Policy: Labor

Labor Department: Wage data used for Davis-Bacon may be flawed

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Politics,Beltway Confidential,Sean Higgins,Labor unions,Labor,Economy

A top Labor Department official told the House Education and Workforce Committee Tuesday that the underlying data they provide to calculate wage rates under the Davis-Bacon Act had several limitations and could include “large sampling error(s).”

Davis-Bacon is a law that requires contractors engaged in any federally funded construction project to affirm that they are paying workers the prevailing local wage. Big Business dislikes the law, calling it a time-consuming and often subjective process. The law is strongly favored by Big Labor, though, since it serves to remove any economic incentive to hire nonunion labor.

Much of the information for determining the wages comes from the Labor Department’s Occupational Employment Statistics survey.

In testimony before the committee Erica Groshen, commissioner of the department’s Bureau of Labor Statistics, said that the OES data had “certain limitations.” She explained:

The OES design allows us to provide estimates for some very small occupations at detailed levels of geography. However, some of these estimates are based on responses from only a handful of employers, which may result in large sampling error or require suppression of the data to protect the confidentiality of individual respondents.

The OES program does not gather information on all attributes that might be of interest when examining occupational wages. For example, the OES does not have data on license requirements, skill level, or years of experience. Although the OES estimates are available for areas that cover the entire geography of the country, the estimates are not available for every geographic breakdown that users might want. For example, we cannot produce estimates by county. And, the OES collects data from business establishments, nit by worksites or construction project sites. A construction business may have multiple projects in the same area or in different areas. Also, OES does not measure total compensation, and therefore does not include overtime pay or benefits. Nor does OES collect information on hours or provide wages by part-time versus full-time  jobs.

Rep. Tim Walberg, R-Mich., chairman of the Workforce Protections Subcommittee, cited a 2011 Government Accountability Office report that found about 25 percent of the final wage rates were based on surveys of fewer than seven workers. It also found that 46 percent of the prevailing wages for non-union workers were based on decade-old data.

Democrats saw the hearing as little more than opportunity to attack the law. Rep. Tim Bishop, D-N.Y., dryly noted that the name of the committee included the words “workforce protection,” adding: “I cannot think of anything more protective of workers than ensuring they are paid a fair wage.”

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