic plight often made it necessary to have more than one income – forcing both parents to work many hours each day for meager pay and often forcing children to work instead of going to school.
However, even before the end of the last century, many Americans began to question why such conditions were afflicting an ever-greater number of workers. More to the point, a growing number came to believe that, having an economic system that favored businesses which paid the least possible wages was clearly incompatible with our country’s founding principles of freedom, equality, justice, and the “pursuit of happiness.” In fact, many reformers went further, charging that it was blatantly hypocritical for America to espouse the benefits of a “free enterprise system” while the reality was increasing impoverishment.
In 1891 Kansas became the first state to attempt to alleviate these problems by passing, the Eight-Hour Bill, which included the idea of a prevailing wage. It is of interest to note that, around the turn of the century, wages were generally paid on a per diem basis. The Kansas Eight-Hour Bill required that the minimum per diem wage that prevailed before passage of the law would remain at that rate for an eight hour work day on all public works projects. Over the next three decades many states adopted legislation similar to the Kansas bill and by the end of the 1920s forty-one states had passed some sort of prevailing wage provision.
The
Construction Industry Before Davis-Bacon: The “Roaring 20’s” During the “Roaring ‘20s” the construction industry generally and workers in particular, became increasingly demoralized as underbidding and cutthroat competition became pervasive. For example, in 1927 New York contractors eagerly sought the many federal contracts being awarded to build a Veteran's Hospital. However, because the New York contractors submitted bids based on wages prevalent in the local labor market, they found themselves under-bid by an Alabama “construction company.” Once the contracts had been awarded, the Alabama company imported all its workers from its home state where wage levels were substantially lower than those paid in New York. Coming to the defense of his local businessmen, Representative Robert Bacon submitted a bill to Congress that required any contractor awarded a federal contract to pay its workers at least the “prevailing wage” in the local area. Though Bacon’s bill was initially defeated, his proposed legislation would eventually become the basis for the Davis-Bacon Act. Representative Bacon justified his proposal as follows:
The Need for a Prevailing Wage Standard In the early 1930s, in the depths of the Great Depression, Congress was under enormous pressure to deal with the growing problems arising out of unfair contract-labor practices on public works projects such as those denounced by Representative Bacon. By awarding federal contracts in this environment, the federal government became involved as an "unwilling collaborator with unscrupulous firms that sought to get government business by cutting wages. "
For many in Congress (both Republicans and Democrats), the structure of the federal bidding process unconscionably tended to favor contractors with low-wage, low-skill laborers (even if family-wage contractors were otherwise superior in terms of efficiency, management of sub-contractors, quality of work, and profit rates). Compounding the problem further, the low-wage, low-skill contractor too often balanced out poor efficiency, poor quality, and poor management by grinding down the wages and benefits of its laborers. Nevertheless, the federal bidding process might—and often did—require the awarding of contracts to such firms in preference to an efficient, well-managed, high-quality product, family-wage firm.
In effect, it had become clear to Congress that in order to combat such unfair and damaging contracting practices, and to establish better and more productive standards of competition, a means of setting minimum standards for wage rates on public construction projects was necessary. The response was not long in coming from the Hoover Administration and its Republican allies along with Democrats in Congress.
Passage of the Davis-Bacon Act and Early Refinements
The Davis-Bacon Act of 1931 was sponsored by two Republicans, Representative Robert Bacon (R-NY) and Senator James Davis (R-PA). The Act was designed to address the above and other such problems by requiring wages paid on federally financed projects to be no lower than the wage standard in the community where the project is to be built. Thus it placed a floor on wages paid, and directed contractors to compete on the basis of management efficiency, profit rates, quality of work, and better management of sub-contractors and materials suppliers.
Yet the original 1931 Act was short and left a number of loopholes. Clever contractors found numerous ways around the Act's requirements. In response to this evasion of the Act, President Hoover issued an executive order the following year (1932) to strengthen its enforcement:
The Act also provided that the President of the United States, in the case of national emergency, could suspend the wage provisions of the Act. The Act has been suspended three times since 1931:
The “Anti-Kickback" Act
Another method dishonest contractors used to evade the Act was to pay their employees the prevailing wage rates in the first instance. Then require employees to "kick back" a portion of their wages under the table as a condition of continuing employment or in the face of other sorts of threats. These "kickback" schemes were rampant and lead to the passage of the Copeland "Anti-Kickback" Act, sponsored by Senator Royal Copeland (R-NY) in 1934. This Act made it illegal to induce an employee "to give up any part of the compensation to which he is entitled under his contract of employment. " The Copeland Act also required employers to file weekly reports of wages paid to employees on a given project, incorporating two of the provisions of Hoover's 1932 executive order.
Congress Strengthens the Davis-Bacon Act in 1935 The Davis-Bacon Act was substantially amended and clarified in 1935. As amended, the Act required that
The enforcement provisions of the Act were also strengthened.
Several provisions of Hoover's executive order were rolled into the Act itself. Contractors were now required by statute to post prevailing wage rates at the project site. Contractors were also required to pay wages at least once a week. This latter provision was designed to prevent contractors from devising methods of keeping some of the earned wages, including variations on the "kickback" abuses that were also outlawed. The Davis-Bacon Act Continues to Enjoy Strong Support in Congress But . . . Since the 1930’s, there have continued to be persistent attempts to repeal or substantially undermine the provisions of the Davis-Bacon Act. However, while the Davis-Bacon Act has continued to receive strong support from a majority in Congress, its supporters know they must remain ever vigilant and prepared to vigorously defend it anew.
In addition, and of even greater concern since the 1980s, the struggle over the prevailing wage has spread to the states. During the past two decades, nine states have repealed their prevailing wage laws. In other states, only successfully fought epic battles between supporters and a host of anti-union organizations and non-union contractors have kept their states from the same fate. A litany of struggles that is well-known to all prevailing wage supporters in Michigan -- a state which has been at or near the epicenter of some of the fiercest struggles in recent years. (For more, read Professor Daniel Kruger’s article “Why Keep Michigan’s Prevailing Wage?”)
MICHIGAN’S PREVAILING WAGE ACT EXECUTIVE SUMMARY
Michigan’s Prevailing Wage Act became law in 1965. Like the provisions of its federal counterpart, the Davis-Bacon Act, the prevailing wage was enacted for two primary purposes:
Since 1965, Michigan's economic and social structures have benefited from this progressive public policy. This Prevailing Wage summary details the positive aspects of Michigan's Public Act 166 of 1965.
THE REAL FACTS ARE:
|
||||