This Labor Day, Celebrate Your Local Flagman

by Morgan Reynolds
Published on LewRockwell.com September 3, 2012

A few weeks ago I was charging along on U.S. 50 in West Virginia, enjoying the state’s great August weather during a brisk, twisty ride up a mountain on my motorcycle. Then east of Aurora I turned south onto WV 24 and soon encountered a flagman stopping traffic for highway repair work. I was the sole motorist there for a while and it didn’t take me long to dismount from my black Honda ST1300 and strike up a conversation with the flagman.

She was an attractive young lady, friendly too, an undergrad at WVU. After a few minutes of conversation, ice appropriately broken, I asked her what she made at her job. Somewhat embarrassed, she answered, “$35 an hour.” “Wow, that’s incredible,” I responded. I blurted out ‘incredible’ as anyone might, even though I knew right away why she was overpaid. It’s called the Davis-Bacon Act. In the absence of this intervention, of course, her market wage for performing such unskilled work would have been more like $12 an hour. Any responsible, able-bodied adult could immediately and competently perform her job of talking into a walkie talkie and turning the sign from “STOP” to “SLOW” and back again. Oh yes, some days she drove the “FOLLOW ME” pick-up truck too.

My dear wife was none too happy to hear what the flag(wo)man made. Pat exclaimed, “But I’m responsible for the lives of all these patients!” Well, I guess the flagman could reply that she’s responsible for highway worker and motorist safety too, but does anyone see these responsibilities and skills demanded as comparable? Pat is an RN who graduated from a prestigious Philadelphia nursing school back in 1967, earned a bachelor’s degree in business at a small West Virginia college in the 1990’s (salutatorian), and held many responsible positions in nursing over the years. She currently works part-time as an RN for a nursing home chain in Arkansas, traveling the state as necessary and earns $28 an hour with few fringe benefits, most prominently two weeks paid vacation annually. RNs average $33 an hour nationally and $69,000 per year.

Residents of the mountain state earn only about 80% of U.S. median or mean hourly wages, and average under $18 per hour across all occupations. West Virginia is saved only by Mississippi from being the lowest income state. In Preston county WV, home of highway 24, the average resident’s weekly pay is $704 while nationally average pay across all occupations and industries is $955. The lovely coed flagman would make $1,400 per 40-hour week, twice that of the typical wage earner in Preston county and considerably above average national pay too.

The Davis-Bacon Act was passed in 1931 after a sharp decline in construction activity at the beginning of the Great Depression. The law requires that workers on federally financed construction be paid wages at “local prevailing rates” for comparable construction jobs. The clearly stated intent was to protect local workers from competition (horrors! competition! be gone!) by migrant workers and contractors. Many contractors and building trades unions welcomed monopoly protection from what one congressman declared “carpetbagging sharpie contractors.”

The ambiguity and virtual impossibility of determining what exactly is the “prevailing” wage rate for each occupation has allowed the U.S. and state departments of labor (like WV) administering their little Davis-Bacon Acts to fix minimum rates at union wage rates in about half of its wage determinations. Government-determined wage rates sharply compress the wage structure compared to market rates too. In Preston county WV, for example, federal construction wage minimums range from $37 per hour in wages plus fringes for Class 3 Laborer, which includes flagman, to $48 per hour for certain power equipment operators and $49 per hour for electricians at the top of the “labor aristocracy” level. Even the West Virginia Division of Labor imposes a rate of $30.58 for a flagman in Preston county. Don’t ask what the Davis-Bacon labor rates are in New York City. OK, just double those in Preston county WV and you will be close.

A wide variety of groups including the Government Accounting Office, The New York Times, the U.S. Chamber of Commerce, Associated Builders & Contractors, and many economists have urged repeal of the act(s). Construction workers are among the highest paid in America although only about 20 percent of all construction work is regulated by Davis Bacon and the parallel state governments’ “little” Davis-Bacon acts. Ten states have repealed their little Davis-Bacon acts and eight states never had one.

Among the deleterious effects of governmental overpricing labor is sharply boosted cost of building and maintaining “infrastructure” including schools, streets and highways, ports, and airports, probably 30 percent more expensive, thereby ripping off taxpayers; reduced employment among unskilled and low skilled labor; shriveled “stimulus” impacts of government spending; and jobs and income transferred from local contractors and their employees to organized labor and unionized contractors. Davis Bacon also discourages minority contractors, most of whom are nonunion, from bidding on government contracts, contrary to government policy aimed at favoring minority enterprises.

Happy Labor Day!

This entry was posted in Economics. Bookmark the permalink.

6 Responses to This Labor Day, Celebrate Your Local Flagman

  1. More than the 38 suicides in Afghanistan last month . :Juliette Kayyem ,worked for GWB , and write for the Globe ,here is her headline on Labor Day “,WARS NOT EVEN WORTH A MENTION “.Dodge by all politicians in 2010 and certainly this year . This is where i found the article about the Suicides .My take on this is not Printable .

  2. Robert E. Salt says:

    Gives new meaning to bringing home the Bacon.

    • Wish I’d thought of that!

      • I received the following email on the article, reprinted with permission:
        Morgan,

        Another factor in the passage of Davis-Bacon was specifically keeping blacks off work forces on federal projects. The authors of the law were quite open about that. Ironically, the biggest supporters of D-B today are black leaders and politicians, just as the blacks are most vociferous in favor of Planned Parenthood, which was founded by a person who openly believed that blacks were of an inferior race and needed to be upgraded via eugenics.

        You weren’t that far from our place when you were on 50 in Preston County. We live in Garrett County, Maryland, in Finzel, just off I-68. Hope you are doing well.

        Bill

        William L. Anderson, Ph.D.
        Professor
        Department of Economics
        College of Business
        Frostburg State University
        Frostburg, Maryland 21532
        Email: banderson@frostburg.edu

        • Another email I received, modified to protect the identity of the author:

          Dear Professor Reynolds,
          >
          > I was delighted to see your article in today’s Lew Rockwell news. I am (unfortunately) very familiar with Davis Bacon, as I administer construction contracts for a [federal agency].
          > Myself and some co-workers detest the act, however, our hands are tied by big brother. Davis Bacon is so typical of Government interference to the “nth” degree. I see the wages
          > that the workers make, as I deal with the certified payrolls, along with the field audits on my contracts, among many other tasks. I told one of the construction guys that worked on a job, “I should
          > have skipped college and been a union laborer” and he said “well it isn’t as good as it use to be”. Huh? Lets see, I worked my way (also had a few loans) through undergraduate
          > school, then went to work in the “real world” where I attended school to get my MBA at night (luckily my employer paid for most of my masters). While I was schooling, this laborer was working
          > and piling up a huge amount of money, benefits, retirement, etc. I say to myself “he will have a much better and earlier retirement than I will”.
          >
          > With the above said, what can we the people do? I know countless efforts have been made to repeal Davis Bacon, and of course nothing ever happens due to all the corruption.
          > Short of not voting for Obamney, what more can we do?
          >
          > Thanks for the great article!
          >
          > Respectfully,
          >
          > Ms. Z

          Follow up:
          Thank you Morgan. By all means please post it on your blog! I see so much waste in my job, it is sickening. I try to do my part by negotiating better pricing on contracts, however, my (our) hands are tied in so many ways.

          Have a great day!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s