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Davis Bacon Act suspended; replaced by supply and demand
Posted by: Jon Henke on Thursday, October 13, 2005

(via Tim Worstall) Bob Herbert is angry at people who have the temerity to believe free markets (capitalism! ha!) could be a good economic system...
Mr. Bush is the standard-bearer par excellence of his party's efforts to redistribute the bounty of the U.S. from the bottom up, not the other way around. [...] One of the first things the president did in the aftermath of Katrina was to poke his finger in the eyes of struggling workers by suspending the requirements of the Davis-Bacon Act in the storm-ravaged areas. Passed during the Great Depression, the law requires contractors on federally funded construction projects to pay at least the prevailing wage in the region.

This is one more way of taking money from the working poor and handing it to the wealthy. A construction laborer in New Orleans who would ordinarily be paid about $9 an hour, the prevailing wage in the city, can now be paid less. So much for the president's commitment to fighting poverty.
Where to start? Perhaps with Mickey Kaus's explanation: "Preserving Davis-Bacon may endear Democrats to the AFL-CIO's construction unions, but it's a slightly trickier case to make to voters—"Hey, this will really slow rebuilding and make it way more expensive for taxpayers!""

Next, let's see how this is working out for the workers in Louisiana...
Despite reports that Louisiana workers are having to compete against out-of-state workers for lower wages, a contractors association said Tuesday that wages are in fact rising around the state because of the demand for workers in the New Orleans area.
[...]
Ken Naquin of the Association of General Contractors said Tuesday that workers in other parts of the state are walking off job sites because they're being offered more money in southeast Louisiana.

"They're paying a premium above the Davis-Bacon Act and guaranteeing overtime," Naquin said at a Tuesday panel organized by Kean Miller & Associates. "There are jobs for anybody that wants to work."
And Mississippi:
Before Katrina the tight job market and Mississippi's traditional low pay kept the offers hugging the minimum wage of $5.50 an hour, maybe $6.50 on a good day. Today, with Katrina's mess visible on every block, wages for an unskilled laborer begin at $8 and often run to $11 an hour.
Or Alabama:
Contractors are frustrated at not being able to find enough qualified workers, according to Estes. "We had a huge shortage before the hurricane," she said. "Most of our guys had a six- to eight-month backlog of work." Many workers are taking jobs in Mississippi, where the Federal Emergency Management Agency pays about $14 per hour for help removing debris, and the casinos are offering higher wages to contractors, trying to make sure that their facilities are up and running as quickly as possible, builders said.
Advantage: Free Markets!

And finally, let's recall that back in 1993 a bill was submitted in an attempt to raise the baseline requirement for Davis-Bacon implementation from the current $2000 to "$100,000 for new construction".

That bill was sponsored by Senators....Kennedy and Feingold.

[cross-posted at Chequer Board]
 
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Previous Comments to this Post 

Comments
On the other hand, I could see one possible use for construction unions, If they kept the illegal workers out.
 
Written By: Kyle N
URL: http://
Many of those high wage jobs are going to illegal aliens. Some came from other states, but no doubt many are new arrivals.

So, here’s more on the "free" market some Republicans support:

* Mexico is making money off sending us people (look up ’remittances’)

* Contractors or someone else are making a huge profit on the blue tarp installation.

* American workers are not getting those jobs; if they try, won’t the illegal aliens just undercut them?

* Those workers are living in unsafe conditions.

* The federal government is paying for all this.

Sweet! I’m sure this will redound to the GOP’s benefit.
 
Written By: TLB
URL: http://lonewacko.com/
You’d think that they’d be interested in the fact that the DBA was mostly designed to protect white workers from competition by "cheap colored labor" from that was moving up from the South.

I mean, after all the crap they’re giving Lieberman over going to the NR anniversary bash and all.
 
Written By: Terry
URL: http://
Terry: All we need to do now is get in a time machine and make Bush the president in the 1930s and that argument will make sense.
 
Written By: TLB
URL: http://lonewacko.com/
Dear TLB:

Luckily, your anti-immigrant theories, while perhaps plausible on their face, don’t hold. Immigrants don’t decrease the wages for even low-skiled US workers. See a nice selection of links here, including to this valuable NBER study on the issue.

I’m truly sorry that you’re so economically ignorant as to think that the existence of remittances from Mexican workers in the US must make the US or US workers worse off. Nothing could be further from the truth, as all the reputable scientific studies have shown.

I could attempt to summarize the various studies, but they do a better job discussing the issues than I could, and there isn’t really so much room here to discuss it.
 
Written By: John Thacker
URL: http://
Those workers are living in unsafe conditions.

Hmm. I can’t figure out why you care. After all, you seem to think it horrible that the immigrants desperately want to escape crushing poverty in their home country and send money home to help their families, (wrongly, as it turns out) worrying that it might take money away from Americans who, while poor for Americans, are richer and better off than the immigrants. And yet you’re worried about these "unsafe conditions" that the workers are choosing to live in over the conditions in their home countries? I’m sorry, I don’t buy it. What, you’d rather that they wallow in horrible poverty against their wills in their home countries than be richer in ours? "Out of sight, out of mind?" They can go be poor in some other country, just don’t come here and dirty up the place?

I’m trying not to be upset and morally disgusted at you because I realize that so much of your viewpoint is because of your ignorance of economics.
 
Written By: John Thacker
URL: http://
TLB:
Sweet! I’m sure this will redound to the GOP’s benefit.
That’s mildly interesting, but none of it is relevant to Davis Bacon or to my post.
 
Written By: Jon Henke
URL: http://www.QandO.net
This conversation is... bizarre. Well, at least the opening article was good, Jon.
 
Written By: Rosensteel
URL: http://
I’m sorry, I don’t buy it. What, you’d rather that they wallow in horrible poverty against their wills in their home countries than be richer in ours?
How about maybe come over legally and work? Having been through the system with my wife... I have little tolerance for those who choose to act illegally when it comes to immigration.
 
Written By: meagain
URL: http://
I would rather we enact a guest worker law.
 
Written By: Walter E. Wallis
URL: http://
Terry: All we need to do now is get in a time machine and make Bush the president in the 1930s and that argument will make sense.
Since it still serves its intended purpose, I think we can dispense with your time machine and just congratulate Bush for getting rid of( to the extent possible without Congressional action) the nasty, racist law that the Dems in question are supporting.
 
Written By: Terry
URL: http://
Thacker: Pretty funny. A selection of links about British "migration" when we’re talking about what’s going on in New Orleans right now.

Henke: My comments have everything to do with your assertion that we’re seeing the wonders of "supply and demand" working in New Orleans right now.

Perhaps you should read the links: what we’re seeing in New Orleans right now is massive corruption, corporatism, and an un-American scheme that gives jobs that could go to American workers to new arrivals from Mexico.

I strongly encourage you and every other "free" marketeer to support this scheme, as I’m quite positive that U.S. voters will never find out about this and even if they do they will not consider it a disgusting scandal.
 
Written By: TLB
URL: http://lonewacko.com
A nice roundup of links!
 
Written By: MaxedOutMama
URL: http://maxedoutmama.blogspot.com
I’d feel if it was a free market. When we issue sole source contracts to GOP friendly companies we have already lost the ability to let the invisible hand distribute resources efficiently. If FEMA is going to insure that the fat cats get the big bucks we might as well cut labor some green too.

To be fair it should either all free market or none of it.

 
Written By: cindy
URL: http://
I wish I’d taken a picture of this to preserve it for posterity, but I remember seeing at a roller rink a sign that, in paraphrase, said that no skater would be allowed to go faster than the average skating speed, and that this was for the benefit of the slower skaters. Evidently nobody but me realized that not all the skaters can be below average in speed, or that slower skaters would make some of the faster skaters be going faster than the average, even if they weren’t skating at a dangerous speed.

The prevailing-wage aspect of the Davis-Bacon Act has always reminded me of that sign for some reason. I, for one, am glad to see it suspended, if on no other grounds than that it represents grievous mathematical (and economic) illiteracy enshrined in law.
 
Written By: Wacky Hermit
URL: http://organicbabyfarm.blogspot.com
Davis Bacon.
Wasn’t that the one who taught typing?

(ducking)

 
Written By: Bithead
URL: http://bitheads.blogspot.com
free markets my eye !

free to bull the table if you got the bucks!
 
Written By: Gil
URL: http://
John Thacker

I am not buying, either literally or figuratively, your valuable studies. Assuming that you have read them, perhaps you can explain to us how they managed to repeal the laws of supply and demand. For generations, economists have told us that increasing the supply of a commodity, including labor, will drive down the price of that commodity. The study you cited claims that increasing the supply of labor drives up the price of labor. Truly an economic miracle.
 
Written By: timactual
URL: http://
TLB—That was an almost-clever bait-and-switch. The article linked only reports what companies are actually being paid. It only mentions that there is "room for profits." The article also points out that the contractors must truck supplies long distances and "feed and house armies of workers." It costs the contractor more to deliver a service. Thus, it costs the customer more. As for illegal aliens, the linked article has no facts about illegals whatsoever. Your article about Mexico said their proposal was rejected. Which means Mexico won’t make money. And where does your fourth linked article show dangerous living conditions?


You’re batting zero, my friend. Try harder next time.

 
Written By: CyanCyde
URL: http://
CyanCyde: I have no idea which article you’re referring to.


But, let me help you understand this.


Eventually, millions of Americans are going to learn how much was spent on rebuilding and what it was spent on and who got the money. The Knight-Ridder article about the blue tarps is just the start.


And, those millions of Americans are going to do the math, just like I did. They’re going to see that spending $2500 for a couple hours work is an outrage, and it’s even worse when illegal aliens are paid to do that work. They’re going to consider that overhead extremely excessive, and they are not going to be happy about it. And, those politicians and political ideologies that consider that "supply and demand" are going to hear about it.


As for illegal aliens, the linked article has no facts about illegals whatsoever.


Which article? There are lots of links here, and several of them are about that topic.


Your article about Mexico said their proposal was rejected. Which means Mexico won’t make money.


I don’t know whether you’re lying or just ignorant, but that article describes a letter from Rep. Charlie Norwood. He and president Bush are not the same person.


While Norwood is opposed to Vicente Fox’s offer, Bush has taken steps to make it easier for illegal aliens to come to the U.S. and take rebuilding jobs. Bush doesn’t need to approve any official offer from Fox in order to do that, he just needs to have done what he did: basically tell businesses that they won’t be fined for hiring illegals.


Once again, good luck to all you "free" marketeers. I’m sure the American public is going to look kindly on those who support what’s going on in NO.

 
Written By: TLB
URL: http://lonewacko.com
lonewacko, why is it you are very comfortable sharing the riches wealth in this country, but you don’t want the wealthiest county in the world share its wealth with its neighbors? Be less for your pocket I suppose.
 
Written By: Wilky
URL: http://
I read Wilky’s comment and felt so guilty that I just sent a check to my local Mexican consulate. Share the wealth!

Meanwhile, for some background on the big picture that ties all of this together, I’d suggest looking in to the New Partnership in North America plan that seeks to integrate the U.S., Canadian, and Mexican economies, turning North America into an EU-style superstate. Both the Cato Institute and the CFR have come out with studies advocating this plan; Sen. John Cornyn (author of a "guest" worker scheme) featured the Cato plan in Senate testimony.

The "free" traders seem to have trascended national boundaries, offering new and creative definitions for words like "sovereignty" and "patriotism".
 
Written By: TLB
URL: http://lonewacko.com
I was referring to the four articles you linked in your first post. I didn’t tackle them in order because I was tired—that is my fault.


The first link you posted which you specifically tell us is about illegal aliens getting high-wage jobs has no facts about any illegal aliens getting jobs, merely this: Of course, a very large part of those "immigrants" are actually illegal aliens.


Granted, in the second link, I missed that the letter was by Norwood. So...wouldn’t that make the article rather pointless?


Third link. Blue tarp tacking. Like you, it doesn’t consider what is going into the overhead. The Seattle times article, which is linked by your article, even says that the three companies in question have "spent millions" to get everything set up. Do we expect them to just take losses?


Fourth link. Dangerous living conditions. It says nothing about dangerous conditions, and neither did the SFC article it referred to. The SFC report says more than the other links put together, including actual facts about illegal immigrants. But it also makes the point that there are more jobs than people to do them. With demand that high, and with so few workers, even 500 potential illegals apparently isn’t denting the job market. So much for undercutting. Which gets back to the point Jon made in the original post.

 
Written By: CyanCyde
URL: http://
The first link is from 9/12 and contains my prediction of what would happen. As we see now, it happened and is still happening.

The second link obviously isn’t pointless, since it shows that some politicians get it. Can anyone imagine our president saying anything similar? Of course not, Vicente Fox might be upset with him.

Based on my past coverage of illegal immigration, I’m going to predict that there are many more than 500 illegal aliens there now, and many many more will come and/or be sent there. And, they’ll lower the wages for Americans who can find work: without them, wages would be even higher.

As for the living conditions:

Lopez... sleeps on the floor of a dank motel room with four other migrants... The motel... was flooded in the storm, forcing the removal of all of the furniture, including beds. But it is packed with migrant workers... "It’s also much better to be in a hotel instead of the outdoor camps where we were getting bit by mosquitoes."
 
Written By: TLB
URL: http://lonewacko.com

 
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