Statements on Introduced Bills and Joint Resolutions: S. 195
Senator Jeff Flake
Congressional Record: 115th Congress
24 January 2017
S. 195. A bill to expedite the deployment of highway construction projects; to the Committee on Environment and Public Works. Mr. FLAKE. Mr. President, I rise to speak of legislation I am introducing today--the Transportation Investment Recalibration to Equality Act, or the TIRE Act. The TIRE Act would suspend the Davis- Bacon prevailing wage requirement on all transportation-related infrastructure contracts. This would free up billions more in taxpayer dollars to be spent on jobs and on projects. For those who are not familiar, Davis-Bacon is a Depression-era law that requires contractors on Federal construction projects to pay workers no less than the so-called local prevailing wage. Now, since its enactment over 80 years ago, the Department of Labor has been unable to devise an effective system for determining prevailing wages. In fact, a 2004 Department of Labor inspector general report revealed that Federal wage reporting surveys, which are a key metric used to determine prevailing wages, are fundamentally flawed. Of all the wage report surveys reviewed by the IG, 100 percent contained flaws. Let me say that again: 100 percent of all the surveys were flawed. In addition, some of the wage surveys have not been updated since the 1980s. The bottom line is that every time Davis-Bacon applies to a Federal project, less money is going to construction and more money is going to meet onerous wage requirements. According to the Beacon Hill Institute, Davis-Bacon forces taxpayers to pay 22 percent above the market rate for labor on Federal infrastructure projects. This is largely the result of disproportionate union participation in flawed wage surveys that skew Federal decisionmaking. Now, despite representing only 4 percent of the construction industry, unions are able to leverage their clout with Federal bureaucrats to inflate more than 60 percent of prevailing wages--talk about benefitting a few at the expense of the many. Here is some perspective on what it means in real dollars. In 2016, the Federal Government spent $23 billion on Federal construction projects, and 2.1 billion of these dollars was spent on above-rate labor costs. Again, $2.1 billion of the $23 billion spent was on above-market-rate labor costs. This means that nearly 10 percent of all Federal construction spending last year went to inflated contracts. Not only does this translate into less construction funding going to actual construction, but according to George Mason University, it results in roughly 30,000 lost construction jobs. So we lose both on the projects and the jobs that are created. More broadly, it discriminates against small businesses that don't have the resources to meet onerous Federal reporting and compliance requirements. Now, while it may be well-intentioned, Davis-Bacon ends up eliminating decent-paying construction jobs and hampering infrastructure spending. I have often talked to State and local officials who will say that if you have two bridges across the same river, even if they are just 100 yards or 200 yards or a mile apart with the same underlying costs--or what should be the same underlying costs--if there are Federal moneys involved in one and no Federal moneys involved in the other, the one with Federal moneys will cost significantly more, and a big portion of that is because of Davis-Bacon requirements. Now, in this body, we have to look for issues to bridge the partisan divide. It turns out that one of these issues is bridges, roads, dams, and other infrastructure projects. Fixing our Nation's crumbling infrastructure is a top priority for many in Congress, and the new administration has touted a large infrastructure package as one of its agenda items. However, despite the bipartisan consensus on both ends of Pennsylvania Avenue for infrastructure investment, visions for the road ahead actually diverge. With a projected pricetag north of $800 billion for highways and bridges alone, every Federal dollar needs to be spent as efficiently as possible. The TIRE Act will return wage determinations for Federal transportation projects where they belong, and that is the market.
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