[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]






 EXAMINING THE DEPARTMENT OF LABOR'S IMPLEMENTATION OF THE DAVIS-BACON 
                                  ACT

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, APRIL 14, 2011

                               __________

                           Serial No. 112-18

                               __________

  Printed for the use of the Committee on Education and the Workforce








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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Dale E. Kildee, Michigan
Judy Biggert, Illinois               Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania    Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Duncan Hunter, California            Lynn C. Woolsey, California
David P. Roe, Tennessee              Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania         Carolyn McCarthy, New York
Tim Walberg, Michigan                John F. Tierney, Massachusetts
Scott DesJarlais, Tennessee          Dennis J. Kucinich, Ohio
Richard L. Hanna, New York           David Wu, Oregon
Todd Rokita, Indiana                 Rush D. Holt, New Jersey
Larry Bucshon, Indiana               Susan A. Davis, California
Trey Gowdy, South Carolina           Raul M. Grijalva, Arizona
Lou Barletta, Pennsylvania           Timothy H. Bishop, New York
Kristi L. Noem, South Dakota         David Loebsack, Iowa
Martha Roby, Alabama                 Mazie K. Hirono, Hawaii
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania
[Vacant]

                      Barrett Karr, Staff Director
                 Jody Calemine, Minority Staff Director
                                 ------                                

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                    TIM WALBERG, Michigan, Chairman

John Kline, Minnesota                Lynn C. Woolsey, California, 
Todd Rokita, Indiana                     Ranking
Larry Bucshon, Indiana               Donald M. Payne, New Jersey
Trey Gowdy, South Carolina           Dennis J. Kucinich, Ohio
Kristi L. Noem, South Dakota         Timothy H. Bishop, New York
Dennis A. Ross, Florida              Mazie K. Hirono, Hawaii
Mike Kelly, Pennsylvania             George Miller, California
[Vacant]












                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on April 14, 2011...................................     1

Statement of Members:
    Hirono, Hon. Mazie K., a Representative in Congress from the 
      State of Hawaii, submission for the record.................    50
    Walberg, Hon. Tim, Chairman, Subcommittee on Workforce 
      Protections................................................     1
        Prepared statement of....................................     3
        Additional submissions:
            Prepared statement of the Women Construction Owners & 
              Executives, USA....................................    57
            Letter, dated Feb. 18, 2004, ``Concerns Persist With 
              the Integrity of Davis-Bacon Act Prevailing Wage 
              Determinations''...................................    58
            Draft, dated July 29, 2004, ``Davis-Bacon Process 
              Evaluation--Final Report''.........................    61
    Woolsey, Hon. Lynn, ranking minority member, Subcommittee on 
      Workforce Protections......................................     4
        Prepared statement of....................................     5
        Questions submitted for the record.......................    98

Statement of Witnesses:
    Eisenbrey, Ross, vice president, Economic Policy Institute...    18
        Prepared statement of....................................    20
        Supplemental statement dated May 4, 2011.................    95
    Markey, Thomas M., Deputy Administrator for Program 
      Operations, Wage and Hour Division, U.S. Department of 
      Labor......................................................     9
        Prepared statement of....................................    11
        Response to questions submitted for the record...........    99
    Mistick, D. Thomas, on behalf of Associated Builders and 
      Contractors................................................    32
        Prepared statement of....................................    34
    Sherk, James, senior policy analyst in labor economics, the 
      Heritage Foundation........................................    22
        Prepared statement of....................................    24
        Letter submitted for the record..........................   100
    Sherrill, Dr. Andrew, Director of Education, Workforce, and 
      Income Security, U.S. Government Accountability Office.....     7
        Prepared statement of....................................     9
        Response to questions submitted for the record...........   100

 
 EXAMINING THE DEPARTMENT OF LABOR'S IMPLEMENTATION OF THE DAVIS-BACON 
                                  ACT

                              ----------                              


                        Thursday, April 14, 2011

                     U.S. House of Representatives

                 Subcommittee on Workforce Protections

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 10:04 a.m., in 
room 2175, Rayburn House Office Building, Hon. Tim Walberg 
[chairman of the subcommittee] presiding.
    Present: Representatives Walberg, Kline, Bucshon, Woolsey, 
Payne, Kucinich, Bishop, Hirono, and Miller.
    Staff present: Katherine Bathgate, Press Assistant; Kirk 
Boyle, General Counsel; Casey Buboltz, Coalitions and Member 
Services Coordinator; Ed Gilroy, Director of Workforce Policy; 
Benjamin Hoog, Legislative Assistant; Barrett Karr, Staff 
Director; Ryan Kearney, Legislative Assistant; Brian Newell, 
Deputy Communications Director; Molly McLaughlin Salmi, Deputy 
Director of Workforce Policy; Ken Serafin, Workforce Policy 
Counsel; Linda Stevens, Chief Clerk/Assistant to the General 
Counsel; Alissa Strawcutter, Deputy Clerk; Loren Sweatt, 
Professional Staff Member; Aaron Albright, Minority 
Communications Director for Labor; Tylease Alli, Minority 
Hearing Clerk; Daniel Brown, Minority Staff Assistant; Jody 
Calemine, Minority Staff Director; Brian Levin, Minority New 
Media Press Assistant; Jerrica Mathis, Minority Legislative 
Fellow, Labor; Celine McNicholas, Minority Labor Counsel; 
Richard Miller, Minority Senior Labor Policy Advisor; Megan 
O'Reilly, Minority General Counsel; Julie Peller, Minority 
Deputy Staff Director; Meredith Regine, Minority Labor Policy 
Associate; Melissa Salmanowitz, Minority Communications 
Director for Education; Michele Varnhagen, Minority Chief 
Policy Advisor and Labor Policy Director; and Michael Zola, 
Minority Chief Investigative Counsel.
    Chairman Walberg [presiding]. A quorum being present, the 
subcommittee will come to order. Good morning and welcome to 
today's hearing. I would like to thank our witnesses for 
joining us. Our panel has a wide range of knowledge and 
experience with the Davis-Bacon Act and your testimony will 
provide important insight as we work to ensure the law is 
serving the interest of job creators, workers and taxpayers.
    We are in the middle of an important debate over the 
country's fiscal future. Years of reckless borrowing and 
spending by the federal government have brought our nation to 
the brink of a crisis and something must be done.
    We can no longer accept waste and inefficiencies as the 
price of doing business with the federal government, which is 
why we are here today. Established by the Hoover Administration 
in 1931, the Davis-Bacon Act requires workers to be paid the 
prevailing wage rates on federal construction projects costing 
taxpayers more than $2000.
    Prevailing wages are determined through a complex system of 
wage surveys administered by the Department of Labor. The 
surveys collect salary and fringe benefit information on 
various job classifications based on similar projects for a 
given location, typically at the county level.
    Businesses and labor organizations voluntarily report wage 
information and the Department can also rely upon local 
collective bargaining agreements when determining the wage 
rate.
    Federal contractors must submit weekly payroll reports to 
the Department, certifying appropriate wages have been paid. 
While intended as a temporary effort 80 years ago, the Davis-
Bacon Act remains a significant feature of federal spending to 
this day.
    That is why a recent report by the Government 
Accountability Office is deeply troubling. Despite years of 
review and oversight, the GAO found considerable challenges 
still plague the Department's implementation of the Davis-Bacon 
Act.
    GAO revealed problems with accuracy, quality, bias and 
timeliness of the wage data. Of the surveys reviewed, one in 
four of the final wage rates were based on the wages of just 
six or fewer workers.
    Forty-six percent of the prevailing wages for non-union 
workers were based on wages reported ten or more years ago. The 
report also identified a lack of transparency about how wage 
rates are determined, raising concerns for businesses trying to 
bid for work and taxpayers who want to ensure their dollars 
aren't being wasted.
    According to the GAO, the Department of Labor also fails to 
follow guidance issued by the Office of Management and Budget 
and even disregards its own policy manual by ignoring the 
impact of non-responses in the accuracy of the survey.
    Despite recent changes adopted by the Department, the GAO 
still found issues with timeliness and believes any 
improvements the Department hopes to achieve, quote--``may not 
be fully realized.''
    Perhaps the GAO outlined best what is at stake and I 
quote--``If the resulting prevailing wage rates are too high, 
it potentially cots the federal government and taxpayers more 
for publicly funded construction projects or if too low, they 
cost workers in compensation.''
    These are stunning conclusions for a law that governs how 
hundreds of billions of taxpayer dollars are spent. In fact the 
failed stimulus committed an estimated $300 billion to federal 
construction projects that could potentially be covered by 
Davis-Bacon wage rates.
    In 2009 alone federal construction and rehabilitation 
projects totaled roughly $220 billion. Are these taxpayer 
dollars being well spent? And if not then what should be done 
about it? Those are the questions we hope to answer today, 
simply accepting the status quo that has been in place since 
the great depression is unacceptable.
    We have a responsibility to determine whether the law is 
meeting the needs of today's taxpayers and workers. Again I 
would like to thank our witnesses. And we will now recognize 
the senior democratic member of the sub-committee, Ms. Woolsey, 
for opening remarks.
    [The statement of Chairman Walberg follows:]

           Prepared Statement of Hon. Tim Walberg, Chairman,
                 Subcommittee on Workforce Protections

    Good morning and welcome to today's hearing. I would like to thank 
our witnesses for joining us. Our panel has a wide range of knowledge 
and experience with the Davis-Bacon Act, and your testimony will 
provide important insight as we work to ensure the law is serving the 
interests of job-creators, workers, and taxpayers.
    We are in the middle of an important debate over the country's 
fiscal future. Years of reckless borrowing and spending by the federal 
government have brought our nation to the brink of a crisis and 
something must be done. We can no longer accept waste and 
inefficiencies as the price of doing business with the federal 
government, which is why we are here today.
    Established by the Hoover administration in 1931, the Davis-Bacon 
Act requires workers be paid the ``prevailing wage rates'' on federal 
construction projects costing taxpayers more than $2,000. Prevailing 
wages are determined through a complex system of wage surveys 
administered by the Department of Labor.
    The surveys collect salary and fringe benefit information on 
various job classifications based on similar projects for a given 
location, typically at the county level. Businesses and labor 
organizations voluntarily report wage information, and the department 
can also rely upon local collective bargaining agreements when 
determining the wage rate. Federal contractors must submit weekly 
payroll reports to the department certifying appropriate wages have 
been paid.
    While intended as a temporary effort 80 years ago, the Davis-Bacon 
Act remains a significant feature of federal spending to this day. That 
is why a recent report by the Government Accountability Office is 
deeply troubling. Despite years of review and oversight, the GAO found 
considerable challenges still plague the department's implementation of 
the Davis-Bacon Act.
    The GAO revealed problems with accuracy, quality, bias, and 
timeliness of the wage data. Of the surveys reviewed, one in four of 
the final wage rates were based on the wages of just six or fewer 
workers. Forty-six percent of the prevailing wages for non-union 
workers were based on wages reported 10 or more years ago.
    The report also identified a lack of transparency about how wage 
rates are determined, raising concerns for businesses trying to bid for 
work and taxpayers who want to ensure their dollars aren't being 
wasted. According to the GAO, the Department of Labor also fails to 
follow guidance issued by the Office of Management and Budget, and even 
disregards its own policy manual by ignoring the impact of nonresponses 
in the accuracy of the survey.
    Despite recent changes adopted by the department, the GAO still 
found issues with timeliness and believes any improvements the 
department hopes to achieve ``may not be fully realized.'' Perhaps the 
GAO outlined best what's at stake: ``If the resultant prevailing wage 
rates are too high, they potentially cost the federal government and 
taxpayers more for publicly funded construction projects or, if too 
low, they cost workers in compensation.''
    These are stunning conclusions for a law that governs how hundreds 
of billions of taxpayer-dollars are spent. In fact, the failed stimulus 
committed an estimated $300 billion to federal construction projects 
that could potentially be covered by Davis-Bacon wage rates. In 2009 
alone, federal construction and rehabilitation projects totaled roughly 
$220 billion.
    Are these taxpayer dollars being well spent, and if not, then what 
should be done about it? Those are the questions we hope to answer 
today. Simply accepting the status-quo that has been in place since the 
Great Depression is unacceptable. We have a responsibility to determine 
whether the law is meeting the needs of today's taxpayers and workers.
    Again, I would like to thank our witnesses, and will now recognize 
the senior Democrat of the subcommittee, Ms. Woolsey, for her opening 
remarks.
                                 ______
                                 
    Ms. Woolsey. Thank you, Mr. Chairman. And thank you for 
holding this hearing to examine the Department of Labor's 
implementation of the Davis-Bacon Act because it provides us a 
forum today to highlight how it has helped maintain decent 
wages for workers in support of local communities that are 
vulnerable to changes to the economy.
    Of course we are also here because the Government 
Accountability Office, GAO, has determined that there are 
issues with the survey process used by the Department of Labor 
to determine local prevailing wages.
    GAO--from that time surveys used outdated wage data and had 
low response rates. And it is my understanding that--and the 
other questions that you brought up--that the department has 
instituted policies to address these issues, most of them, to 
be sure.
    So let us be clear. We all agree that the department must 
work to see that its survey process is effective and the wage 
rates it publishes for federal projects are accurate. Making 
certain that federal policies work as intended is not a 
partisan issue.
    We should be careful however not to read into the GAO 
report and draw conclusions that it absolutely doesn't make. 
The report does not conclude that Davis-Bacon drives up the 
cost of construction projects or inhibits job growth. These are 
discredited theories that don't hold up to scrutiny.
    The Davis-Bacon Act requires contracts and contractors on 
federal construction projects to pay their employees no less 
than the locally prevailing wage. This is important because it 
ensures that the federal government does not use its bargaining 
power to drive down wages which would actually hurt local 
economies.
    Instead the act makes certain that federally financed 
projects encourage competition, contribute to the development 
of a skilled workforce for the future and pay decent wages. 
This is sound and proven public policy.
    Without prevailing wage laws like Davis-Bacon contractors 
would be encouraged to assemble the cheapest and most 
exploitable workforce rather than the best trained, equipped, 
and managed workers. It would be a race to the bottom 
subsidized by the federal government.
    Much of the opposition to prevailing wage protections is 
grounded in decades of false rhetoric and misinformation. 
Studies consistently show that Davis-Bacon prevailing wage 
requirements do not increase the cost of federal construction.
    In addition, several reports on prevailing wage 
requirements have found that prevailing wages provide numerous 
benefits including higher wages, better workplace safety, 
increased government revenues and they elevate workers skills 
and standards in the construction industry.
    My point is the 2006 study determined that states with 
prevailing wage laws had higher rates of construction training 
programs. And the trainees were more likely to complete their 
programs compared to the states without prevailing wage laws.
    We have seen the effects when prevailing wage laws have 
been repealed at the state level. Competitive pressures in the 
industry led to lower wages for workers. There is also an 
increase in work related injuries and illnesses. The last thing 
construction workers need in this economy is to have their 
wages cut.
    At the end of the day that is just what any argument 
against Davis-Bacon prevailing wage protection would amount to, 
a reduction in wages and the elimination of a standard of 
living for workers where they can raise and educate their 
families while ultimately ensuring their own retirement.
    Mr. Chairman, I have confidence that we can use this 
hearing constructively to discuss the legitimate issues raised 
by the GAO and not as a policy to debate whether or not Davis-
Bacon has some merit that we know they have. I yield back.
    [The statement of Ms. Woolsey follows:]

 Prepared Statement of Hon. Lynn C. Woolsey, Ranking Minority Member, 
                 Subcommittee on Workforce Protections

    Thank you Mr. Chairman and thank you for holding this hearing to 
examine the Department of Labor's implementation of the Davis-Bacon Act 
because it provides us a forum today to highlight how it has helped 
maintain decent wages for workers and supported local communities that 
are vulnerable to changes in the economy.
    Of course, we're also here because the Government Accountability 
Office (GAO) has determined that there are issues with the survey 
process used by the Department of Labor to determine local prevailing 
wages. GAO found that at times surveys use outdated wage data and had 
low response rates. It is my understanding and the other questions that 
you brought up that the Department has instituted policies to address 
some of these issues.
    Let's be clear: we all agree that the Department must work to see 
that its survey process is effective and the wage rates it publishes 
for federal projects are accurate. Making sure federal policies work as 
intended is not a partisan issue.
    We should be careful, however, not to read into the GAO report and 
draw conclusions that it absolutely doesn't make. The GAO's report does 
not conclude that Davis-Bacon drives up the costs of construction 
projects or inhibits job growth. These are discredited theories that 
don't hold up to scrutiny.
    The Davis-Bacon Act requires contractors on federal construction 
projects to pay their employees no less than the locally prevailing 
wage. This is important because it ensures that the federal government 
does not use its bargaining power to drive down wages which would 
actually hurt local economies. Instead, the Act makes certain that 
federally financed projects encourage competition, contribute to the 
development of a skilled workforce for the future, and pay decent 
wages. This is sound and proven public policy.
    Without prevailing wage laws, like Davis-Bacon, contractors would 
be encouraged to assemble the cheapest and most exploitable workforce 
rather than best trained, equipped, and managed workers. It would be a 
race to the bottom, subsidized by the federal government.
    Much of the opposition to prevailing wage protections is grounded 
in decades of false rhetoric and misinformation. Studies consistently 
show that Davis-Bacon prevailing wage requirements DO NOT increase the 
cost of federal construction. In addition, several reports on 
prevailing wage requirements have found that prevailing wages provide 
numerous benefits including: higher wages, better workplace safety, 
increased government revenues, and they elevate worker skills and 
standards in the construction industry.
    Likewise, a 2006 study determined that states with prevailing wage 
laws had higher rates of construction training programs, and trainees 
were more likely to complete their programs compared to the states 
without prevailing wage laws.
    We have seen the effects when prevailing wage laws have been 
repealed at the state level--competitive pressures in the industry lead 
to lower wages for workers. There is also an increase in work-related 
injuries and illnesses.
    The last thing construction workers need in this economy is to have 
their wages cut. At the end of the day, that is just what any argument 
against Davis-Bacon prevailing wage protections would amount to--a 
reduction in wages and the elimination of a standard of living for 
workers where they can raise and educate their families, while 
ultimately ensuring their own retirement. Mr. Chairman, I have 
confidence that we can use this hearing constructively to discuss the 
legitimate issues raised by the GAO and not as a policy to debate 
whether or not Davis-Bacon has the merits that we know they have.
                                 ______
                                 
    Chairman Walberg. I thank you, Ranking Member. Pursuant to 
committee rules all members will be permitted to submit written 
statements to be included in the permanent hearing record. And 
without objection the hearing record will remain open for 14 
days to allow questions for the record. Statements and 
extraneous material reference during the hearing to be 
submitted for the official hearing record.
    It is now my pleasure to introduce our distinguished panel 
of witnesses. Dr. Andrew Sherrill is Director of Education, 
Workforce and Income Security with the U. S. Government 
Accountability Office in Washington, D. C. He was appointed to 
GAO's senior executive service in 2009.
    In his 20 years at GAO he has led teams in producing 
reports for the Congress on a broad range of topics including 
workforce development, unemployment insurance, workers' 
compensation programs, women in the labor force, welfare 
reform, foreign labor programs, and mass care after hurricane 
Katrina.
    Mr. Sherrill received his PhD and M. A. from the University 
of Texas at Austin and his B. A. from Trinity University at San 
Antonio, Texas. In addition he completed course work in the 
masters program at the Lyndon Baines Johnson School of Public 
Affairs at the University of Texas at Austin. He is a member of 
the National Academy of Social Insurance. And we welcome you.
    Mr. Thomas M. Markey is the deputy administrator of program 
operations at the U. S. Department of Labor. Mr. Markey has 
served at the Department of Labor in a variety of positions 
since 1972 including his role as the Director for the Federal 
Employees Compensation Program from 1985 through 1998. Mr. 
Markey is a graduate of Rutgers University and is a veteran of 
the United States Army. And we thank you for your service.
    Mr. Ross Eisenbrey is vice president of the Economic Policy 
Institute and a former staffer with this committee, welcome 
back. Mr. Eisenbrey is a lawyer and former commissioner of the 
U. S. Occupational Safety and Health Review Commission. Prior 
to joining the Economic Policy Institute he worked for many 
years as a staff attorney and legislative director in the U. S. 
House of Representatives and as a committee counsel in the U. 
S. Senate.
    Additionally he served as policy director of the 
Occupational Safety and Health Administration from 1999 to 
2001. Mr. Eisenbrey holds a J. D. from University of Michigan 
Law School--go Blue--and a B.A. from Middlebury College as well 
as was raised in Michigan itself, so welcome.
    Mr. James Sherk is senior policy and analyst of labor 
economics at the Heritage Foundation. In his position Mr. Sherk 
works on minimum wage, card check, rising standards of living 
and other tax, labor and economic issues in Heritage Center for 
Data Analysis.
    Mr. Sherk received an M. A. in Economics with a 
concentration in Econometrics in Labor Economics from the 
University of Rochester and a Bachelor's Degree in Economics 
and Mathematics from my district, Hillsdale College. Welcome, 
glad to have you here.
    Mr. Thomas Mistick is principal of the Church Restoration 
Group. Mr. Mistick's Church Restoration Group offers 
restoration and construction services for historic and sacred 
sites across the country.
    Mr. Mistick has completed more than $1 billion in 
construction and restoration during his 30-plus years running 
the Mistick family of companies. Mr. Mistick has a great deal 
of experience trying to navigate the Davis-Bacon regulations, 
otherwise known as real-world experience.
    Mr. Mistick received his undergraduate degree from Harvard 
College where he graduated cum laude. He holds a graduate 
degree in Systems Analysis and Finance from Stanford 
University's Graduate School of Business and a J. D. from the 
University of Pittsburg School of Law. Mr. Mistick is 
testifying on behalf of the Associated Builders and 
Contractors. Thank you, each of you, for being here.
    Before I recognize each of you to provide your testimony 
let me briefly explain our lighting system. You will each have 
5 minutes to present your testimony. When you begin--and I 
guess I would say 5 minutes unless the Chairman here enjoys 
your testimony so much and is known to let it go on and on.
    I know that the ranking member and the full committee--the 
gentleman from California--will make it very clear to me when I 
have gone past that red light.
    And I appreciate that, Mr. Miller.
    When you begin the light in front of you will turn green. 
When 1 minute is left the light will turn yellow and when your 
time has expired the light will turn red at which point I will 
ask that you wrap it up quickly. Your remarks are important but 
the time is of necessity as well.
    After everyone has testified members will each have 5 
minutes to ask questions of the panel.
    And so having said that let me start with Mr. Sherrill, 
your testimony we appreciate.

   STATEMENT OF DR. ANDREW SHERRILL, DIRECTOR OF EDUCATION, 
WORKFORCE, AND INCOME SECURITY, U.S. GOVERNMENT ACCOUNTABILITY 
                             OFFICE

    Mr. Sherrill. Mr. Chairman, ranking member Woolsey, and 
members of the sub-committee, I am pleased to be here today to 
discuss the Department of Labor's procedures for determining 
prevailing wages under the Davis-Bacon Act.
    Our prior reports--in those of Labor's Inspector General 
have made various recommendations to improve these procedures. 
Today I will present the results of our report that was 
publicly issued last week.
    This report covers two topics, first the extent to which 
labor has addressed concerns regarding the quality of the 
Davis-Bacon wage determination process and second additional 
issues identified by stakeholders regarding the wage 
determination process.
    In recent years Labor has taken several steps to improve 
its wage determinations. However, Labor has not addressed some 
key issues with survey quality such as the representativeness 
and sufficiency of survey data collected.
    Among the steps Labor had taken is to shift away from a 
one-size-fits-all approach for the four construction types. For 
highway surveys Labor began using certified payrolls as the 
primary data source. For building and heavy surveys Labor 
adjusted timeframes to better manage the quality of data 
received.
    Labor expects these and other changes to reduce the time 
needed to process highway surveys by more than 50 percent--by 
more than 80 percent and building and heavy surveys by more 
than 50 percent.
    While it is too early to fully assess the effects of 
Labor's changes a review found that they may not achieve 
expected results. Of the 12 surveys conducted under Labor's 
review process that we assessed against Labor's new timelines 
we found that ten were behind schedule, some by several steps 
in the process.
    Many published wage rates are several years old. Labor's 
2010 performance goal was for 90 percent of published wage 
rates for building, heavy and highway construction to be no 
more than three years old. Labor achieved 61 percent. When we 
drilled down we found almost 75 percent of the union prevailing 
rates were three years old or less. In contrast 36 percent of 
the non-union prevailing rates were three years old or less, 
almost half were ten or more years old.
    We also found critical problems with Labor's wage survey 
methodology--continued or survey-hindered survey quality. Labor 
cannot determine whether its wage determinations accurately 
represent prevailing wages because it does not calculate survey 
response rates or analyze those who do not respond.
    A low response rate may mean the results are misleading or 
inaccurate if those who differ--if those who respond differ 
substantively and systematically from those who do not respond. 
While Labor is required by law to issue wage rates by the civil 
sub-division of the state, its goal to issue them at the county 
level is often not met because of insufficient survey response.
    We reviewed four surveys that were issued in 2009 or 2010 
and found that Labor issued 11 percent of wage rates for key 
job classifications using data from a single county. Forty 
percent of the wage rates were based on statewide data. That 
means that the rate was based either on data from all of the 
rural--or all of the metropolitan counties in the entire state.
    In the four surveys over one-quarter of the wage rates for 
key job classifications were based on data reported for six or 
fewer workers. The statutory requirement to issue rates by 
civil sub-division limits Labor's ability to address inadequate 
data. Labor's not able to augment its survey data with sources 
that draw on other geographical areas such as metropolitan 
statistical areas that may better reflect regional markets.
    We interviewed a wide variety of stakeholders including 
academics, contractors, contractor associations, unions to 
obtain their perspectives. They voiced two key concerns, first 
little incentives to participate in the wage surveys, second a 
lack of transparency in the survey process.
    Stakeholders cited various factors. They said were 
disincentives to participate, for example, kit contractors may 
lack the necessary resources, do not understand the purpose of 
the survey, may not see the point in responding.
    Stakeholders also said there was a lack of transparency 
about the number of workers and wage rates used to calculate 
prevailing wages for each job classification and for providing 
such information could enhance understanding of the process and 
result in greater participation.
    So in sum, to improve the quality and timeliness of the 
wage surveys we recommended that Labor enlist the National 
Academies or another independent statistical organization to 
evaluate and try to provide objective advice on the survey, its 
methods and design, potential for conducting a sample survey 
instead of a census survey and other aspects of doing the 
process.
    We also recommended that Labor take steps to improve the 
transparency of its wage determinations which could encourage 
greater participation in the survey. Finally we suggested that 
Congress consider amending the requirement that Labor issue 
wage rates by civil subdivision to provide the agency with more 
flexibility.
    Mr. Chairman, ranking member Woolsey, members of the sub-
committee, that concludes my remarks. I would be happy to 
answer any questions you may have.
    [The statement of Mr. Sherrill may be accessed at the 
following Internet address:]

                http://www.gao.gov/new.items/d11486t.pdf

                                ------                                

    Chairman Walberg. Thank you, Dr. Sherrill.
    Mr. Markey?

 STATEMENT OF TOM M. MARKEY, DEPUTY ADMINISTRATOR FOR PROGRAM 
  OPERATIONS, WAGE AND HOUR DIVISION, U.S. DEPARTMENT OF LABOR

    Mr. Markey. Chairman Walberg, ranking member Woolsey and 
members of the sub-committee, thank you for the opportunity to 
talk to you today about the role of the Department Wage and 
Hour Division in Davis-Bacon wage determination.
    The Davis-Bacon Survey Program was evaluated extensively in 
the 1990s and early 2000s. The two evaluations that are most 
relevant of what we will be discussing today are the 1999 GAO 
report and the 2004 OIG report. Both reviews concluded that 
despite Wage and Hour's efforts there were still numerous 
problems with timeliness and accuracy of wage determinations.
    To address these concerns Wage and Hour enlisted the help 
of McGraw-Hill Construction Analytics to assess our process and 
operations. They recommended improving and stabilizing the IT 
system, developing policies and training for survey staff, 
establishing metrics to measure time limits and productivity 
and improving communication with internal staff and external 
stakeholders.
    Wage and Hour has implemented improving this based on these 
recommendations which are starting to bear fruit. From 2005 
through January 2011 Wage and Hour issued several major 
releases to both its automated systems. These changes were 
designed to complete and publish wage determinations in a more 
timely fashion. In 2007 a bridge connecting both of these IT 
systems became operational, thereby allowing improvements to 
survey performance measurements.
    In addition Wage and Hour increased the number of survey 
staff, established a new yearly training program for all survey 
staff, drafted a new manual of operations--and using a manual 
and a training guide that is updated with each IT system 
release--instituted performance measures for the age of wage 
rates, the period of time from completion of the survey to 
publication and the time required to conduct surveys.
    It also incorporated analyst tracking reports enabling 
supervisors to monitor the time spent by analysts and survey 
processing and in specific task. Finally it developed new 
performance standards in the fiscal year 2010 rating cycle for 
Wage and Hour staff. Wage and Hour's recent re-engineering 
efforts are as follows.
    For highway construction many state departments of 
transportation conduct surveys of highway construction using 
the same payment data as Wage and Hour. We now work with these 
states to issue and maintain current prevailing highway wage 
rates.
    For residential surveys to combat traditionally low 
response rates we are now conducting these surveys separately 
so we can also call and visit to supplement the mailing that 
contractors receive.
    For building and heavy construction we initiate a pilot 
program of completing these in a shorter period of time--on 
average Wage and Hours' completing these surveys under this 
pilot within 24 months as opposed to many years in the past. At 
the same time Wage and Hour was conducting all these 
improvements the agency published wage determinations for 22 
statewide backlog surveys.
    The 2011 GAO report contains two recommendations. With 
regard to the first one on the National Academies or other 
statistical organizations we feel that given that we are 
currently making changes to contract to a different 
organization and evaluate the efforts of Wage and Hour may be 
premature, especially in light of cost considerations. Wage and 
Hour nevertheless will explore the options for seeking 
independent evaluation of survey methodology.
    With regard to a transparency the wage determinations are 
housed on WDOL, which is the result of a collaboration of 
multiple federal agencies. Consequently any changes to the 
website must be made in collaboration with these other entities 
and cannot be made unilaterally by the department. We do, 
however, agree that the public should have more information to 
clearly understand the process here and have opened a dialogue 
with these other agencies.
    Eight years after its enactment, the Davis-Bacon and 
related Acts continued to protect the wages of hard-working 
Americans as they build the nation's infrastructure. Wage and 
Hour is doing its part in this endeavor by re-engineering the 
Davis-Bacon Survey Program to ensure that the injection of 
federal construction funds to communities does not depress the 
wages of the local workforce. Again thank you for the 
opportunity to testify today. I am happy to answer any 
questions that the sub-committee may have.
    [The statement of Mr. Markey follows:]

   Prepared Statement of Thomas M. Markey, Deputy Administrator for 
  Program Operations, Wage and Hour Division, U.S. Department of Labor

    Chairman Walberg, Ranking Member Woolsey, and Members of the 
Subcommittee, thank you for the opportunity to talk with you today 
about the role of the U.S. Department of Labor's Wage and Hour Division 
(WHD) in Davis-Bacon Act wage determinations and enforcement. I 
appreciate the opportunity to discuss WHD's efforts to reengineer the 
Davis-Bacon Survey Program and our work to revitalize the enforcement 
of Davis-Bacon requirements on federally funded construction projects.
    The principle underlying the Davis-Bacon Act (DBA) is simple--to 
ensure that the Federal Government's extensive contracting activity 
does not have the unintended consequence of depressing workers' wages. 
Since its enactment in 1931, the DBA has ensured minimum compensation 
levels for construction workers based on the wages paid in a given 
locality and has provided a level playing field for all contractors in 
the construction industry. Construction is a labor-intensive sector of 
the economy, often with multiple layers of contracting and 
subcontracting. Without the DBA and the over 60 Davis-Bacon ``related 
Acts'' that contain Davis-Bacon prevailing wage requirements, the 
Federal contracting agencies, state and local governments, and 
recipients of Federal grants who are responsible for federally funded 
or assisted construction projects might never assume direct 
responsibility for the wages of the laborers and mechanics who build 
our nation's buildings, pave our roads, dig our trenches, and maintain 
our infrastructure.
    The DBA and the standards that it imposes on the Federal government 
and recipients of Federal funds ensure that hard-working middle class 
Americans will not see their wages and benefits undercut by Federal 
spending practices. As important, these standards enable local 
contractors and subcontractors to compete for local projects by 
protecting them from underbidding by contractors who import workforces 
from outside the local community. As Secretary Solis' vision for the 
Department of Labor appropriately articulates, it is about ``Good Jobs 
for Everyone.''
    Today, the Federal government continues to construct buildings, 
build dams, and fund housing projects. State highway departments pave 
roads with Federal funds from the Federal Highway Administration. Local 
and State governments build water treatment plants, modernize schools, 
and renovate airports. Many of these projects are funded by the 
American Recovery and Reinvestment Act of 2009 (Recovery Act), which 
appropriated substantial funding for construction, alteration and 
repair of Federal buildings and for infrastructure projects. The DBA 
therefore is as relevant today as it was when it was first enacted, and 
it continues to provide stable wage rates and benefits that attract 
higher-skilled labor. And by attracting higher-skilled workers who are 
both experienced and productive, construction projects are more often 
completed on time and at lower cost.
    The average annual earnings for construction workers in May 2009 
was $43,350--not significantly higher than the average annual earnings 
for construction workers reported in 1995, when the Department last 
testified on the DBA before the House Subcommittee on Workforce 
Protections. The industry remains particularly susceptible to economic 
fluctuations that bring on periods of high unemployment and 
underemployment, as we have seen in the most recent recession that 
began in December 2007. When Federal construction causes a sudden 
significant increase in the demand for local labor in a high 
unemployment labor market, absent a prevailing wage requirement, there 
is a strong downward pressure on local wages as the unemployed and 
underemployed are drawn into the area for work. The Davis-Bacon and 
related Acts provide the safety net for those local workers, their 
construction companies, and their communities.
DOL and Davis-Bacon Wage Determinations
    The longstanding mission of the Department of Labor's Wage and Hour 
Division (WHD) is to promote and achieve compliance with labor 
standards to protect and enhance the welfare of the nation's workforce. 
To this end, the WHD is responsible for administering and enforcing 
some of our nation's most comprehensive federal labor laws covering, 
among other things, requirements and obligations relating to minimum 
wage and overtime pay, recordkeeping, child labor, family and medical 
leave, migrant work and worker protections in certain temporary worker 
programs, and the prevailing wages for government service and 
construction contracts.
    The Davis-Bacon Act requires that all contractors and 
subcontractors performing work on federal contracts in excess of $2,000 
for the construction, alteration, or repair of public buildings or 
public works (and contractors or subcontractors performing on federally 
assisted contracts under the related Acts) pay their laborers and 
mechanics not less than the prevailing wage rates and fringe benefits 
listed in the contract's Davis-Bacon wage determination for 
corresponding classes of laborers and mechanics employed on similar 
projects in the area. Davis-Bacon labor standards clauses must be 
included in covered contracts. Since the 1990s, WHD has focused on 
improving the accuracy and timeliness of DBA wage determinations by 
reengineering the DBA survey program and providing the best 
opportunities for increasing stakeholder participation. During the last 
24 months in particular, WHD has reevaluated and changed various 
administrative processes, addressed recommendations from various 
audits, improved outreach, and enhanced enforcement. These changes of 
the last two years are already producing positive results.
    For example, the survey backlog is gone. The only surveys being 
processed in the system at this time are recent surveys and some of 
these surveys are nearing publication. Additionally, the time needed 
for survey analysis (cutoff date to on-site verification) has decreased 
from 2-5 years to less than 12 months.
    The 2011 Government Accountability Office (GAO) audit of the Davis-
Bacon Survey Program at issue in today's hearing analyzed WHD's IT 
system, the timeliness and accuracy of the survey process, the 
effectiveness of WHD personnel, and the performance measures WHD 
employed. Prior to the audit, WHD was already engaged in addressing 
many of these issues, but, as WHD staff acknowledged to the GAO 
auditor, WHD's improvements to its DBA survey program are ongoing.
IT System
    WHD has adopted a systematic approach to effect improvements in the 
wage determinations IT system. From 2005 through January 2011, twenty-
nine (29) major releases and updates were made to WHD's Automated 
Survey Data System (ASDS) and seventeen (17) major releases and updates 
were made to the Wage Determination Generation System (WDGS). The 
changes were designed to increase the speed of processing so that 
surveys could be completed and published in a more timely fashion. In 
2007, a ``bridge'' connecting both of these IT systems (an enhancement 
that had been discussed in WHD's May 2006 report to Congress) became 
operational, thereby allowing improvements to survey performance 
measurements and other reports.
    These IT improvements have enhanced the efficiency and 
effectiveness of myriad tasks performed both by the WHD's analysts and 
by the agency's contract staff at the University of Tennessee's 
Construction Industry Research and Policy Center (CIRPC). For example, 
the usual time needed to complete basic business processes, such as 
loading F.W. Dodge reports that identify construction projects within a 
particular geographic area, has been reduced from three weeks to one 
hour; the time needed to prepare documents for on-site verification has 
been reduced from one month to one day; and area practice resolution by 
WHD staff has been reduced from weeks to one day.
    IT development and resulting changes to the survey process to 
further increase the accuracy and timeliness of DBA wage surveys and 
wage determinations are still ongoing. Also, improvements to reports 
used to assess the performance of both WHD analysts as well as the 
overall program continue to be developed and implemented.
Process (Timeliness and Accuracy)
    Prior to the 2011 GAO audit, WHD began reviewing survey processes 
in the key areas in which there was substantial time expenditure by 
staff (WHD and contract staff). Many of the large time expenditures 
were reduced by IT improvements. For example, the time spent by WHD 
survey analysts on administrative/clerical type functions was greatly 
reduced when WHD modified the University of Tennessee contract, thereby 
freeing WHD staff to concentrate on analysis and clarification of data. 
Regional WHD analysts are now performing analysis and clarification of 
data within two weeks of the receipt of such data. Despite a large 
amount of data still being received on the survey cut-off date, 
processing time is quicker than before because all other data is 
reviewed and processed by the cut-off date. Currently, contractor, 
third party, and on-site verification are being performed within an 
average of six to eight months from survey cut-off date compared to the 
12-15 months it took prior to 2010.
    Early IT problems had caused a backlog of surveys awaiting on-site 
verification, analysis, review, and publication. In 2005, there were 22 
statewide surveys in WHD's Automated Survey Data System (ASDS) that had 
been started in the years 2002 through 2004. This backlog of surveys in 
the data system affected the start of new surveys. To remedy this, 
changes were made to the IT program allowing cross-regional work and, 
as a result, new surveys were started in 2007. Additionally, all of the 
22 ``old'' surveys were completed and published either in FY 2009 or in 
FY 2010.
    Beginning in 2002, new statewide surveys were conducted of all four 
types of construction (residential, highway, building, and heavy) in an 
effort to maximize responses. Because they covered all four types of 
construction at one time, the surveys were very large and clarification 
and analysis became much more difficult. In 2009, WHD determined that 
it would be more efficient for residential and highway surveys to be 
conducted separately, while continuing to conduct building and heavy 
construction statewide surveys concurrently because the same universe 
of contractors are engaged in both building and heavy construction. 
Additionally, most building construction is related to heavy 
construction, i.e., site prep and utility infrastructure.
    Concerning highway construction, because many state Department of 
Transportation (DOT) offices conduct state surveys of highway 
construction using the same payment data used by WHD in their surveys, 
WHD contacted all state DOTs regarding state conducted highway 
construction surveys to obtain their data and survey information. For 
those states in which highway surveys were not conducted by the state, 
WHD began working with those states to obtain certified payroll data so 
that WHD could conduct the survey. Based on this effort, 33 states now 
work with WHD to issue and maintain current prevailing highway wage 
rates. Three states (Arkansas, Mississippi, and Utah) were surveyed by 
WHD, and new highway rates were published in 2008. WHD will also 
publish 11 statewide highway surveys funded under the Recovery Act in 
2011 (Oklahoma, New Mexico, North Carolina, South Carolina, Nebraska, 
Maine, Vermont, New Hampshire, Colorado, Louisiana, and Florida). WHD 
will work with the state DOTs on the three remaining states (Kentucky, 
Massachusetts, and Idaho) to obtain state data or conduct a survey in 
2012. Also in 2012, WHD will schedule new highway surveys for Arkansas, 
Mississippi, and Utah. Upon publication of these surveys, WHD will have 
met its goal of having all surveys of highway construction completed 
with results (wage rates) published within the last three years. WHD 
will then develop a survey plan with a schedule of publishing rates for 
17 states each year so that highway construction wage rates are based 
on data no older than three years.
    Residential surveys are the most difficult of all surveys to 
conduct because the construction projects are small and the contractor 
response rate is the lowest of all survey types. As a result, WHD 
decided to conduct these surveys separately so that additional calls 
and/or visits to contractors to solicit participation could be made. 
WHD began its revised residential construction program in 2010 with a 
statewide survey of Missouri. Residential surveys of Maine, Vermont, 
New Hampshire, Maryland, Virginia, North Carolina, South Carolina, 
Nevada, Washington, and Oregon will follow in 2011 and 2012.
Personnel
    WHD has increased the number of both its Federal survey staff in 
the regional offices as well as contract staff at the University of 
Tennessee to provide support for the increased number of surveys and 
the reduced timeframes in which surveys are to be concluded.
    In 2006, the WHD national office established a new yearly training 
program for all of the field offices in each region. Training is also 
provided to University of Tennessee staff by WHD national office 
personnel.
    Additionally, WHD has drafted a new manual of operations. Once 
approved, it will be posted on the WHD Intranet for use by staff as 
well as on the agency's public website. Moreover, with each new update 
to WHD's IT systems (WDGS and ASDS), a training guide is now also 
prepared and training on the new release is provided to analysts. WHD 
prepared a comprehensive user manual for each of the automated systems 
in 2008. The manuals are updated with each release and are maintained 
on the WHD Intranet.
    Yearly planning meetings are held with the Regional Wage 
Specialists (RWS), Senior Wage Analysts, and National Office staff. 
Monthly conference calls are held with all regional and national office 
staff. In addition, regular calls as well as on-site visits are made to 
contractors.
Performance Measures
    From 2004 through 2009, the only performance measure that WHD 
reported for the Davis-Bacon Survey Program was related to the 
processing of wage determinations submission (``WD-10'') forms, which 
measured only how efficiently WHD staff processed the survey forms. 
However, in 2006, WHD instituted additional performance measures for 
this program to address the timeliness of the DBA wage survey and wage 
determinations program. The age of wage rates, the period of time from 
completion of the survey to publication, and the time required to 
conduct surveys are now measured. Reports measuring these items are in 
ASDS and WDGS and are calculated based on the work processes performed 
in the system.
    The 2011 GAO Report indicates that start dates are being entered 
into the system differently by regions and, therefore, the ability to 
accurately measure the survey timeliness is affected accordingly. 
However, the surveys reviewed and discussed in the 2011 GAO report were 
entered into ASDS in early January 2009, prior to the date when a new 
survey time tracking report was implemented in the October 2009 ASDS 
release. This accounts for the differences in reporting by the regions. 
In the planned April 2011 release, ASDS will automatically populate the 
fields when the region enters data so there will be uniformity in 
reporting. This report, along with the analysts' time reports, will 
allow WHD to monitor the processes in which large amounts of time are 
being spent and allocate resources accordingly.
    Analyst time tracking reports were incorporated into ASDS in 2009, 
enabling supervisors to monitor the time spent by analysts in survey 
processing and in specific tasks. Additionally, all WD-10s reviewed and 
submitted by analysts are also reviewed by the senior wage analyst in 
each region and feedback is given immediately to the analysts. All of 
these initiatives have resulted in more accurate reporting of 
information, allowing, among other things, WHD national office 
personnel to monitor the time spent in specific survey activities. 
Additionally, new performance standards were also developed for the FY 
2010 rating cycle for WHD regional and national office survey and wage 
determinations staff. These standards are closely aligned to the 
agency's program performance goals and measures.
    As documented in the foregoing, WHD has implemented numerous 
changes over the last five years. As GAO acknowledges with respect to 
timeliness, it is too early to assess the effects of Labor's 2009 
changes. This is also true with respect to other process improvements 
that WHD has implemented over the last two years. For building and 
heavy construction, the new processes instituted in 2009 and 2010 broke 
down the survey process for these types of construction into discrete 
tasks and estimated how long each task should take, with a goal of 
completing building and heavy surveys in a shorter period of time (19 
months). There were five surveys in the pilot: Montana, Wyoming, North 
Carolina, South Carolina, and West Virginia. The 2011 GAO Report states 
that WHD is behind schedule in each of these surveys. The pilot program 
was developed to test this process, refine it, and eventually meet the 
estimated goal of 19 months. Of the nine building and heavy statewide 
surveys started in 2009 with data collection cut-off dates from 
December 31, 2009, to February 28, 2010, four surveys (Montana, 
Wyoming, New Hampshire, and Vermont) are being published now; three 
surveys (North Carolina, South Carolina, and Maine) will be published 
in next two months; and two surveys (West Virginia and Nebraska) are in 
on-site verification and will be published in the summer of 2011. This 
is an average of 24 months from the time the survey was entered in the 
system to publication and an average of 12 months from the survey cut-
off date to publication. This clearly indicates that WHD has 
substantially reduced the time in every process as compared to five or 
ten years ago. WHD continues to make improvements to the survey process 
in order to reach its goal of a 19-month turn around time period.
    In addition to conducting and completing all of the above surveys, 
WHD conducted and completed a building, heavy, highway, and residential 
survey of Guam in 2010, and a residential weatherization construction 
survey of 50 states and Washington D.C. in 2009. The weatherization 
construction survey in particular stands out as a significant 
accomplishment for WHD as the agency completed it within 3 months. The 
Department of Energy's weatherization program received $5 billion as a 
result of the Recovery Act. The Recovery Act also applied Davis-Bacon 
Act provisions to the program for the first time because Congress 
wanted to assure that workers employed on Recovery Act-funded projects 
were paid the legally mandated wages and benefits. WHD initiated and 
completed the prevailing wage rate surveys during July and August 2009 
and published weatherization rates for more than 3,000 counties by 
September 3, 2009. After publication, it was discovered that due to the 
inexperience of some community action agencies with the Davis-Bacon 
survey requirements, some of the data submitted to WHD had errors. As a 
result, WHD decided to re-verify all the submitted survey data to 
ensure the data was accurate and reliable. WHD then published revised 
prevailing wage rates for weatherization in December 2009.
    Guam will continue to be surveyed every year in accordance with the 
legal requirements concerning Federal construction projects on Guam. 
The further reduction of survey time should continue as more and more 
of the survey and wage determination processes are being automated and 
improved.
    As WHD conducts surveys more frequently in accordance with the new 
processes outlined above, the age of the surveys addressed in the 2011 
GAO Report with contractors and unions should be reduced. New wage 
surveys of states surveyed in 2002 are already being conducted. Surveys 
of Georgia, New Hampshire, Maine, and Vermont are currently being 
conducted. Surveys of Florida, Utah, and Nevada are planned for late 
2011.
    The 2011 GAO Report also refers to the quality of representation 
and responsiveness in WHD's survey results. WHD has already taken steps 
to address this concern. Notably, the December 2010 ASDS release has 
provided the capability to track responses for every contractor and 
interested party, and the April 2011 release will give us additional 
reporting capability. The automatic breakdown by construction type will 
occur later in 2011. This will only affect building and heavy 
construction surveys as they are conducted together as one survey. 
However, as discussed in the 2011 GAO Report, since these efforts are 
ongoing it is premature to assess their effectiveness at this time.
    The 2011 GAO Report discusses the lack of incentive for 
stakeholders to participate in the survey process. Despite an 
aggressive outreach program to increase participation in the survey 
process from all parties, including small contractors and their 
associations, the Davis-Bacon survey is still a voluntary survey. See 
29 CFR 1.3(a). Many of the shortcomings in the surveys arise from the 
voluntary nature of the survey process.
    There is also a discussion in the 2011 GAO Report about reporting 
errors. The errors mentioned in the report were found in the data 
verification process of the survey and typically (if not always) 
resulted from errors in the information provided by survey respondents, 
not from errors by WHD employees. WHD's survey submission form (WD-10) 
asks responders to report on the multiple types of work performed by 
each classification for which they are reporting data. WHD then bases 
rates on the work performed by the classification. While the 2011 GAO 
Report states that 19 of 27 interested parties (70%) interviewed by GAO 
found the forms easy to use, WHD believes any confusion by any 
stakeholder is undesirable. It is important to note, however, that many 
of the errors discovered during on-site verification do not impact the 
accuracy of the wage rates, such as recording the wrong name or address 
of the contractor, or not reporting the correct contract amount. These 
all get counted as errors but have no impact on the wage rates 
themselves.
    The 2011 GAO Report at page 27 indicates that errors may have 
occurred because WHD did not pretest a redesigned form. However, this 
form is not a new form. It is the old WD-10 data placed on a scannable 
format. Over time there has been a substantial increase in electronic 
wage determinations submissions; and therefore, a decision was made to 
make changes to this format to allow respondents to save data, etc. so 
as to ease the information collection process on the part of the 
participant. As noted in the 2011 GAO Report, WHD has indicated that 
another update is planned to address portions of the form that 
respondents find confusing. These changes may only be implemented with 
the approval of the Office of Management and Budget (OMB) in 
coordination with the U.S. Census Bureau, and in conjunction with 
changes to ASDS. The effectiveness of these changes cannot be assessed 
until after implementation.
    The 2011 GAO Report indicated that stakeholders found problems with 
the transparency of the process. WHD agrees that greater transparency 
would enhance the process and the agency has already identified a 
number of improvements that could be implemented. These improvements 
range from improvement to the WHD website, including additional 
information on the surveys and survey data, to more descriptive 
language on the wage determinations.
    In every WHD wage survey, contact is made with unions and 
contractor associations. For the Florida and New York surveys mentioned 
in the 2011 GAO Report, the contractor associations did not respond to 
WHD's offers of pre-survey briefings. WHD will continue to work with 
the contractor associations, unions, and other interested parties to 
increase participation and to solicit the necessary wage information. 
As surveys are conducted more regularly, WHD anticipates that 
participation in the pre-survey briefings and in the surveys themselves 
will become routine for the stakeholders, thus decreasing confusion and 
increasing overall response rates.
2011 GAO Recommendations
    The 2011 GAO Report contains two recommendations for WHD. The first 
recommendation suggests that the Secretary of Labor direct WHD to 
enlist the National Academies or other independent statistical 
organization to evaluate and provide objective advice on the wage 
survey. WHD has previously enlisted McGraw Hill Construction Analytics, 
a firm of leading industry economists with expertise in construction 
analysis, trends, and forecasts, to assess WHD's process and 
operations. The recommendations from McGraw Hill, which WHD provided to 
the GAO auditor, have been implemented and are beginning to bear fruit. 
Given that further changes to the process are currently being 
implemented or will be implemented in the near future, contracting to a 
different organization to evaluate the efforts of WHD may be premature, 
especially in light of cost considerations. WHD will, nevertheless, 
explore options for seeking independent evaluation of the survey 
methodology and identify organizations or academics that may have 
expertise in this area.
    The second recommendation states that the transparency of wage 
determinations needs to be improved. The wage determinations are housed 
on the website ``WDOL.'' The WDOL website is the result of a 
collaboration of the Department of Labor, OMB, National Technical 
Information Service, General Services Administration, and Department of 
Defense. Consequently, any changes to the Website must be made in 
collaboration with these other entities and cannot be made unilaterally 
by the Department of Labor. WHD, however, agrees with the 
recommendation that the public should have more information to clearly 
understand the information being requested and the calculations and 
codes that are used on the wage determinations. As indicated above, WHD 
is already undertaking steps to address these concerns.
DBA Enforcement and Compliance Assistance
    In Fiscal Year (FY) 2010, in addition to focusing on reengineering 
the Davis-Bacon Survey Program, WHD also increased and enhanced its DBA 
enforcement and outreach activities, pursuing opportunities made 
possible with funds from the Recovery Act to implement new enforcement 
and outreach strategies with the objective of realizing Secretary 
Solis' vision of Good Jobs for Everyone.
    DOL's commitment to improving compliance for workers on DBA covered 
construction projects is particularly important because the DBA does 
not provide for a private right of action to collect prevailing wages 
that are legally owed to them. Additionally, enforcement of the DBA 
provisions, as stated earlier, ensures that wage rates in local 
communities are not adversely impacted by an influx of workers who are 
willing to work at wages below those paid in the local area. 
Construction workers who work in high wage areas should not lose out on 
opportunities to work on Federal projects in their communities because 
workers from other areas are willing to take the jobs for less pay. The 
infusion of Federal dollars into communities should never be the 
trigger that depresses wages.
    In FY 2010, WHD pursued an aggressive enforcement and outreach 
program, targeting for DBA compliance 660 contractors and 51 projects 
funded under the Recovery Act. In addition, WHD reinforced its policy 
to accept third party complaints regarding DBA noncompliance. As a 
result, in FY2010, WHD found over $7.4 million in back wage 
compensation owed to 3,716 employees on DBA-covered projects. 
Additionally, in FY 2010, WHD completed 1,087 DBA and Recovery Act 
investigations. As a comparison, in FY 2008, WHD completed 406 DBA 
investigations.
    In part, WHD was able to achieve this measurable improvement after 
creating a new Senior Investigator Advisor (SIA) position, deploying 33 
existing investigators to serve as SIAs in various locations across the 
country. These advisors were responsible for overseeing all Recovery 
Act investigations, training, and coaching other WHD investigators in 
DBA enforcement principles, and providing training and outreach to 
various stakeholders in the Federal contracting community. Because 
basic skills in DBA enforcement had diminished throughout the agency 
over the last ten years, training was undertaken at various levels of 
the organization on a nationwide basis.
    WHD also expanded its efforts to educate contractors and workers 
about their rights and responsibilities on DBA-covered work. To reach 
as large an audience as possible, WHD conducted a series of free 
Prevailing Wage Conferences on the laws and regulations applicable to 
Recovery Act projects. Specifically, these conferences included program 
seminars on the Davis-Bacon Act, the McNamara-O-Hara Service Contract 
Act and the Fair Labor Standards Act; the process of obtaining wage 
determinations and adding classifications; WHD's compliance and 
enforcement processes; and the process for appealing wage rates, 
coverage and compliance determinations.
    The initial conferences in Washington, D.C.; Chicago; Orlando; Long 
Beach; San Antonio and Boston were intended to reach all geographic 
areas of the country. In FY 2010, WHD conducted three more Prevailing 
Wage Conferences in Guam, New Orleans, and Cleveland. Altogether, total 
registrations at these conferences exceeded 2,170. Due to the success 
and positive response WHD received from these conferences, the agency 
announced that it will host five more conferences in FY2011 in 
Melbourne, FL; New York City; Phoenix; Denver; and Las Vegas.
    In addition to the Prevailing Wage Conferences, WHD also increased 
its specific outreach to employers and employer associations to provide 
compliance assistance and education. The agency made presentations to 
the National Association of Women in Construction, the Independent 
Electrical Contractors, the Power and Communication Contractors 
Association, the Professional Services Council, and the Associated 
General Contractors of America, and met with 370 minority/women-owned 
construction companies. WHD also developed a webpage dedicated to 
providing all of our government contract stakeholders with up-to-date 
compliance assistance materials regarding the DBA, SCA, and the 
prevailing wage requirements under the Recovery Act.
    In addition, WHD provided compliance assistance to various 
contracting agencies and hundreds of contracting officers, and 
responded to technical assistance requests from many prime contractors 
and recipients of federal financial assistance awards, including grant 
recipients of the U.S. Department of Agriculture and the U.S. 
Department of Commerce for construction of fiber optic lines under the 
Broadband USA program, as well as recipients and contractors performing 
work under various Department of Energy programs, including the 
Weatherization Assistance Program. WHD participated in outreach events 
hosted by the President's Recovery Accountability and Transparency 
Board including the production of a You Tube video that highlights DBA 
requirements on Recovery Act funded projects. WHD also found 
opportunities to conduct Recovery Act workshops and staff information 
booths at broader events such as the 2010 DOL Informational and 
Outreach forum at Rice University in Houston, TX.
    On March 31, 2011, the DOL Office of the Inspector General (OIG) 
published an audit of WHD's DBA wage determinations and enforcement 
processes, particularly the agency's utilization of Recovery Act 
funding. The objectives of the audit were to determine whether WHD: (1) 
provided adequate compliance assistance/outreach to ensure Recovery Act 
contractors and subcontractors complied with the DBA; (2) conducted 
timely prevailing wage complaint and directed investigations, in 
accordance with applicable policies and regulations; and (3) issued 
timely and reliable prevailing wage determinations in response to the 
Recovery Act, in accordance with applicable policies and regulations.
    The OIG's published report validates WHD's efforts to improve 
outreach, enhance enforcement of the DBA provisions, and reengineer the 
Davis-Bacon Survey Program. Specifically, the OIG determined that: (1) 
WHD outreach efforts were extensive and effective; (2) WHD used 
Recovery Act funds to shift the overall focus of DBA investigations 
using initiatives that have resulted in lasting improvements to the 
investigation program; and (3) WHD conducted timely surveys and 
established reliable prevailing wage determinations required by the 
Recovery Act as illustrated by WHD's use of Recovery Act funds to 
update 10 DBA highway surveys, and quickly issue rates for DOE's 
weatherization program. The OIG did not make any recommendations for 
improvement.
    WHD has implemented program goals and objectives for FY 2011 that 
will continue targeting Recovery Act project investigations for DBA 
compliance, providing outreach opportunities for educating stakeholders 
on the DBA requirements, and aggressively pursuing complaints of DBA 
violations with an emphasis on targeting and debarring contractors who 
commit repeat or serious DBA violations.
Conclusion
    Secretary Solis has consistently stated that all of the work of the 
Department of Labor is focused on achieving Good Jobs for Everyone. The 
Labor Department's vision of a ``good job'' includes jobs that:
     increase workers' incomes and narrow wage and income 
inequality;
     assure workers are paid their wages and overtime;
     are in safe and healthy workplaces, and fair and diverse 
workplaces;
     provide workplace flexibility for family and personal 
care-giving;
     improve health benefits and retirement security for all 
workers; and
     assure workers have a voice in the workplace.
    To achieve this goal, the Department is using every tool in its 
toolbox, including increased enforcement actions, increased education 
and outreach, and targeted regulatory actions. These unifying themes 
seek to foster a new calculus that strengthens protections for workers 
and results in significantly increased compliance.
    Eighty years after its enactment, the Davis-Bacon and related Acts 
continue to protect the wages of hard-working Americans as they build 
our nation's infrastructure. In addition to providing a stable and fair 
contracting environment for businesses that perform construction 
covered by Davis-Bacon labor standards, the Acts ensure that 
construction workers receive appropriate prevailing wages that 
contribute to the quality of their lives and to the communities in 
which they live.
    WHD is doing its part in this endeavor by reengineering the Davis-
Bacon Survey Program and enhancing enforcement of the DBA requirements 
to ensure workers are paid the wages they are legally owed and that the 
injection of Federal construction funds into communities does not 
depress the wages of the local workforce. These efforts help to 
increase workers' incomes and narrow wage and income inequality, and 
they ensure the sustainability of American's hard-working middle class.
    Again, thank you for the opportunity to testify today. I am happy 
to answer any questions the Subcommittee may have on the Department of 
Labor's work to improve the accuracy and timeliness of DBA wage 
determinations and to enhance DBA enforcement.
                                 ______
                                 
    Chairman Walberg. Thank you, Mr. Markey.
    Mr. Eisenbrey?

  STATEMENT OF ROSS EISENBREY, ESQ., VICE PRESIDENT, ECONOMIC 
                        POLICY INSTITUTE

    Mr. Eisenbrey. Thank you, Mr. Chairman. Congress enacted 
Davis-Bacon to assure workers on federal----
    Chairman Walberg. Make sure your mic is on.
    Mr. Eisenbrey. Congress enacted Davis-Bacon to assure 
workers on construction projects a fair wage and to provide 
local contractors a fair opportunity to compete. The 
requirement to pay no less than locally prevailing wages is 
absolutely essential to protect local standards and to prevent 
competition based on low wages rather than on productivity, 
efficiency and quality.
    The act has achieved those goals for 80 years so it is easy 
to forget its importance. Like many things in life it is only 
when it is gone that we realize just how valuable its 
protections really are. Hurricane Katrina is a case in point. 
After the hurricane struck the Gulf coast President Bush 
suspended the act by executive order. What happened?
    Well, workers didn't get a fair wage because contractors 
could bid the work at the minimum wage instead of the 
prevailing wage. They brought in itinerant crews from outside 
the Gulf Coast, even from outside the U. S., and paid rock-
bottom wages.
    Workers, for example, were reportedly hired at $60.00 per 
day, no benefits and a long workday. Local contractors were 
underbid and got passed over at their hour of greatest need and 
opportunity. They watched multi-nationals sweep in and take 
millions of dollars of federal clean-up contracts. Finally 
President Bush reinstated the act.
    When local workers are hired there is a benefit to local 
businesses beyond construction firms. Local workers spend 
locally. Out of state crews take their wages with them. There 
are huge regional and state variations in construction industry 
pay just as there were in 1931. State hourly wages range from 
about $18.00 in Alabama to about $36.00 in Alaska. Construction 
wages in adjacent counties can also differ remarkably which is 
why Davis-Bacon's preference for county-based wage 
determination makes some sense.
    Using OES data from the Bureau of Labor Statistics in the 
Chairman's home state we see enormous differences between 
Washtenaw County where electricians average about $34 and hour 
and next door in Livingston County where they average about 
$27. Tile and marble setters in Livingston County earn about 
$32.00 an hour on average but next door in Genesee they earn 
far less, about $22.00 an hour.
    The Davis-Bacon Act serves another extremely important 
purpose. It supports high quality training by encouraging the 
operation of union apprenticeship programs and compelling the 
non-union sector to try to compete.
    The typical contractor has little incentive to invest in 
skills training since the worker can carry that investment to 
another employer. Unions overcome contractors' natural 
reluctance to make the investment by compelling employers to 
contribute to joint apprenticeship funds.
    Every signatory contractor pays his fair share and benefits 
equally from the training provided. The Davis-Bacon Act 
incentivises (sic) these apprenticeships by permitting payment 
of lower wage rates to employers enrolled in bone fide a 
apprenticeship programs. Contractors can submit lower bids when 
they employ bone fide a apprentices as part of their work 
force.
    Critics claim that the act raises the cost of construction 
benefiting the workers at the expense of taxpayers. But a great 
deal of empirical research refutes that. There have been 
natural experiments--elegant natural experiments where states 
have repealed their laws or passed laws and then you see what 
happens following that change in state law. And it shows 
without question that these laws do not raise construction 
costs.
    Higher wages lead employers to invest in labor saving tools 
and equipment which increases productivity. Better paid, more 
skilled workers are safer, work more efficiently and deliver a 
better product.
    Construction workers in states that have little Davis-Bacon 
Act prevailing wage laws are 13 percent to 15 percent more 
productive on average than construction workers in non-
prevailing wage states. Given that construction wages and 
benefits are only about 30 percent of construction cost it is 
easy to see how higher productivity offsets the increased cost 
of prevailing wages.
    The GAO does identify some problems. The surveys are not--
the response rates are not very good. And I have a couple of 
ideas in addition to what GAO suggests which I think makes a 
lot of sense. They should do more outreach. The Labor 
Department should do more outreach.
    They should use Webinars, they should get on the phone and 
call contractors. They should really make an effort to get a 
higher response rate. But there are other things that could be 
done and two in particular I think make a lot of sense.
    One would be to pay small employers--contractors--
especially ones who aren't bidders on contracts. Pay them $100 
for their time to fill out the surveys. That would give them 
the incentive--if he says there is no incentive or little 
incentive now. That would give them an incentive.
    The other thing that could be done--and I think this is 
very important--is to amend the Federal Acquisition Regulations 
to require that anyone who does work on a federal construction 
contract has to respond. Mandate a response to any relevant 
appropriate survey. That would, by itself, greatly increase the 
response rate. Mr. Sherk will suggest using an alternative----
    Chairman Walberg. Mr. Eisenbrey, your time is up.
    Mr. Eisenbrey. I--just to sum up I would just say that 
there are problems using the OES. It doesn't have benefits. I 
think he recognizes that and the sample sizes are too small to 
cover all of the classifications at the metropolitan survey 
area.
    [The statement of Mr. Eisenbrey follows:]

         Prepared Statement of Ross Eisenbrey, Vice President,
                       Economic Policy Institute

    Good morning, Mr. Chairman and members of the subcommittee. I am 
Ross Eisenbrey, Vice President of the Economic Policy Institute, a non-
partisan think tank whose mission is to document the impact of the 
economy on working and middle class families and to develop policies to 
ensure shared prosperity.
    The subject of today's hearing, the Davis Bacon Act and its 
implementation by the Department of Labor, is important to middle class 
Americans. The Act helps stabilize a sector of the economy which is 
fundamental to our overall economic performance and which provides good 
jobs to millions of non-college educated men and women.
    Congress enacted the Davis Bacon Act to assure workers on federal 
construction projects a fair wage and to provide local contractors a 
fair opportunity to compete for construction contracts. The requirement 
to pay no less than locally prevailing wages is essential to protect 
local standards and to prevent competition based on low wages rather 
than on productivity, efficiency and quality.
    The Act has succeeded in those goals for 80 years, so it's easy to 
forget its importance. Like many things in life, it's only when it's 
gone that we realize just how valuable its protections really are. 
Hurricane Katrina is a case in point. After the hurricane struck the 
Gulf Coast, President Bush suspended the Act by executive order. What 
happened?
    Workers didn't get a fair wage because contractors could bid the 
work at the minimum wage instead of the prevailing wage. They brought 
in itinerant crews from outside the Gulf Coast--even from outside the 
U.S.--and paid rock bottom wages. Roofers, for example were reportedly 
hired at $60 per day.
    Local contractors couldn't compete and got passed over at their 
hour of greatest need and opportunity. Stories in the Baltimore Sun, 
Atlanta Journal Constitution and New Orleans Times Picayune reported on 
the unhappiness of local businesses that watched multinationals sweep 
in and take millions of dollars of federal clean-up contracts. An 
editorial in the Times Picayune under the headline ``Rebuilding effort 
should be localized'' hit the nail on the head:

          ``[W]e are already moving quickly and boldly in the wrong 
        direction * * * [Y]ou can hardly entice [our citizens] back if 
        you're only willing to pay poverty wages. But in the wake of 
        the disaster, President Bush suspended the Davis-Bacon Act. * * 
        * In essence, there's no ceiling preventing sky-high profits 
        for these [out-of-state] contractors and not much of a floor to 
        ensure that wages to workers are not abysmally low. There is an 
        intelligent way to rebuild our city. This, however, isn't it.''

    When local workers are hired there's a benefit to local businesses 
beyond the construction firms themselves because local workers spend 
locally. Out-of-state crews take their wages with them.
    The importance of the locally prevailing wage requirement in the 
Act goes beyond disaster situations, of course. There are huge regional 
and state variations in construction industry pay, just as there were 
in 1931. In 2010, we have data available for the hourly wage of all 
workers in the construction industry by state in 43 states. They 
averaged $24.54. However, the range of state hourly wages was quite 
large: from a low of $18.33 in Alabama to a high of $36.15 in Alaska. 
Five states had hourly wages in construction below $20 an hour 
(Alabama, Arkansas, Maine, Mississippi, Texas), and six states' wages 
were above $30 an hour (Alaska, Illinois, Massachusetts, New Jersey, 
New York, Washington). Likewise, within-state differences can be 
extreme.
    Construction wages in adjacent counties can differ remarkably, 
which is why the Davis-Bacon Act's preference for county-based wage 
determinations makes sense. In the Chairman's home state, it's perhaps 
no surprise that carpenters average $9 an hour more in urban Washtenaw 
County than in rural Charlevoix County, according to BLS data (which do 
not account for further differences in fringe benefits). But there are 
enormous differences even between Washtenaw County, where electricians 
average $33.71 an hour, and next door in Livingston County, where they 
average $27.41. Tile and marble setters in Livingston County earn 
$31.69 on average, whereas next door in Genessee County they earn far 
less--$22.27 an hour.
    The Davis Bacon Act serves another extremely important purpose that 
was not foreseen by Congress in 1931. It supports high quality training 
by encouraging the operation of union apprenticeship programs and 
compelling the non-union sector to try to compete. The typical 
contractor has very little incentive to invest in skills training since 
the worker can carry that investment with him to another employer. 
Unions overcome contractors' natural reluctance to make the investment 
by compelling employers to contribute to joint apprenticeship funds: 
every signatory contractor pays his fair share and benefits equally 
from the training provided.
    The Davis Bacon Act incentivizes apprenticeships by permitting 
payment of lower wage rates to employees enrolled in bona fide 
apprenticeship programs. Contractors can submit lower bids when they 
employ bona fide apprentices as part of their workforce.
    Critics claim these goals are achieved at too high a price, that 
the Act raises the cost of construction, benefitting the workers at the 
expense of taxpayers. But a great deal of empirical research refutes 
the claim that prevailing wage laws inflate construction costs. Work by 
Professors Peter Philips and Garth Magnum of the University of Utah, by 
Prof. Dale Belman of Michigan State University, and Prof. Hamid Azari-
Rad of the State University of New York, among others, shows that 
prevailing wage laws lift workers' wages and compensation without 
significantly increasing construction costs.
    Higher wages lead employers to invest in labor-saving tools and 
equipment, which increases productivity. Better paid, more skilled 
workers are safer, work more efficiently, and deliver a better product. 
Prof. Philips has calculated that construction workers in states with 
``little Davis Bacon'' prevailing wage laws are more productive, on 
average, than construction workers in non-prevailing wage states. Their 
value added is 13-15% higher per employee. Given that construction 
wages and benefits are only about 30% of construction costs, it is easy 
to see how higher productivity offsets the increased cost of prevailing 
wages.
The GAO report
    GAO makes three recommendations, one for Congress and two for the 
Department of Labor:
    1. Congress should consider giving DOL more flexibility in the 
requirement that wage rates be issued by civil subdivision.
    2. DOL should obtain expert advice on its survey design and 
methodology.
    3. DOL should take steps to increase transparency in its wage 
determinations.
    None of these recommendations is earth-shaking, and the report 
makes clear that DOL is engaged in the process of making improvements. 
The Department seems to be on the verge of ending a long period of 
neglect, when many wage determinations were not updated for more than a 
decade and the survey process itself was allowed to drag on 
interminably. Highway surveys, for example, which have taken an average 
of 42 months, will be completed in eight months.
    GAO admits that it is too early to fully assess the effects of 
changes DOL made in 2009, but it goes on to criticize the timeliness of 
survey data nevertheless. It is important, however, to remember that 
the use of older data usually means that wage rates are set lower than 
would otherwise be the case. It is employees, first and foremost, who 
pay the price for delays.
    With respect to the first recommendation, it is clear that DOL 
already has considerable flexibility in choosing the survey area for 
wage determinations and uses it. If there aren't sufficient responses 
in a county, DOL combines nearby counties in groups and super groups, 
only resorting to statewide data when absolutely necessary. The large 
use of statewide data in the four states GAO examined is an indication 
that DOL needs to do more to improve the survey response rate.
    As we saw earlier, there are very real differences, county by 
county, in how construction workers are compensated. To prevent the 
federal government from altering the market, wage determinations based 
on surveys that perfectly reflect county wage patterns would be ideal. 
The Bureau of Economic Affairs and the Bureau of Labor Statistics do 
not collect and report wage data consistently at the county level for 
all of the construction industry's occupational classifications. The 
most direct solution is to improve the DOL surveys and collect more 
complete information.
    The surveys are voluntary, and that is a major source of the 
response rate problem. Many reasons have been offered for the lack of 
participation: some people don't understand the survey's importance, 
others don't trust or want to assist the government, while others feel 
they can't afford to take the time to respond. The oddest reason GAO 
proffered was that some people think the surveys lead to inaccurate 
wage determinations, even though their non-participation is a cause of 
the inaccuracy they complain about.
    GAO's recommendations for greater outreach and transparency seem 
like obvious pieces of the puzzle. And I have trouble understanding 
DOL's reluctance to seek expert advice on ways to increase the survey 
response rate. The quality of the surveys depends on maximizing the 
rate and accuracy of the responses. Getting help can never be 
premature.
    But two other solutions seem to be called for and could make a 
bigger difference.
    First, OMB could require as a precondition for bidding on federal 
contracts that contractors participate in every relevant Davis-Bacon 
survey. This would be a small price to pay for the privilege of working 
on a federal construction project. And second, paying the respondents 
for their time--even $100 per completed survey--might substantially 
increase the response rate, especially among small businesses. I am 
told the surveys actually take even a small contractor very little time 
to complete--about 55 minutes for first-time filers, and less 
thereafter.
    Suggestions that DOL abandon the Davis Bacon Act survey process and 
rely on the Bureau of Labor Statistics Occupational Employment 
Statistics (OES) for wage determinations have been made for many years 
and rejected after serious consideration. Among the many problems with 
the OES are the fact that it doesn't collect benefits data--which can 
make up 20% or more of a worker's compensation, and that its sample 
size is much too small to report data at the county or even MSA level 
on all of the construction occupations in each of the separate, key 
market areas: residential, building, highway and heavy. There would be 
considerable cost involved in redesigning the OES and increasing its 
sample size, and even then it could not meet the statutory requirement 
of determining the prevailing wage in the sense of identifying the 
single wage paid to a majority of workers in the locality of the 
construction, because the OES is an estimate constructed from a three-
year average of reported wages in various ranges.
                                 ______
                                 
    Chairman Walberg. Thank you for your testimony.
    Move on to Mr. Sherk.

   STATEMENT OF JAMES SHERK, SENIOR POLICY ANALYST IN LABOR 
               ECONOMICS, THE HERITAGE FOUNDATION

    Mr. Sherk. Chairman Walberg, ranking member Woolsey and 
members of the sub-committee, thank you for inviting me to 
testify. My name is James Sherk and I am a senior policy 
analyst in Labor Economics at The Heritage Foundation. However, 
the views I express in this testimony are my own and they 
should not be construed as representing an official position of 
the Heritage Foundation.
    I want to explain to you this morning that the Wage and 
Hour Division's prevailing wage estimates in our survey is 
deeply flawed. And these flaws hurt both workers and taxpayers.
    There are three facts about the Davis-Bacon survey that 
Congress should be aware of. The first fact is that the Wage 
and Hour division uses an unscientific methodology incapable of 
accurately estimating prevailing wages. The importance of a 
representative sample is a fundamental statistical principle. 
Accurate estimates are impossible without them.
    To see this just consider what would happen if Rush 
Limbaugh polled his audience about whether President Obama 
deserves reelection. Presumably an overwhelming majority would 
say he does not. Would this mean the President is headed for a 
landslide defeat? Not necessarily.
    Limbaugh has a more conservative audience than the country 
as a whole. Drawing conclusions from an unrepresentative sample 
is unscientific and inaccurate. Nonetheless, that is what the 
Wage and Hour Division does. Many businesses ignore the Davis-
Bacon Surveys and Wage and Hour does little to follow up with 
them. The survey responders who do respond are 
disproportionately large, unionized employers. Wage and Hour 
does not apply the standard statistical corrections for this 
problem, such as waiting and imputation.
    As a result, 63 percent of Davis-Bacon wages are union 
rates, while only 13 percent of construction workers belong to 
a union. The Davis-Bacon survey is not a representative sample 
and there is no reason to expect that it would reflect clear 
wages. But even if Wage and Hour properly randomized its 
survey, it is too few responses to be accurate. Surveys become 
less accurate as their sample size drops. When the sample size 
drops below 30, it becomes impossible to even estimate the 
survey's margin of error.
    No professional pollster would conduct a survey of 28 
voters. If the GAO finds that three-quarters of Davis-Bacon 
wage determinations are based on the wages paid to six or fewer 
workers, only one-quarter of them are based on wages paid to 
six or fewer workers. These small sample size make the results 
meaningless. The Davis-Bacon survey methodology is 
unscientific. Only by chance will it report clear wages. The 
second fact that Congress should know is that Davis-Bacon 
surveys are highly inaccurate.
    When Labor puts garbage in, they get garbage out. Now in 
most cities, these errors inflate Davis-Bacon rates--wages 
above market rates. For example, plumbers in Jackson, Michigan 
earn $28 an hour. But the Davis-Bacon rates there are $33 an 
hour, a 16 percent premium.
    Electricians in Sonoma County, California earn $20-odd an 
hour, but Davis-Bacon rates there are $44 an hour, 54 percent 
higher. But in other cities, Davis-Bacon rates are well below 
market wages.
    In Spartanburg, South Carolina the Wage and Hours Division 
contends that carpenters there earn federal minimum wage of 
$7.25 an hour. That is less than half of what they actually 
make.
    Nationwide, Davis-Bacon rates are 22 percent above market 
pay, and this inflates the cost of federal construction by 
about 10 percent. These inaccuracies have caused the government 
to hire four construction workers for the price of five, 
hurting both workers and taxpayers.
    Accurate data would reduce the deficit and allow Congress 
to build more construction without additional appropriations. 
This would create extra jobs for tens of thousands of 
unemployed construction workers without diverting resources 
from productive sectors of the economy.
    The third fact that Congress should keep in mind is that 
the Bureau of Labor Statistics estimates prevailing wages much 
more accurately than what the Wage and Hour Division does.
    Wage and Hour is an enforcement agency, its job is to 
enforce federal laws like the Family and Medical Leave Act, or 
the Minimum Wage. It has no expertise in surveying wages and 
that is why you got such a bad methodology. The Bureau of Labor 
Statistics has exactly this--this expertise.
    That is why it exists. BLS methodology, accuracy and data 
quality are internationally respected. Now The Bureau of Labor 
Statistics already conducts two nationwide occupational wage 
surveys. Unlike the Davis-Bacon survey, these surveys are based 
on representative samples.
    They have large sample sizes and are updated annually. They 
are scientific. They are accurate. That is why the Department 
of Labor already uses these surveys to enforce prevailing wages 
for the Foreign Labor Certification Program and for the Service 
Contract Act. The chief obstacle to using BLS data is 
calculating hourly fringe benefit rates as required by the act. 
No existing nationwide survey covers employee benefits at the 
local level.
    This problem could be solved either by expanding the 
geographic scope of the National Compensation Survey or by 
collecting information on construction benefits through the 
Occupational Employment Statistics Survey. If Congress wants 
accurate prevailing wage rates, it should direct the Bureau of 
Labor Statistics to calculate them.
    Thank you. I appreciate the opportunity to talk to you 
today about the deep flaws with the Davis-Bacon survey and how 
it hurts both workers and taxpayers.
    [The statement of Mr. Sherk follows:]

   Prepared Statement of James Sherk, Senior Policy Analyst in Labor 
                   Economics, the Heritage Foundation

    Chairman Walberg, Ranking Member Woolsey, and members of the 
Subcommittee on Workforce Protections, thank you for inviting me to 
testify before you today. My name is James Sherk and I am a senior 
policy analyst in labor economics at The Heritage Foundation. The views 
I express in this testimony are my own, and should not be construed as 
representing any official position of The Heritage Foundation.
    The GAO has identified many severe flaws in the process used to 
calculate Davis-Bacon prevailing wages. However, two aspects of the 
Department of Labor's methodology are particularly problematic: the use 
of a non-representative sample and excessively small samples. These 
errors render Davis-Bacon wage estimates scientifically meaningless.
    As a result of these flaws, Davis-Bacon wages vary wildly from 
market rates. In some states, such as South Dakota, Davis-Bacon rates 
are below market rates. In other states, such as California, Davis-
Bacon rates are well above market wages. On average, the Davis-Bacon 
rates are 22 percent above market wages.
    These errors hurt both workers and taxpayers. My estimates show 
that paying true prevailing wage rates--instead of inaccurate Davis-
Bacon rates--would reduce government construction costs by $10.9 
billion this year. Those savings could be used to either reduce the 
deficit or build more infrastructure at no additional cost to the 
public. The latter choice would mean jobs for an additional 155,000 
construction workers.
    Congress should insist that the Department of Labor produce 
scientific and accurate estimates of prevailing construction wages. The 
best way to do this is by transferring the resources and responsibility 
for conducting Davis-Bacon surveys to the Bureau of Labor Statistics. 
The Bureau of Labor Statistics has expertise in producing scientific 
wage estimates and could meet this responsibility by expanding its 
existing compensation surveys. The Department of Labor has no excuse 
for relying on unscientific and error-riddled prevailing wage 
estimates.
The Davis-Bacon Act
    The Davis-Bacon Act (DBA) requires contractors on federally funded 
construction projects to pay their employees at least as much as other 
construction workers in the area earn--the ``prevailing wage.'' This 
prevents construction contractors from winning federal construction 
projects by bringing in outside workers earning below local wages.
    Congress passed the Davis-Bacon Act in 1931 to prevent African-
American workers from underbidding white union members on federal 
construction projects.\1\ During the Great Depression many African-
Americans moved to the North to search for employment opportunities. In 
many cases they won federal construction contracts that would have 
otherwise gone to white union members. The Davis-Bacon Act 
intentionally made it much more difficult for minorities to compete 
against white workers for these jobs.\2\
    Despite this origin, the Davis-Bacon Act remains on the books and 
applies to almost all federally funded construction projects. The Wage 
and Hour Division (WHD) of the Department of Labor estimates the local 
prevailing wages that federal contractors must pay.
Unscientific Survey Methodology
    The Government Accountability Office (GA) and the Office of 
Inspector General have frequently criticized the Wage and Hour 
Division's survey methodology.\3\ A recent GAO report finds that 
serious flaws persist with Davis-Bacon surveys.\4\ Some of these 
problems can be solved by improving existing methods. These include 
processing delays and confusing surveys that lead to high error rates 
in returned forms.
    However, the most significant problem with Davis-Bacon rates is the 
WHD methodology itself. The Wage and Hour Division uses unscientific 
methods to estimate construction wages. The GAO criticized WHD for not 
consulting with survey experts to design its survey and this lack of 
expertise shows.\5\
    Two fundamental flaws render WHD wage estimates scientifically 
invalid. First, WHD does not calculate Davis-Bacon wages using a 
representative sample. The importance of a representative sample is a 
fundamental statistical principle. A non-representative sample of wages 
reveals nothing about true prevailing wage rates.
    Second, WHD bases the majority of its wage estimates on too few 
responses to be accurate. GAO reports that only one-quarter of Davis-
Bacon wages are based on estimates of 29 or more workers. Fully 26 
percent of Davis-Bacon estimates are based on the wages paid to six or 
fewer workers. Even if WHD properly randomized its surveys, these small 
sample sizes would make the results meaningless.
    The WHD survey methodology is unscientific and incapable of 
accurately estimating construction wages. It will only approximate 
market pay by chance.
Representative Samples
    Professional statistical agencies estimate statistics by conducting 
surveys. The Bureau of Labor Statistics (BLS) does not have to 
interview every business every month to determine how many jobs the 
economy created. Instead it surveys a representative sample of 
businesses. Statistical agencies achieve representative samples through 
random sampling. Using statistical principles they can extrapolate from 
a randomly sampled survey to the overall economy.
    Without a representative sample surveys say nothing about the 
overall economy. As Nobel Prize-winning economist James Heckman has 
noted, ``Wage or earnings functions estimated on selected samples do 
not in general, estimate population wage functions.''6 Any introductory 
statistics text will make the same point.\7\
    Non-representative samples are not scientifically valid. They only 
provide information about those who respond to the survey. They provide 
no statistical information about wages or other aspects of the overall 
economy.
    To see this, consider if Rush Limbaugh and Rachel Maddow hosted on-
air polls about whether President Obama should be re-elected. Rush 
Limbaugh has a much more conservative audience than the country as a 
whole. He would probably find an overwhelming majority of respondents 
wanting to see Obama defeated. Rachel Maddow has a much more liberal 
audience than the country as a whole. Her viewers would probably say 
overwhelmingly that Obama deserves a second term. These straw-polls 
might provide interesting information about the audience of the Rush 
Limbaugh and Rachel Maddow shows, but they would provide no useful 
information about President Obama's actual re-election prospects. 
Concluding that President Obama was headed for a landslide defeat or 
landslide victory based on a non-representative survey would be 
unscientific and inaccurate.
Davis-Bacon Survey Is Self-Selected
    A representative sample is unnecessary if the government knows the 
wages of every worker. Then the government could calculate average 
wages directly without generalizing from a sample. The Wage and Hour 
Division purports to have this information for construction workers. 
WHD sends surveys to every construction firm in a given region.\8\ WHD 
bases Davis-Bacon wages on the responses to this ``census.'' This will 
provide scientifically valid wage figures--if every business responds.
    However, most businesses do not return Davis-Bacon wage surveys. 
Davis-Bacon surveys take considerable time and effort to complete and 
many contractors do not expend staff resources to complete them.\9\ The 
surveys also ask for information in a form that many construction 
companies do not track.\10\ If contractors do not respond to the 
survey, WHD sends them a follow-up letter asking them to complete the 
forms.\11\ If that letter goes unanswered, they are ignored.
    This methodology leads to very high non-response rates. Response 
rates are so low that WHD reduced its minimum data standards to wages 
of three workers from two companies. Too few employers responded to 
meet the old standard of data on six workers from at least three 
employers.\12\ Those employers who do respond tend to be those with 
large staffs. Unions also devote considerable effort to facilitate 
unionized employers completing and returning the surveys.\13\
    Consequently, Davis-Bacon rates are based on neither a 
representative sample nor a universal census of construction workers. 
They are based on a self-selected sample of large, unionized 
businesses. The GAO report confirms this. Nationwide only 13.7 percent 
of construction workers are covered by union contracts.\14\ Nonetheless 
63 percent of Davis-Bacon rates are collectively-bargained union wage 
rates.\15\ Union rates are more than four and a half times more common 
in the WHD survey than would occur in a representative sample. The 
Davis-Bacon survey is far from representative.
    As a result it is scientifically useless. Accurate estimates of 
prevailing construction wages cannot be made from a non-representative 
sample. Davis-Bacon rates will only approximate actual prevailing wages 
by chance.
Statistical Corrections Ignored
    Professional statistical surveys do not suffer from these problems. 
The Bureau of Labor Statistics, for example, does not estimate job 
creation by conducting a census of all employers. Instead BLS selects a 
smaller sample of businesses and takes several steps to make that 
sample representative.
    First the BLS strives to make its surveys as easy as possible to 
understand and complete. They test their surveys with employers before 
they put them in the field to ensure ease of use. The Wage and Hour 
Division does not do this.\16\
    Second, professional statistical agencies like the BLS follow up 
with employers who do not initially respond. This includes telephone 
calls and in some cases on-site visits to collect the required 
information.\17\
    As a result of these measures BLS surveys have high response rates. 
For example, 78.4 percent of employers respond to the Occupational 
Employment Statistics survey.\18\ These high responses help make BLS 
surveys representative of the overall population.
    Third, professional statistical agencies do not ignore employers 
that do not respond. Instead they make adjustments to correct for their 
absence. The two principle adjustments statistical agencies make are 
weighting and imputation.
    Weighting involves adjusting the importance given to the 
respondents of the survey based on how likely they are to respond. 
Those groups who were more likely to respond count for less and vice 
versa. Pollsters do this on a regular basis. For example, a pollster 
might survey a state and get a sample with 60 percent men and 40 
percent women. In fact that state has equal numbers of men and women--
women simply responded in lower numbers. The pollster would adjust the 
weight given to men and women's responses so that both groups 
contributed equally to the final results. Statistical agencies weight 
responses by variables like firm size so that large businesses are not 
overrepresented.\19\
    Imputation involves substituting a missing response with a response 
from a similar respondent or respondents. For example, if a small 
construction firm does not return the Occupational Employment 
Statistics survey the BLS does not assume that there are not any 
workers. Instead the BLS would randomly select another nearby small 
construction firm that did respond and treat its response as the 
response of the missing firm.\20\ This introduces some error into the 
sample--but much less error than by completely ignoring non-responders.
    The Wage and Hour Division does not weight Davis-Bacon survey 
responses or impute missing data. The Wage and Hour Division does not 
conduct any analysis at all of contractors who do not respond.\21\ WHD 
does not take basic statistical steps to obtain a representative 
sample. Their methodology has no scientific justification.
Inappropriately Small Samples
    The Davis-Bacon methodology suffers from a second fundamental 
scientific flaw. Even with a proper representative sample the Wage and 
Hour Division surveys too few workers to make statistically accurate 
estimates.
    Averages in a representative sample are unlikely to exactly match 
the average in the overall economy. The power of statistical inference 
is that it allows researchers to estimate their margin of error. The 
sample may not exactly match the overall population, but researchers 
can determine how far off they are likely to be.
    As sample size decreases, surveys become less accurate and their 
margin of error increases. For example, a representative poll of 1,000 
Americans has a margin of error of +/- 3.1 percent while a poll of 100 
Americans has a margin of error +/- 10.0 percent.\22\
    If sample sizes become too small, however, estimating even the 
margin of error becomes impossible. Statistical inference is based on 
the central limit theorem.\23\ The central limit theorem only applies 
to samples of sufficiently large size, in most cases requiring a sample 
of at least 30 observations.\24\ Researchers cannot estimate how 
inaccurate the results of smaller samples are.
    The Wage and Hour Division routinely uses samples of less than 30 
workers. The GAO found that only 25 percent of Davis-Bacon rates are 
based on data from 29 or more workers. A greater proportion of wage 
rates (26 percent) are based on data from 6 or fewer workers.\25\
    Even a properly randomized representative sample of 6 workers would 
be too small from which to make statistical inferences. No professional 
pollster would conduct a survey of 6 voters.
    The WHD minimum data standards are observations on three workers 
from two employers. That minimum standard should be data on at least 30 
randomly selected workers. The Wage and Hour Division's existing 
methodology lacks statistical validity.
Inaccurate Wage Determinations
    The Wage and Hour Division uses unscientific methods and 
unrepresentative data to estimate prevailing wages. Unsurprising, 
Davis-Bacon rates typically bear little relation to actual prevailing 
wages. The table below shows Davis-Bacon and market wages (estimated by 
the Bureau of Labor Statistics) for several U.S. cities.\26\ The 
appendix to this testimony explains the methodology for these 
comparisons. Davis-Bacon rates vary wildly from actual market pay.
    For most cities, Davis-Bacon rates are well above market wages. 
Plumbers in Jackson, Michigan, earn $28.23 an hour, but their Davis-
Bacon rates are $32.79 an hour--a 16 percent premium. Carpenters in the 
Twin City region in Minnesota earn $23.92 an hour, but the Wage and 
Hour Division requires federal contractors to pay $31.77 an hour--a 33 
percent premium. Electricians in Sonoma County, California, earn $28.55 
an hour, but Davis-Bacon rates are 54 percent higher at $44.00 an hour.
    In some cities, however, the Wage and Hour Division's flawed 
methodology reports Davis-Bacon rates below prevailing market wages. 
Davis-Bacon rates for plumbers in Sioux Falls, South Dakota, are 17 
percent below market wages. The Wage and Hour Division contends that 
prevailing wages for electricians in Spartanburg, South Carolina, are 
only $7.85 an hour--55 percent below their actual level of $17.47 an 
hour. Davis-Bacon rates for carpenters in Spartanburg are even worse--
the federal minimum wage of $7.25 an hour.
    Nationwide the Wage and Hour Division reports Davis-Bacon wages 
that average 22 percent above actual market pay. These inaccurate rates 
inflate the cost of federal construction projects by 9.9 percent.\27\

             DAVIS-BACON AND MARKET RATES FOR VARIOUS CITIES
------------------------------------------------------------------------
                                                                  %
                                      Market    Davis-Bacon   Difference
------------------------------------------------------------------------
Jackson County, MI:
    Carpenters...................       $20.98       $23.89       13.90%
    Electricians.................       $27.14       $38.57       42.10%
    Plumbers/Pipe-fitters........       $28.23       $32.79       16.20%
Minneapolis-St. Paul, MN:
    Carpenters...................       $23.92       $31.77       32.80%
    Electricians.................       $29.44       $34.56       17.40%
    Plumbers/Pipe-fitters........       $33.06       $36.62       10.80%
Sioux Falls, SD:
    Carpenters...................       $15.57       $12.17       -21.8%
    Electricians.................       $19.38       $23.61       21.80%
    Plumbers/Pipe-fitters........       $17.56       $14.57       -17.0%
Erie County, PA:
    Carpenters...................       $16.89       $26.23       55.30%
    Electricians.................       $23.72       $26.40       11.30%
    Plumbers/Pipe-fitters........       $22.54       $33.38       48.10%
Sonoma County, CA:
    Carpenters...................       $26.88       $37.65       40.10%
    Electricians.................       $28.55       $44.00       54.10%
    Plumbers/Pipe-fitters........       $29.71       $55.25       86.00%
Lafayette, IN:
    Carpenters...................       $18.46       $25.32       37.20%
    Electricians.................       $24.84       $30.83       24.10%
    Plumbers/Pipe-fitters........       $21.23       $33.91       59.70%
Terre Haute, IN:
    Carpenters...................       $19.75       $26.16       32.50%
    Electricians.................       $27.20       $32.95       21.10%
    Plumbers/Pipe-fitters........       $26.81       $33.91       26.50%
Spartanburg County, SC:
    Carpenters...................       $15.40        $7.25       -52.9%
    Electricians.................       $17.47        $7.85       -55.1%
    Plumbers/Pipe-fitters........       $20.48        $7.36       -64.1%
Polk County, FL:
    Carpenters...................       $15.37       $15.19        -1.2%
    Electricians.................       $17.62       $22.07       25.30%
    Plumbers/Pipe-fitters........       $18.31       $17.00        -7.2%
Contra Costa and Alameda
 Counties:
    Carpenters...................       $28.96       $37.65       30.00%
    Electricians.................       $35.46       $45.20       27.50%
    Plumbers/Pipe-fitters........       $32.85       $50.81       54.70%
Newark and Union, NJ:
    Carpenters...................       $26.57       $39.07       47.00%
    Electricians.................       $33.57       $46.63       38.90%
    Plumbers/Pipe-fitters........       $29.54       $45.04       52.50%
Cleveland-Elyria-Mentor, OH:
    Carpenters...................       $20.89       $28.37       35.80%
    Electricians.................       $26.01       $33.91       30.40%
    Plumbers/Pipe-fitters........       $27.73       $31.43       13.30%
Nassau-Suffolk, NY:
    Carpenters...................       $28.62       $37.21       30.00%
    Electricians.................       $30.76       $44.75       45.50%
    Plumbers/Pipe-fitters........       $31.49       $49.98       58.70%
Honolulu County, HI:
    Carpenters...................       $31.61       $36.20       14.50%
    Electricians.................       $32.86       $39.75       21.00%
    Plumbers/Pipe-fitters........       $26.95       $35.60       32.10%
------------------------------------------------------------------------
Source: Heritage Foundation calculations using data from the Department
  of Labor, Bureau of Labor Statistics and Wage and Hour Division, as
  explained in the appendix.

Harmful Consequences
    These inaccurate Davis-Bacon rates harm both workers and taxpayers. 
In most cities Davis-Bacon rates unnecessarily raise construction 
costs. In essence the government hires four construction workers for 
the price of five. The construction workers fortunate enough to work on 
a federal project no doubt appreciate this premium. However, these 
inaccuracies will inflate the cost of federally funded construction 
projects by $10.9 billion this year.\28\
    In other cities the Davis-Bacon inaccuracies depress market pay. 
Davis-Bacon rates are minimum wages, so below-market determinations do 
not force contractors to pay substandard wages. They do, however, 
encourage contractors to reduce their bids--putting downward pressure 
on wages.
    If the Department of Labor used accurate wage determinations, 
Congress could build the same amount of infrastructure at substantially 
lower cost. The savings from paying market wages would reduce the 
deficit.
    Alternatively, accurate wage determinations would allow Congress to 
build more infrastructure at no extra cost to taxpayers. This would 
enable the government to provide more public services and employ an 
additional 155,000 construction workers in 2011.\29\ This is not a 
minor consideration when unemployment in the construction industry is 
above 20 percent. If Congress is going to keep the Davis-Bacon Act on 
the books it should require the Department of Labor to estimate 
prevailing wages scientifically. Taxpayers receive no value from 
overpaying some workers and underpaying others.
Bureau of Labor Statistics
    The Wage and Hour Division estimates prevailing wages so poorly 
because it is not a professional statistical agency. The Wage and Hour 
Division is an enforcement agency. WHD enforces federal laws regulating 
wages and many working conditions, such as minimum wages, prevailing 
wages, child labor, overtime, and the Family and Medical Leave Act. WHD 
has no expertise in conducting scientific wage surveys.
    The Bureau of Labor Statistics does. The BLS has extensive 
experience in conducting scientific wage surveys. Bureau of Labor 
Statistics methodology, accuracy, and data quality are internationally 
respected. They have the expertise in scientifically estimating wages 
that the Wage and Hour Division lacks.
    The Bureau of Labor Statistics already conducts two nationwide wage 
surveys that scientifically estimate occupational wages: the National 
Compensation Survey (NCS) and the Occupational Employment Statistics. 
Unlike the WHD survey, these surveys have high response rates and BLS 
corrects for non-response with weighting and imputation. Both surveys 
have large sample sizes, are conducted in a timely manner, and are 
updated annually. The Department of Labor uses OES data to enforce 
prevailing wages for the Foreign Labor Certification program and the 
Service Contract Act. If Congress wants accurate Davis-Bacon rates it 
should require the Department of Labor to use BLS data.
Better Geographic Coverage
    The Department of Labor previously rejected the idea of using BLS 
data. One of the reasons they gave for doing so was concerns about 
BLS's geographic coverage. While the Wage and Hour Division issues 
Davis-Bacon rates for individual counties, the Bureau of Labor 
Statistics reports wages for Metropolitan Statistical Areas (MSAs). 
Some large counties are their own MSA, but most MSAs are agglomerations 
of multiple economically linked counties.
    The Davis-Bacon Act states: ``The minimum wages shall be based on 
the wages the Secretary of Labor determines to be prevailing for the 
corresponding classes of laborers and mechanics employed on projects of 
a character similar to the contract work in the civil subdivision of 
the State in which the work is to be performed, or in the District of 
Columbia if the work is to be performed there.'' \30\
    The GAO argues that this provision prevents the Department of Labor 
from estimating prevailing wages at the MSA level. The Wage and Hour 
Division disagrees with this legal analysis. In response to a 2004 
Inspector General report, the Wage and Hour Division stated that ``the 
Davis-Bacon Act does not prohibit issuing wage determinations for 
broader geographic areas such as an MSA, and we routinely issue such 
wage determinations when sufficient data are not available on a county 
basis.'' \31\
    The GAO report reveals just how routine those broader geographic 
determinations are. Only 11 percent of Davis-Bacon rates are based on 
data from a single county. Forty-two percent of Davis-Bacon rates are 
based on groupings of counties analogous to an MSA, while 40 percent of 
job classifications are based on statewide data.\32\
    Switching to BLS data at the MSA level would eliminate wage 
determinations based on statewide data. This would much more closely 
approximate prevailing local wages than the WHD currently does.
Steps Forward
    Congress should transfer responsibility for collecting Davis-Bacon 
prevailing wage data to the Bureau of Labor Statistics. The OES already 
provides annual wage data for most construction jobs across the 
country. WHD could currently use OES wage data to set Davis-Bacon wage 
rates. The chief obstacle to using OES data is calculating hourly 
fringe benefit rates as required by the Davis-Bacon Act--the OES does 
not cover employee benefits.
    The National Compensation Survey covers benefits and the WHD 
determined that the NCS provides the information necessary to enforce 
the Davis-Bacon Act in the areas that it surveys.\33\ However, the NCS 
provides local wage information for only 154 metropolitan and non-
metropolitan statistical areas. These MSAs cover just half of the U.S. 
population. Consequently, neither the OES nor the NCS directly provides 
all of the information necessary to enforce the Davis-Bacon Act.
    These problems are solvable. To calculate prevailing construction 
benefits the Bureau of Labor Statistics could:
     Expand the National Compensation Survey. The BLS could 
expand the construction portion of the NCS to provide nationwide 
coverage of construction workers. The Inspector General suggested this 
approach in 2004.\34\
     Collect Construction Benefits with the OES. The BLS could 
collect benefits data from construction employers through the OES. This 
would require overhauling the OES survey and would take some time to 
set up and train staff to conduct properly.
     Econometrically Model Benefits. A third approach involves 
using NCS data to econometrically model the relationship between wages 
and benefits in the construction industry. That model could be applied 
to the existing OES data to estimate fringe benefits for different 
construction occupations.
    These solutions are not trivial undertakings. They would require 
Congress to transfer the resources for conducting Davis-Bacon surveys 
from WHD to the BLS. However, if Congress did so the BLS could do what 
the WHD does not: scientifically and accurately estimate prevailing 
construction wages.
Conclusion
    The Department of Labor's methods for calculating prevailing 
construction wages are scientifically unsound. The Government 
Accountability Office report demonstrates that the Wage and Hour 
Division calculates Davis-Bacon rates with a self-selected sample 
instead of a representative sample. Non-representative samples do not 
provide reliable information. WHD does not use basic statistical 
techniques, such as measuring non-response and weighting their data to 
mitigate this bias. Even if WHD did use a representative sample they 
have too few responses to be accurate.
    Unsurprisingly, Davis-Bacon rates bear little correlation to market 
wages. In some cities they are below market rates, while in others they 
are well above market rates. On average, Davis-Bacon rates are inflated 
22 percent above market pay. These inaccuracies hurt both workers and 
taxpayers.
    Congress already spends $600 million a year on another agency with 
professional expertise in calculating labor market statistics: the 
Bureau of Labor Statistics. BLS surveys do not suffer from the 
methodological shortfalls that plague WHD prevailing wage estimates. 
The BLS is internationally respected for conducting scientific and 
accurate surveys. If Congress wants accurate Davis-Bacon surveys it 
should direct the Bureau of Labor Statistics to conduct them.
                                appendix
    Bureau of Labor Statistics (BLS) and Wage and Hour Division (WHD) 
wage estimates are not directly comparable. To report comparable wage 
rates, The Heritage Foundation was guided by the methodology outlined 
by the Beacon Hill Institute on their comprehensive report comparing 
market and Davis-Bacon wages.\35\
    Market wage data come from the Occupational Employment Statistics 
program within the BLS. This data can be found online at http://
www.bls.gov/oes/. Data on Davis-Bacon wages came from the U.S. 
Government Printing Office, ``Davis-Bacon Wage Determinations,'' at 
http://www.gpo.gov/davisbacon.
    Three job categories were selected for comparison: carpenters, 
electricians, and plumbers/pipefitters. The Davis-Bacon rate for each 
category was determined as follows. The Davis-Bacon rates for 
``Building'' construction were identified from the online postings. 
Davis-Bacon rates often specify wages for general and specific tasks 
within an occupation. There may be wages for general ``electricians,'' 
but also separate rates for electricians who perform specialized tasks. 
In these cases, the wages of the most general category was selected.
    The BLS and WHD estimate wages for different geographic areas. The 
WHD issues wage rates at the county level, while the OES estimates 
wages for metropolitan statistical areas. The Heritage Foundation used 
county-level Davis-Bacon wages to create MSA-level Davis-Bacon wage 
rates. In MSAs with only one county, Davis-Bacon rates were calculated 
as explained above and directly compared to BLS data. In MSAs with 
multiple counties, Davis-Bacon rates were calculated separately for 
each county. A weighted average of Davis-Bacon rates was constructed, 
using as weights the relative population of each county according to 
Census Bureau estimates from the year 2009, which can be found online 
at http://quickfacts.census.gov/qfd/index.html. This weighted average 
was the final Davis-Bacon rate compared to BLS data.
    In a few cases, the Davis Bacon rate is not the same for the entire 
county--for example, a certain occupation's wage rate may vary for 
different geographic regions within a single county. In these cases, 
The Heritage Foundation used the rate from the most populous part of 
the county.
    MSAs examined and their constituent counties:

MSA: Jackson, MI MSA
    Counties: Jackson County

MSA: Minneapolis--St. Paul-Bloomington, MN--WI MSA
    Counties: Anoka County, MN; Carver County, MN; Chisago County, MN; 
Dakota County, MN; Hennepin County, MN; Isanti County, MN; Ramsey 
County, MN; Scott County, MN; Sherburne County, MN; Washington County, 
MN; Wright County, MN; Pierce County, WI; St. Croix County, WI

MSA: Sioux Falls, SD MSA
    Counties: Lincoln County, McCook County, Minnehaha County, Turner 
County

MSA: Erie, PA MSA
    County: Erie County

MSA: Santa Rosa--Petaluma, CA MSA
    County: Sonoma County

MSA: Lafayette, IN MSA
    Counties: Benton County, Carroll County, Tippecanoe County

MSA: Terre Haute, IN MSA
    Counties: Clay County, Sullivan County, Vermillion County, Vigo 
County

MSA: Spartanburg, SC MSA
    County: Spartanburg County

MSA: Lakeland--Winter Haven, FL MSA
    County: Polk County

MSA: Oakland--Fremont--Hayward, CA MSA
    Counties: Alameda County, Contra Costa County

MSA: Newark--Union, NJ--PA MSA
    Counties: Essex County, NJ; Hunterdon County, NJ; Morris County, 
NJ; Sussex County, NJ; Union County, NJ; Pike County, PA

MSA: Cleveland--Elyria--Mentor, OH MSA
    Counties: Cuyahoga County, Geauga County, Lake County, Lorain 
County, Medina County

MSA: Nassau--Suffolk, NY MSA
    Counties: Nassau County, Suffolk County

MSA: Honolulu, HI MSA
    County: Honolulu County
                                endnotes
    \1\ See, for example, statements made during the Congressional 
debate. ``I have received numerous complaints in recent months about 
southern contractors employing low-paid colored mechanics getting work 
and bringing the employees from the South.'' Rep. John Cochran, 
Employment of Labor on Federal Construction Work, Hearings on H.R. 7995 
and H.R. 9232 Before the House Committee on Labor, 71st Congress, 2nd 
Session, March 6, 1930, p. 26--27. See also Rep. Clayton Allgood: 
``Reference has been made to a contractor from Alabama who went to New 
York with bootleg labor. This is a fact. That contractor has cheap 
colored labor that he transports, and he puts them in cabins, and it is 
labor of that sort that is in competition with white labor throughout 
the country.'' Legal compilation; ``Statutes and Legislative History, 
Executive Orders, Regulations, Guidelines and Reports,'' Part 1, 
Volumes 3-4, U.S. Environmental Protection Agency, 1973, p. 1688.
    \2\ It still has this effect. States that repeal their own 
prevailing wage laws see the the earnings of African-American 
construction workers rise and the earnings of unionized white 
construction workers fall. See Daniel Kessler and Lawrence Katz, 
``Prevailing wage laws and construction labor markets,'' Industrial and 
Labor Relations Review, vol. 54(2), pages 259-274, January 2001.
    \3\ U.S. Department of Labor, Office of Inspector General, 
``Concerns Persist with the Integrity of Davis-Bacon Act Prevailing 
Wage Determinations,'' Report No. 04-04-003-04-420, March 30, 2004, pp. 
12--13, at http://www.oig.dol.gov/public/reports/oa/2004/04-04-003-04-
420.pdf (April 13, 2011); U.S. Department of Labor, Office of Inspector 
General, ``Inaccurate Data Were Frequently Used in Wage Determinations 
Made Under the Davis-Bacon Act,'' Report No. 04-97-013-04-420, March 
10, 1997, at http://www.oig.dol.gov/public/reports/oa/pre--1998/04-97-
013-04-420s.htm (April 13, 2011); and U.S. General Accounting Office, 
Davis-Bacon Act: Labor Now Verifies Wage Data, but Verification Process 
Needs Improvement, HEHS-99-21, January 1999, at http://www.gao.gov/
archive/1999/he99021.pdf (April 13, 2011).
    \4\ Government Accountability Office, ``Davis-Bacon Act: 
Methodological Changes Needed to Improve Wage Survey,'' Report No. GAO-
11-152, March 2011, at http://www.gao.gov/new.items/d11152.pdf (April 
13, 2011).
    \5\ Ibid., p. 19.
    \6\ James Heckman, ``Sample Selection Bias As a Specification 
Error,'' Econometrica, Vol. 47, No. 1 (January 1979), pp. 153--154.
    \7\ See, for example, James McClave, Frank Dietrich, and Terry 
Sincich, Statistics, Seventh Ed., (Upper Saddle Hill, NJ: Prentice 
Hall, Inc.: 1997), pp. 11--15, 131--136.
    \8\ Government Accountability Office, ``Davis-Bacon Act: 
Methodological Changes Needed to Improve Wage Survey,'' pp. 57--58.
    \9\ Ibid., pp. 24--26.
    \10\ For example, asking for wage rates using union job 
classifications that do not reflect the practices of nonunion 
construction contractors.
    \11\ Government Accountability Office, ``Davis-Bacon Act,'' p. 8.
    \12\ Ibid., p. 19.
    \13\ Ibid., p. 26.
    \14\ Department of Labor, Bureau of Labor Statistics, ``Union 
Members--2010,'' Table 3, at http://www.bls.gov/news.release/pdf/
union2.pdf (April 13, 2011).
    \15\ Government Accountability Office, ``Davis-Bacon Act,'' p. 20.
    \16\ Ibid., p. 27.
    \17\ Polly A. Phipps and Carrie K. Jones, ``Factors Affecting 
Response to the Occupational Employment Statistics,'' Bureau of Labor 
Statistics, Office of Survey Methods Research, 2007, at http://
www.bls.gov/osmr/abstract/st/st070170.htm (April 13, 2011).
    \18\ U.S. Department of Labor, Bureau of Labor Statistics, ``BLS 
Handbook of Methods,'' Chapter 3, at http://www.bls.gov/opub/hom/pdf/
homch3.pdf (April 13, 2011).
    \19\ Ibid.
    \20\ Ibid.
    \21\ Government Accountability Office, ``Davis-Bacon Act,'' p. 19.
    \22\ These error margins are at the 95 percent level, so the polls 
will be within that margin of the true value 19 times out of 20.
    \23\ The central limit theorem (CLT) states that for a sufficiently 
large sample the sample mean is normally distributed around the true 
population mean. Knowing that the sample mean follows the normal 
distribution allows statisticians to estimate how far off it is likely 
to be from the population mean.
    \24\ James McClave, Frank Dietrich, and Terry Sincich, Statistics, 
pp. 240--241.
    \25\ Government Accountability Office, ``Davis-Bacon Act,'' p. 23.
    \26\ The author thanks Heritage Foundation intern Thomas Capone for 
his invaluable help in compiling this data.
    \27\ Sarah Glassman, Michael Head, David G. Tuerck, and Paul 
Bachman, ``The Federal Davis-Bacon Act: The Prevailing Mismeasure of 
Wages,'' Suffolk University, Beacon Hill Institute, February 2008, at 
http://www.beaconhill.org/BHIStudies/PrevWage08/
DavisBaconPrevWage080207Final.pdf (April 13, 2011).
    \28\ James Sherk, ``Repealing the Davis-Bacon Act would Save 
Taxpayers $10.9 Billion,'' Heritage Foundation WebMemo No. 3145, 
February 14, 2011, at http://www.heritage.org/Research/Reports/2011/02/
Repealing-the-Davis-Bacon-Act-Would-Save-Taxpayers-$10-9-Billion.
    \29\ Ibid.
    \30\ U.S. Code Title 40, Sec. 3142(b)
    \31\ U.S. Department of Labor, Office of the Inspector General, 
Concerns Persist with the Integrity of Davis-Bacon Prevailing Wage 
Determinations, Audit Report No. 04-04-003-04-420, 2004, p. 2 of 
Appendix B, at http://www.oig.dol.gov/public/reports/oa/2004/04-04-003-
04-420.pdf (April 13, 2011).
    \32\ Government Accountability Office, ``Davis-Bacon Act,'' pp. 
20--22. Note that the GAO was unable to determine the geographic level 
for 7 percent of job classifications.
    \33\ Bernard Anderson, Assistant Secretary of Labor for the 
Employment Standards Administration, letter to Congress, attachment, 
``Evaluation of the Reinvention vs. Reengineering Alternatives for 
Improving the Davis-Bacon Wage Survey/Determination Process,'' January 
17, 2001, p. 1.
    \34\ U.S. Department of Labor, ``Concerns Persist with the 
Integrity of Davis-Bacon Act Prevailing Wage Determinations,'' p. 17.
    \35\ Sarah Glassman, Michael Head, David G. Tuerck, and Paul 
Bachman, ``The Federal Davis-Bacon Act: The Prevailing Mismeasure of 
Wages,'' Suffolk University, Beacon Hill Institute, February 2008, at 
http://www.beaconhill.org/BHIStudies/PrevWage08/
DavisBaconPrevWage080207Final.pdf (April 13, 2011).
                                 ______
                                 
    Chairman Walberg. Thank you Mr. Sherk.
    Mr. Mistick?

  STATEMENT OF D. TOM MISTICK, PRINCIPAL, CHURCH RESTORATION 
 GROUP, ON BEHALF OF THE ASSOCIATED BUILDERS AND CONTRACTORS, 
                              INC.

    Mr. Mistick. Chairman Walberg, thank you.
    Member Woolsey, members of committee. Good morning and 
thank you for the opportunity to testify before you today. In 
the interest of time I request that my full written testimony 
be included in the record. My name is Tom Mistick. I am the 
owner of the Church Restoration Group based in Pittsburgh, 
Pennsylvania, and during my 35-year career, I have completed 
hundreds of projects under the Davis-Bacon Act as a general 
contractor and a subcontractor.
    I also appear before you today on behalf of Associated 
Builders and Contractors. ABC represents 23,000 merit shop 
construction contractors that employ nearly 2 million workers. 
ABC's membership is bound by a shared commitment to the merit 
shop philosophy based on principles of non-discrimination due 
to labor affiliation and the awarding of construction contracts 
through competitive bidding.
    Repeated criticisms of the Government Accountability Office 
over many years have highlighted significant problems with the 
administration of the Davis-Bacon Act. The GAO report published 
last week again makes clear that the U.S. Department of Labor 
is incapable of setting fair or accurate federal construction 
wages.
    ABC and others have proposed numerous recommendations for 
common sense reforms for several decades, and unfortunately 
DOL's inability to implement meaningful changes illustrates 
that the process cannot be fixed and that the act should 
therefore be repealed. Davis-Bacon hinders economic growth, 
increases the federal deficit and imposes significant burdens 
on the contractors and taxpayers.
    These burdens both increase costs and make it nearly 
impossible for small merit shop firms to competitively bid on 
federal projects, raising costs by eliminating competition. A 
recent CBO estimate found that Davis-Bacon raises federal 
construction costs by $15.7 billion annually. For years 
contractors and experts have voiced serious concern about the 
waste and abuse of taxpayer dollars associated with Davis-
Bacon, yet nothing has really been done to fix the obvious 
defects in the law.
    I would like to highlight in some ways in which the DOL has 
failed to carry out its statutory mandates and contributes to 
construction industry unemployment rate of 20 percent by 
imposing inaccurate and artificially inflated wages. Instead of 
using sound statistical analysis, as Mr. Sherk mentioned, DOL 
sets Davis-Bacon wage rates by relying upon voluntary wage 
surveys with extraordinarily low response rates. The new GAO 
report finds the Davis-Bacon wage survey lacks transparency and 
most often does not reflect true prevailing wages.
    Furthermore, the GAO found that most survey forms verified 
against payroll data were in error. The report also stated that 
almost one-quarter of the final wages for key job 
classifications were based on wages for six or fewer workers. I 
have personal knowledge of the dysfunctional DOL wage survey 
process, having formally challenged Davis-Bacon wage rates set 
for residential construction in Western Pennsylvania. They 
dramatically and inaccurately increased project costs.
    Unions represent less than 10 percent of residential 
construction workers in Western Pennsylvania, yet DOL found 
that union wage rates prevailed for most of the public job 
classifications, although they couldn't produce enough job 
classifications to provide enough people to build a house. 
There were--the plumber was missing and the plasterer was 
missing, you couldn't even get accurate wage rates for the 
small subset that was there. This problem isn't unique for 
Pennsylvania.
    The--again, the BLS has reported 13 percent of the 
construction workers are unionized, yet only--yet 63 percent of 
the GAO finds that the DOL reported union wage rates. Now after 
a 3 year legal battle and costs of--considerable costs, we 
received a favorable union ruling from DOL's Administrative 
Review Board. It found that DOL had indeed violated its own 
rules in conducting wage surveys.
    But rather than demand any revision in the survey process 
or order a new survey, the board only required the agency to 
recalculate a few wages that it determined to be in error and 
left in place all the systemic failures of the DOL's wage 
survey process, which the GAO report has again highlighted in 
the last week's report.
    Like many other non-partisan government surveys before it, 
the GAO report illustrates a long-term systematic failure to 
achieve true reform of the survey process across several 
administrations.
    It is clear to us that DOL will never accept meaningful 
reform and repeal is now the only solution. At a time of 
shrinking construction budgets, Davis-Bacon's fundamentally 
flawed system is arbitrarily limiting the amount of 
construction that could be built by needlessly increasing 
project costs. The taxpayers are getting six buildings for the 
price of seven because of this broken process. The clear answer 
to the problems created by the fatally flawed, and unfixable 
system is to repeal Davis-Bacon.
    Let the market set acceptable wage rates through open and 
competitive bidding, just as it successfully does in the 
private industry and private construction market. The act needs 
to return to the neutrality that was once its original instance 
and its goal.
    Mr. Chairman that concludes my formal remarks and I am 
prepared to answer any questions you may have. Thank you.
    [The statement of Mr. Mistick follows:]

         Prepared Statement of D. Thomas Mistick, on Behalf of
                  Associated Builders and Contractors

    Chairman Walberg, Ranking Member Woolsey and members of the 
Subcommittee on Workforce Protections: Good morning and thank you for 
the opportunity to testify before you today on ``Examining the 
Department of Labor's Implementation of the Davis-Bacon Act.''
    My name is Tom Mistick. I am the owner of Church Restoration Group, 
based in Pittsburgh, Pennsylvania. My company restores historic and 
sacred spaces across the United States, and offers a broad range of 
emergency and consulting services. For 35 years, I have directed the 
activities of two general contracting companies, a disaster recovery 
firm, a real estate management office and a millwork company. Much of 
the work performed by my companies has been performed under the Davis-
Bacon Act.
    I also appear before you today on behalf of Associated Builders and 
Contractors (ABC). ABC is a national trade association representing 
23,000 merit shop contractors, employing nearly 2 million workers, 
whose training and experience span all of the 20-plus skilled trades 
that comprise the construction industry. ABC's membership is bound by a 
shared commitment to the merit shop philosophy. This philosophy is 
based on the principles of nondiscrimination due to labor affiliation 
and the awarding of construction contracts through competitive bidding 
based on safety, quality and value.
The Davis-Bacon Act
    The Davis-Bacon Act is an 80-year-old wage subsidy law administered 
by the U.S. Department of Labor (DOL) that mandates so-called 
``prevailing'' wages for employees of contractors and subcontractors 
performing work on federally financed construction projects. ABC has 
long advocated for the full repeal of the Davis-Bacon Act, though we 
also have recommended numerous reforms over the years that could have 
mitigated some of the Act's damage to our economy through fairer 
implementation of its provisions by DOL. However, despite repeated 
criticisms from the Government Accountability Office (GAO) and DOL's 
own Office of Inspector General (OIG),\1\ the agency has implemented 
few if any meaningful reforms in its administration of the Act since 
the early years of the Reagan administration. The latest GAO report 
published last week\2\ makes clear that DOL is simply incapable of 
implementing the Davis-Bacon Act's provisions in a fair and common-
sense manner. Therefore, ABC sees no alternative to repealing the Act 
entirely.
    The Davis-Bacon Act, as administered by DOL, unnecessarily hinders 
economic growth, increases the federal deficit, and imposes an enormous 
paperwork burden on both contractors and the federal government. It 
stifles contractor productivity by raising costs, ignores skill 
differences for different jobs, and imposes rigid craft work rules. In 
addition, Davis-Bacon fails to provide equal access to work 
opportunities because the complexities and inefficiencies in the Act's 
implementation make it nearly impossible for many qualified, small 
merit shop firms to competitively bid on publicly funded projects. 
These businesses--and the construction industry in general--are at an 
even greater disadvantage due to our current unemployment rate of 20 
percent,\3\ and the traditionally low net profit margins on which we 
operate.\4\
    From a fiscal standpoint, a recent Congressional Budget Office 
(CBO) estimate found the Davis-Bacon Act raises federal construction 
costs by $15.7 billion annually, which ABC believes may be a 
conservative estimate.\5\ Numerous academic studies have shown that 
repeal of the Act would create real and substantial savings to the 
government without affecting workplace productivity, safety or market 
wages.
    The main reason the Davis-Bacon Act causes so many problems is that 
DOL has failed to achieve the Act's stated objective of determining 
true ``prevailing'' wages and instead has repeatedly issued wage 
determinations that are vastly inflated above the true market rates 
seen on private sector construction projects. The evidence of DOL's 
failed wage survey method is easily shown by comparing two numbers: 
According to the Bureau of Labor Statistics (BLS), only 13 percent of 
construction workers in the United States are covered by any union 
agreement;\6\ yet, according to the latest GAO Report, 63 percent of 
all DOL wage determinations report that wages set by union agreements 
are ``prevailing.'' \7\
    Despite these facts and findings, Davis-Bacon remains in effect and 
continues to inflate the cost of federal construction by as much as 22 
percent.\8\ For years, economists, legal and policy experts, and merit 
shop contractors across the country have voiced serious concerns about 
the waste and abuse of taxpayer dollars associated with Davis-Bacon--
yet nothing has been done to fix the obvious defects in the law.
    DOL's unwillingness to engage in meaningful corrective actions and 
reforms, along with the process' continuing burden on taxpayers and 
contractors, illustrate that the Act cannot be fixed, and must instead 
be repealed. In the remainder of my testimony, I would like to 
highlight some of the specific ways in which DOL is failing to properly 
carry out its statutory mandate, leading us to conclude that the Act 
must be repealed.
Wage Rates and Surveys
    The methodology by which DOL determines Davis-Bacon Act wage rates 
is inaccurate and unscientific. It relies on voluntary wage surveys--
often with an extremely low response rate--instead of using sound 
statistical samples already made available through other government 
data collections. The resulting wage rates are usually poor reflections 
of actual local wages. The problems associated with Davis-Bacon wage 
calculations have been well documented in previous Congressional 
testimony from ABC and, more importantly, reports by GAO and OIG.\9\
    In addition, due to the systematic delays associated with the final 
publication of many Davis-Bacon rates, ABC is concerned that wage 
determinations made during an economic ``boom'' in construction are now 
being applied to a ``bust'' economy. In the case of government-backed 
loans and other projects that are subsidized by the government, these 
inaccurate determinations have resulted in projects being scrapped 
because of cost.
    The new GAO report shows that the current Davis-Bacon wage survey 
process lacks transparency and does not reflect true prevailing wages. 
The report concludes that efforts to improve the Davis-Bacon wage 
survey process--both with respect to data collection and internal 
processing--have not addressed key issues with wage rate accuracy, 
timeliness and overall quality.\10\
    GAO identifies ``persisting shortcomings in the representativeness 
of survey results and the sufficiency of data gathered for Labor's 
county-focused wage determinations,'' notwithstanding cosmetic changes 
in DOL's survey collection and processing procedures. In addition, GAO 
points out that many of the agency's surveys are still years behind 
schedule.
    The GAO report also finds that DOL ``cannot determine whether its 
wage determinations accurately reflect prevailing wages,'' and ``does 
not currently have a program to systematically follow up with or 
analyze all non-respondents.'' DOL procedure identifies nonresponse as 
a ``potential source of survey bias and indicates there is a higher 
risk non-respondents will be nonunion contractors because they may have 
greater difficulty in compiling wage information or be more cautious 
about reporting wage data.''
    Just as the 2004 DOL-OIG report revealed that nearly 100 percent of 
published wage determinations contained errors, the GAO report found 
that ``most survey forms verified against payroll data had errors.'' In 
addition, the report stated that more than ``one-quarter of the final 
wage rates for key job classifications were based on wages reported for 
six or fewer workers.''
    Reaffirming yet another longtime ABC concern, GAO found that 
``contractors have little or no incentive to participate in the Davis-
Bacon wage survey'' as it is currently administered. The report cited 
insufficient resources with which to complete the surveys, the 
inability to provide all information requested and a justifiable lack 
of confidence in DOL's process as contributing factors.
    GAO also recommended ``technical guidance from experts is 
considered critical to ensure the validity and reliability of survey 
results,'' remarking that better survey response prediction models 
``such as statistical sampling rather than the current census survey'' 
could be aided by collaboration with survey experts. However, instead 
of obtaining an evaluation of its wage survey process from experts in 
survey design and methodology, DOL informed GAO that it prefers to 
institute such changes based mainly on staff experience.\11\
    I have personal knowledge of the dysfunctional DOL wage survey 
process, having witnessed and challenged the 2000 wage survey in 
Western Pennsylvania, which dramatically increased Davis-Bacon wage 
rates on residential construction in the Pittsburgh metropolitan area 
when its results were published in 2003.\12\ Keep in mind that during 
this time, the union market share of residential construction in 
Western Pennsylvania was (and still is) in the single digits. Yet as a 
result of the wage survey, DOL found that union wage rates 
``prevailed'' in a great majority of the wage classifications for which 
survey results could be determined, while many of the most common 
classifications had no determined wage rates at all. After reviewing 
the data DOL collected to issue its new wage determination, and 
checking the math, it was clear to me that the results occurred because 
DOL relied on a totally inadequate number of responses (as few as a 
half-dozen wage reports setting the wage rates for thousands of 
workers), and that DOL had violated its own rules for calculating which 
rates prevailed in the region. One obvious reason why the responses 
were inadequate was because DOL failed to properly notify the largest 
nonunion construction trade groups.\13\ The calculations were also 
wrong because DOL improperly counted union workers who were paid 
different wage rates as if they were all paid the same wages. There 
were many other flaws in the survey process as well.\14\
    Along with ABC's Western Pennsylvania Chapter, I filed a legal 
challenge at DOL against the results of the flawed wage survey. Three 
years later, and at considerable cost, we received a favorable ruling 
from DOL's own Administrative Review Board, which found that the Wage 
and Hour Division (WHD) had indeed violated DOL's rules on conducting 
wage surveys. But the Board did not order a new survey with 
instructions to obtain more meaningful responses from the nonunion 
contractors that comprised the vast majority of the residential 
contractors. Instead, the Board simply told the WHD Administrator to 
recalculate the wages that we had shown to be in error, leaving in 
place all of the other systemic failures of the wage survey process.
    More recently, ABC learned DOL issued wage determinations that 
repeat the same errors identified in 2003. In addition, DOL has 
committed new errors, leading to newly inflated wage determinations in 
other parts of the country. One of the errors, confirmed by the GAO 
report, is that DOL has greatly expanded its issuance of ``statewide'' 
wage determinations which combine wage surveys from large and small 
metropolitan areas hundreds of miles apart into single wage 
determination rates. This practice plainly violates the language of the 
Act, and is currently the subject of a legal challenge.
    At a time of shrinking public construction budgets, these inflated 
wage determinations arbitrarily limit the amount of construction that 
can be built by increasing the projected costs. Jobs have been lost and 
businesses have closed because of DOL's bizarre implementation of the 
wage survey process, and because of the Davis-Bacon Act itself.
    For years, ABC and other government studies and reports have 
pointed out these problems. We believe the GAO report illustrates a 
long-term systematic failure to achieve true reform of the survey 
process across several administrations. It is clear to us that DOL will 
never accept meaningful reform, and that repeal is now the only 
solution.
Job Classifications
    Another key concern pertaining to Davis-Bacon is DOL's lack of 
clarity regarding the job duties that apply to a particular job 
classification, which are determined by local practice. When DOL 
determines the prevailing wage rate for a classification is based on a 
union collective bargaining agreement, the job duties for that 
classification also likely will be governed by the union's work rules 
in that agreement. Generally, union work rules require that only a 
certain job classification perform certain work. For example, the work 
rules may require a carpenter to perform a certain task in one 
location, but sheet rock hangers or perhaps even laborers are the only 
workers allowed to perform that work in another jurisdiction.
    While each DOL wage determination lists several different 
classifications of workers (painters, carpenters, laborers, etc.), 
limited information is available on the actual job duties that apply to 
the classifications. Although the published wage determinations may 
identify the relevant local union for each of the listed job 
classifications (where the rate is based on the union's collective 
bargaining agreement), DOL does not provide detailed information as to 
whether there are any work rule restrictions attached to those wage 
rates and, if so, what those restrictions are. DOL's failure to provide 
such information makes it almost impossible for merit shop contractors 
to figure out the correct wage rate for many construction-related jobs. 
Not surprisingly, GAO's report agreed, finding DOL's current method of 
handling job classifications ``confusing'' and ``challenging'' for 
contractors.
Certified Payrolls and Fringe Benefits
    Another burden on small business compliance with the Davis-Bacon 
Act--and also the Copeland Act--is the requirement that contractors 
submit weekly certified payroll reports to the government. This is a 
paperwork nightmare for many contractors and a significant 
administrative cost factor for every contractor. Recent upgrades of the 
system by DOL to include electronic filing are a small step in the 
right direction, but do nothing to solve the complexities of the 
certified payroll form itself, and in particular the confusion 
surrounding the proper credits allowed to nonunion contractors for 
their bona fide fringe benefit costs.
Repeated Failure to Implement Reforms
    ABC has repeatedly called on DOL to follow the findings of past 
independent government studies, some dating back more than 10 years, to 
explore using alternative data to determine wage rates--such as data 
collected through the BLS Occupational Employment Statistics (OES) 
program. To date, DOL has not given serious consideration to utilizing 
these, or any other alternatives to its traditional survey method. ABC 
also has requested that DOL provide better clarity about job duties 
that correspond to each wage rate. Many states that have adopted 
prevailing wage laws similar to Davis-Bacon have at least published the 
job duties that are to be performed by each wage classification. DOL, 
however, has repeatedly refused to give contractors fair notice of what 
the job assignment rules are on the published wage determinations. A 
2009 WHD All Agency Memorandum offered no relief to contractors lacking 
access to unpublished union work rules.\15\ ABC has received reports 
from its members that the current DOL is misdirecting contractors 
seeking guidance on the job classification issue. For example, DOL has 
told some contractors to contact a project contracting officer, even 
though the law is clear that only DOL officials are authorized to make 
final rulings on worker classification issues. Instead of fixing these 
problems with Davis-Bacon, the last Congress and this administration 
only made matters worse by expanding the Act's coverage in 
unprecedented ways under last term's stimulus bill.\16\
Conclusion
    The clear answer to the problems created by the present system is 
to let the market set the acceptable wage rate through open and 
competitive bidding, as we see in the private sector. Multiple bills to 
repeal the Davis-Bacon Act have been introduced during this 
Congressional session alone, indicating that the time is right for 
Members of Congress to act.
    ABC is pleased to see the Education and the Workforce Committee 
take a renewed interest in the problems associated with Davis-Bacon 
Act. We look forward to working with the Subcommittee on Workforce 
Protections on this issue. Mr. Chairman, this concludes my formal 
remarks--I am prepared to answer any questions that you may have.
                                endnotes
    \1\ U.S. Department of Labor, Office of the Inspector General, 
Concerns Persist with the Integrity of Davis-Bacon Prevailing Wage 
Determinations, Audit Report No. 04-04-003-04-420, 2004, at http://
www.oig.dol.gov/public/reports/oa/2004/04-04-003-04-420.pdf. See also, 
Government Accountability Office, Davis-Bacon Act: Process Changes 
Could Raise Confidence That Wage Rates Are Based on Accurate Data, May 
1996, at http://www.gao.gov/archive/1996/he96130.pdf.
    \2\ Government Accountability Office, Davis-Bacon Act: 
Methodological Changes Needed to Improve Wage Survey, April 6, 2011, at 
http://www.gao.gov/new.items/d11152.pdf.
    \3\ Bureau of Labor Statistics, Construction Sector at a Glance: 
Employment, Unemployment, Layoffs, and Openings, Hires, and 
Separations, March 2011. See http://www.bls.gov/iag/tgs/iag23.htm.
    \4\ Construction firms often operate on extremely low net margins. 
According to the 2009 Construction Industry Annual Financial Survey, 
published by the Construction Financial Management Association (CFMA), 
an average construction firm's operating margin was only 3.4 percent, 
with many firms operating at even lower margins. Contract retainage 
further exacerbates this cash flow issue.
    \5\ Office of Rep. Steve King, King's Davis-Bacon Repeal Bill Saves 
Taxpayers $15.7 Billion, April 4, 2011, at http://1.usa.gov/f0ioXw.
    \6\ U.S. Department of Labor, Bureau of Labor Statistics, Economic 
News Release: Union Members Summary, January 2011, at http://
www.bls.gov/news.release/union2.nr0.htm.
    \7\ Government Accountability Office, Davis-Bacon Act: 
Methodological Changes Needed to Improve Wage Survey, April 6, 2011, at 
http://www.gao.gov/new.items/d11152.pdf.
    \8\ The Beacon Hill Institute at Suffolk University, The Federal 
Davis-Bacon Act: The Prevailing Mismeasure of Wages, February 2008, at 
http://www.beaconhill.org/bhistudies/prevwage08/
davisbaconprevwage080207final.pdf.
    \9\ U.S. Department of Labor, Office of the Inspector General, 
Concerns Persist with the Integrity of Davis-Bacon Prevailing Wage 
Determinations, Audit Report No. 04-04-003-04-420, 2004, at http://
www.oig.dol.gov/public/reports/oa/2004/04-04-003-04-420.pdf. See also, 
Government Accountability Office, Davis-Bacon Act: Process Changes 
Could Raise Confidence That Wage Rates Are Based on Accurate Data, May 
1996, at http://www.gao.gov/archive/1996/he96130.pdf.
    \10\ Government Accountability Office, Davis-Bacon Act: 
Methodological Changes Needed to Improve Wage Survey, April 6, 2011, at 
http://www.gao.gov/new.items/d11152.pdf.
    \11\ ABC takes issue with only one aspect of the GAO report, namely 
the report's recommendation that the Act be amended to allow DOL to 
expand the geographic scope of wage surveys beyond the civil 
subdivision of the state in which the work is to be performed. See, 
General Accountability Office, Davis-Bacon Act: Methodological Changes 
Needed to Improve Wage Survey, April 6, 2011, at http://www.gao.gov/
new.items/d11152.pdf (page 35). Such an amendment would not ``improve 
the quality'' of DOL's wage determinations but would instead encourage 
DOL to combine wage data from totally separate wage markets, thereby 
undermining any prospect of determining the true prevailing wage in the 
smaller market. Indeed, as GAO confirmed, DOL is already conducting 
statewide surveys that violate the plain language of the Act, because 
such surveys do not determine the prevailing wage for a ``civil 
subdivision of the state.'' A legal challenge is pending against DOL's 
unlawful wage survey practice.
    \12\ A more detailed summary of this case is contained in the 
decision of DOL's Administrative Review Board, which considered ABC's 
challenge to DOL's wage determination and overturned it after three 
years of litigation. See Mistick Construction, Inc., No. 04-051 (ARB 
2006) (attached hereto)
    \13\ DOL later admitted it had obsolete addresses for the two 
largest residential construction trade associations in Western 
Pennsylvania. Mistick Construction, supra, at p. 6
    \14\ An independent study of DOL's Western Pennsylvania wage 
determination found more than a dozen systemic flaws in the wage survey 
process, which virtually guaranteed an inflated and inaccurate result. 
See Thieblot, Armand, The Twenty-Percent Majority: Pro-Union Bias in 
Prevailing Rate Determinations, 26 J. Lab. Research 99 (2005).
    \15\ U.S. Department of Labor, Job Duties of Employee 
Classifications in Davis-Bacon Wage Determinations (All Agency 
Memorandum 205), January 16, 2009. The current administration has 
failed even to make public the limited guidance contained in this AAM.
    \16\ Under the American Recovery and Reinvestment Act (ARRA), 40 
federal programs (33 existing, seven newly created) became subject to 
Davis-Bacon, several of which found the wage requirements to have a 
``moderate to large'' negative impact on program costs and efficiency. 
See, Government Accountability Office, Recovery Act: Views Vary on 
Impacts of Davis-Bacon Act Prevailing Wage Provision, February 2010, at 
http://www.gao.gov/new.items/d10421.pdf. One such program, the U.S. 
Department of Energy's (DOE) Weatherization Assistance Program, 
received $5 billion under ARRA. However, delays stemming from the 
Davis-Bacon wage survey process resulted in fewer projects undertaken 
(including some ``shovel-ready'' projects) and fewer jobs created under 
this program. See DOE's Progress in Implementing the Department of 
Energy's Weatherization Assistance Program under the American Recovery 
and Reinvestment Act, February 2010, at http://ww.ig.energy.gov/
documents/OAS-RA-10-04.pdf.
                                 ______
                                 
    Chairman Walberg. Thank you, Mr. Mistick, and all the 
members of the panel. I appreciate that. Pretty good use of the 
time as well.
    Mr. Sherk, I think I can safely say not only myself, but 
all of us here in the room and at this panel, are fully 
supportive of a fair day's pay for an honest day's work. 
However I see some very interesting facts in your testimony 
that you have given this morning.
    And in my own district, you mentioned, in Jackson, 
Michigan, the Davis-Bacon prevailing wage calculations paying 
electricians roughly 40 percent more than the market wage while 
in one of our committee member's, Congressman Noem's, home 
state in Sioux Falls, South Dakota, plumbers and carpenters are 
being paid between 17 and 20 percent below market wages. We 
know that the GAO has found some serious flaws in the 
calculations of this.
    How do you believe we can smooth out these inaccuracies and 
bring Davis-Bacon wage calculations back into line with what 
the market demands?
    Mr. Sherk. The only way you are going to actually--or 
accurately survey wages is using a scientific methodology. When 
you have got such implausibly small sample sizes and when you 
have got an unrepresentative sample, you are simply not going 
to get accurate rates out of the existing survey, it is just 
not possible.
    You can do the--you can turn the results, you know, 
overnight, you would have no errors, no return forms, but with 
these fundamental methodological flaws, you wouldn't get any 
accuracy.
    I think what you want to do is move to the BLS, which has 
expertise in conducting these surveys. There are two surveys 
that they do right now, one is the Occupational Employment 
Statistics Survey. That covers nationwide every metropolitan 
statistical area. It gives you the wage data.
    What it doesn't give you is the hourly fringe benefits 
data. Another survey is the National Compensation Survey, which 
the Wage and Hour Division has previously determined provides 
all the information they need, wage and--information for 
intricate levels of work.
    The problem is it, doesn't have nationwide coverage. It 
only covers about half the population, and so you wouldn't be 
able to go into every, you know, metropolitan statistical area 
and get estimates.
    So either expanding the Occupational Employment Survey to 
cover fringe benefits or expanding the geographic scope of the 
construction portion of the NCS survey, both of you--would give 
you accurate, timely and scientific wage estimates. You 
simply--you can't improve the existing methodology, it is too 
deeply flawed.
    Chairman Walberg. Okay, thank you.
    I have another question and we can come to that but let me 
get a few of the questions I want to ask first. I am sure we 
can get back those.
    Mr. Mistick?
    Mr. Mistick. Yes, sir?
    Chairman Walberg. You are a brave man in suing the 
Department. We will leave it at that.
    Mr. Mistick. Thank you, sir.
    Chairman Walberg. But in your 35 years of doing business, 
could you give a rough estimate of how much more your company 
has paid above market demand as a result of Davis-Bacon?
    Mr. Mistick. I could. I can actually give you a specific 
example of how Davis-Bacon was applied by the Pittsburgh 
Redevelopment Authority. They had a program that fixed 
commercial facades in elderly neighborhood commercial districts 
and commercial Davis-Bacon wages applied. You couldn't get 
commercial contractors to bid these $5, $10, $15,000 jobs, so 
they did the work without Davis-Bacon.
    And at the end of the job, which was completed on time, on 
budget and of sufficient quality, the contractors simply turned 
in his payroll data to the Authority and the Authority wrote 
checks to the employees and that was generally----
    Chairman Walberg. That is not a normal occurrence you 
would----
    Mr. Mistick. That is not the normal occurrence, and I doubt 
that anybody in D.C. would approve that process, but it is what 
they did to get the work done. And generally you paid 15 to a 
30 percent premium on the contract cost to satisfy the 
commercial wage rates that were required to be paid by Davis-
Bacon. Instead of commercial contractors, you had remodeling 
contractors that did $5 to $25,000 projects, and that was the 
differential or premium that the government was paying on that 
work.
    Chairman Walberg. And so you would--I would assume that you 
believe that this has hurt your productivity and the ability to 
hire employees and create jobs? Is that an accurate statement?
    Mr. Mistick. It certainly reduces the amount of federal 
construction and thereby limits the amount of work that the--a 
contractor can get and the opportunities for additional 
employment for his workers.
    Chairman Walberg. Okay. Okay, thank you.
    In the remaining minute or so, Mr. Markey, I will give 
latitude for you to answer.
    Mr. Markey. Mr. Sherk talks about using BLS data----
    Chairman Walberg. Turn your mic on, please. The time is 
running out.
    Mr. Markey. He talks about using BLS data. The statute 
talks about prevailing, the regulations, which happen to have 
been amended in 1985, defines prevailing as more than 50 
percent. All BLS data is averaged, you will never get 
prevailing rate if you use BLS data.
    If more than 50 percent earn $35, and the remainder earned 
somewhere between $25 and $30, the average BLS data that would 
come back would be like 33 or something like that. That is not 
prevailing, according to the statute in the current 
regulations.
    Chairman Walberg. Thank you. I am sure that there will be 
follow up questions to that and the opportunity to answer from 
the other side as well.
    And I now turn to our ranking member, a gentlelady from 
California, Ms. Woolsey.
    Ms. Woolsey. Mr. Chairman, I want to go on record for this 
hearing and all hearings in the future that any of our 
witnesses who bring testimony using the logo and the label of 
their organization when they present their testimony and refer 
to their organization cannot argue that they are not 
representing that organization when they provide their 
testimony.
    We, as members of Congress, if we write a letter on our 
letterhead, we are congress people when we talk about that and 
the same thing goes for our witnesses. I really want you to 
know I discount testimony that would use that double standard.
    Chairman Walberg [continuing]. I just know that it is a 
fairly normal process for a number of entities that----
    Ms. Woolsey. [Off mike.]
    Chairman Walberg [continuing]. Represent----
    Ms. Woolsey. I mean if they don't use the logo, don't say 
this is who sent me, this is who I am--I work for. That is an 
entire different thing than to--use the heft of the 
organization and then deny that they are part of it.
    Chairman Walberg. Duly noted, your time is running.
    Ms. Woolsey. Okay, I would like to ask you Mr. Eisenberg 
(sic) about in your testimony you state that a great deal of 
empirical research refutes the claim that prevailing wage 
inflates construction costs, so could you tell us how that can 
be? I mean if prevailing wage requirements lifts workers' 
wages, how does it not increase the overall cost, and how do we 
calculate how--the benefits of that overall cost to the 
community?
    Mr. Eisenbrey. Well the, you know, at first glance, it is 
true. You think that having a higher wage will necessarily lead 
to higher cost in construction. But it turns out that if you 
are paying a higher wage to a more skilled worker, someone, you 
know, a journeyman who has had a 5 year apprentice program and 
a lot of experience as opposed to, you know, someone with much 
less experience, you get a higher quality work, you get the 
work done more efficiently.
    And these productivity improvements more than make up for 
or can more than make up for the costs. After all, the wages 
are only 30 percent, 25 to 30 percent of the cost of 
construction. So that when Mr. Sherk for example says that 22 
percent higher pay leads to 10 percent higher costs, that 
almost can't be because the percent of the construction costs 
that is attributed to wages is only 25 to 30 percent and the 
math just doesn't work out.
    But, you know, on the one hand you have the theory on the 
other hand we have actual experience. We have states, we had in 
the middle and late 1990s Michigan suspended its state 
prevailing wage law because of a judicial decision. Kentucky 
passed a prevailing wage law for school construction and Ohio 
repealed it.
    So various researchers studied what happened following 
that, the expectation was some people claim that construction 
costs would rise 22 percent or 25 percent. In fact, at the end 
of the day, school construction costs were unchanged. There was 
no significance statistically significant difference. And the 
reason was----
    Ms. Woolsey. That was in Kentucky?
    Mr. Eisenbrey. That was in Kentucky, Michigan and Ohio.
    Ms. Woolsey. Oh.
    Mr. Eisenbrey. Going back farther, the same thing in 
Kansas. Kansas repealed its state prevailing wage law in 1987 
and the results were no higher--the construction costs didn't 
fall, there was no statistical difference in construction costs 
before and after.
    Apprenticeship training however, fell off almost, you know, 
just fell off the table--38 percent drop in apprenticeships, 54 
percent drop in minority apprenticeships and safety and health 
suffered as well. By bringing in younger, less experienced, 
less skilled workers, it raised the serious injury rate by 21 
percent. So all of these things, you know, come along with the 
notion of doing away with prevailing wages.
    Ms. Woolsey. So, Mr. Mistick, it seems like you said that 
you think federal construction is limited because of prevailing 
wage. But it seems like you said that you didn't have any 
problem with hiring and quality even though you were--had to--
--
    Mr. Mistick. You know there are other ways besides a simple 
wage rate to drive up the cost of federal construction. When a 
collective bargaining rate is determined to prevail, it imports 
into the process all of the work practices that are covered by 
that collective bargaining process.
    Western Pennsylvania for example on jobs that--on Davis-
Bacon jobs that are subject to the collective bargaining 
agreement, carpenters have to unload the trucks and distribute 
the material on site, and electrician unloads the truck and 
distributes the materials on site rather than a laborer.
    Now the laborer can make a Davis-Bacon wage that is quite 
comfortable, but he is not allowed by the enforcement division 
to cost effectively prosecute the federal construction.
    Ms. Woolsey. Okay, thank you.
    Mr. Mistick. Thank you.
    Chairman Walberg. I recognize now the full committee 
chairman, Chairman Kline.
    Mr. Kline. Thank you Mr. Chairman.
    I thank the witnesses for being here today. I have got a 
couple of questions, and I am going to of course abide by the 5 
minute rule. I was just struck by the ranking member's 
assertion that when we have witnesses who appear and have a 
logo on their letterhead that they have to agree that they are 
speaking for the entire organization.
    And Mr. Sherk, I think you recognize that you are indeed an 
employee of the Heritage Foundation and appropriately use the 
letterhead, but your position would be that you haven't got an 
agreement from the Heritage Foundation board and the 700,000 or 
so members that you are indeed representing the entire Heritage 
Foundation, is that correct?
    Mr. Sherk. That would be exactly correct.
    Mr. Kline. Thank you. And the ranking member then asserts 
that because she is a member of Congress, and has the 
congressional seal at the top of her letter, that she is of 
course speaking for herself, but I doubt if the ranking member 
really believes that she is speaking for all 435 members of 
Congress. Let us see----
    Ms. Woolsey. Oh, wait a minute----
    Mr. Kline. I think----
    Ms. Woolsey. Will you yield----
    Mr. Kline. I am happy to yield.
    Ms. Woolsey. Yes, I actually am on record speaking to and 
representing my entire constituency. If they don't like it then 
they have to--they will dis-elect me.
    Mr. Kline. Thank you and now reclaiming my time, I am no 
doubt that you are representing your position of your 
constituents, but the congressional seal doesn't mean you are 
representing all 435 members of Congress.
    I think that all of us would agree that shortchanging 
workers and overcharging taxpayers is unacceptable and it looks 
like that may be what we are getting in many cases according to 
the GAO report.
    Dr. Sherrill, it is nice to have you back again. It seems 
like only a week or so, you were here with a controller 
general.
    For this report, the GAO interviewed contractors who 
stated, quoting that ``DOL's current method of handling job 
classifications was confusing and challenging''. Can you help 
us with any further detail about the issues raised by these 
stakeholders, the confusing and challenging?
    Mr. Sherrill. Yes, one of the key issues that were raised 
is, especially I think by some of the smaller contractors is 
that they would in some cases have a worker doing a certain 
type of job activity part of the time and a different job 
activity another part of the time so they were confused about 
how they ought to be classifying that worker with regard to 
which specific job classification.
    So there were issues like that where some of the smaller 
employers really needed more guidance and instruction about, 
you know, you know how to fill out the survey form properly.
    Mr. Kline. And so this would be information presumably 
coming from Wage and Hour that they need or?
    Mr. Sherrill. I mean this would be the kind of thing that 
could be done in better--the Department of Labor hasn't 
pretested the survey. I mean we have--one of the themes that 
GAO--the I.G. has noted is that there is a fairly high level of 
errors that are identified in the way survey data reported.
    And I think part of the issue is that the labor survey form 
has never really been pretested to get a better idea of, you 
know, what, where, what could have been made more 
comprehensible, where are the issues.
    Labor is planning to do that to revise the survey, but we 
think it is critical that they really incorporate sort of 
methodological expertise as they revise the survey to help 
avoid some of those kinds of errors and confusion.
    Mr. Kline. Thank you. It appears that there have been 
studies going back for years and decades complaining about this 
process and the many inaccuracies and the current GAO report 
was again, pretty negative about the Department of Labor's 
attempts to change the current practices.
    But I am--we have heard from the Department of Labor that 
it has made improvements to the process. Could--do you agree 
that these improvements are significant? It is really going to 
improve things? Can you address that?
    Mr. Sherrill. The Department of Labor has taken a number of 
steps to make improvements. In recent years they have really 
focused on different strategies to increase the timeliness of 
conducting the surveys. They have taken efforts to better 
verify the data.
    But one of our key findings was they haven't sufficiently 
addressed some of the fundamental issues with the survey 
dealing with the quality of the survey, how representative is 
it. Do you have sufficient data to make a representative 
judgment? Those kind of sort of more fundamental issues. So 
they made progress in some areas, but in others haven't gone 
far enough.
    Mr. Kline. Okay, thank you.
    And Mr. Markey, the Wage and Hour division has previously 
used McGraw-Hill Construction Analytics and there is a study I 
think came from 2005. Could you produce that for us for the 
record please?
    Mr. Markey. Yes I can.
    Mr. Kline. Thank you.
    I yield back Mr. Chairman.
    Mr. Bucshon [presiding]. The chair now recognizes the 
gentleman from New Jersey, Mr. Payne.
    Mr. Miller?
    Mr. Miller. Just quickly, on the question--Mr. Kline just 
raised a question about the McGraw-Hill. From the GAO's point 
of view, is that a legitimate undertaking by Department of 
Labor?
    Mr. Sherrill. The McGraw-Hill review was conducted in 2004. 
It was really a view of Department of Labor's processes for 
doing the----
    Mr. Miller. But are they not now using them on an ongoing 
basis?
    Mr. Sherrill. I think you would have to ask the Department 
of Labor, sir what they are doing here. They are----
    Mr. Miller. Well, let me ask the Department of Labor then 
quickly.
    Mr. Markey. As my testimony indicated, it had several 
recommendations and we acted on all of those. And, you know, 
where it went through the IT personnel training, and we are 
seeing real progress. With the new surveys, we are receiving a 
much greater response rate that we had in the past. These are 
the surveys we initiated in 2009 and 2010.
    Mr. Miller. But that--the McGraw-Hill is not an ongoing 
process it was used and you are responding to the 
recommendations that McGraw-Hill made, is that correct?
    Mr. Sherrill. That is correct.
    Mr. Miller. Let me just say, I have--I guess I have seen 
this process sort of both ways. I am fortunate to represent an 
area that over the last 20 years has had billions of dollars of 
heavy construction in the refining, chemical industries, steel 
mills, and I have seen when these private contracts were left a 
number of years ago, over the last 10 years, the influx of 
people from all over the country coming and sleeping in their 
cars, camping in the parks, bunking up five, six, seven people 
to a motel room, using county facilities, law enforcement 
facilities, county hospital, health care clinics, using all of 
those facilities and then leaving the minute the job was over.
    Today, all of those fields, the major oil companies, the 
chemical companies, that work is now done under project labor 
agreements. It is entirely different situation. For the 
residents of that area who are employed in those jobs, who get 
the benefits, who return the revenues to the, if you will, 
their pay to the community and it is a much different 
proposition.
    And it took time to evolve over to that process, but I 
think it is clear that Davis-Bacon provides much of that same 
benefit to communities. I mean I--actually when I was a young 
man working my way through college, I worked alongside people, 
and everybody I worked alongside of came from long distances to 
work in those refineries and turnaround times or refurbishing 
or modernization in those trades. But they put nothing back 
into the community.
    And that is the world of difference. Today, that is the 
case and I think that we are all better off for that reason. 
And obviously those negotiations are carried on with some of 
the largest entities in the world. They are mature negotiators 
they have made that determination to go in that direction.
    So I would hope that we wouldn't be considering the repeal 
here. I do think that the GAO report--I get a little sense here 
that we have got sort of two different photographs and there is 
the number of things that have been going on to improve this, 
if I look at Mr. Markey's testimony, to improve the timeliness 
and the responses to the surveys. But some of the GAO work was 
on previous work to that.
    I think we need somehow to reconcile both of your 
testimonies to see if we get an accurate picture of where it 
yet needs to be to be done. And then to the question of whether 
or not the response rate is sufficient or not, and accurate 
enough I think is an issue that we should continue to look at.
    But I would like to get some, maybe I can formally ask the 
GAO if you would look at--if the testimony of DOL, I don't know 
if you have prior to this hearing because it appears that there 
is a little bit of mismatch in sequencing if you will.
    I am not putting intent anywhere here, I just--the question 
of sequencing. Some things that have been done subsequent to 
the surveys that you may have been looking at that were an 
earlier iteration. That is--does that make any sense to you?
    Mr. Sherrill. That is fair because we did our analysis 
based on the data, the surveys that were available at the time 
for us look at that.
    Mr. Miller. Okay.
    Mr. Sherrill. So some of it was a snapshot of where they 
were at that time.
    Mr. Miller. I think that would be helpful to us.
    Finally I just want to say I think Mr. Mistick, the $15.7 
billion is not annually, it is over 10 years. And it is a 
result of a CBO--informal CBO estimate. It is not a formal 
finding of CBO, just to clarify the record. It is--there is a 
little bit of difference between us two as you might imagine.
    Mr. Mistick. It is still on the plus side.
    Mr. Miller. No I understand, I understand. But you could 
also argue, I think, that the issue of the timeliness drags the 
wages back in time as opposed to being current, but more to be 
said later.
    Mr. Mistick. I agree with that observation, Mr. Miller.
    Mr. Bucshon. The chair yields 5 minutes to himself for a 
few questions. Mr. Mistick, you have a lot of experience as a 
stakeholder in all of this and trying to understand how to 
comply with the Davis-Bacon, and in your opinion, what is 
really the most troubling that you find with the findings of 
the GAO report?
    Mr. Mistick. It is--part of it consistent series over 
literally decades in which the department fails to produce 
accurate numbers. And we can talk about--computers and doing 
things faster, but all we are going to do is produce wrong 
numbers more quickly. What it has produced most generally by 
the Department of Labor's survey are numbers that are wrong.
    We have to be able to say out loud that if 13 percent of 
the workforce belongs to a union and 65 percent of our data 
points are union rate, prima facie, that is wrong. And that is 
what we need to address. We already pay to collect a great deal 
of data, as Mr. Sherk has mentioned, in the occupational waste 
surveys.
    Advantages of which are that it is done on a county by 
county basis so that we can get to that fine granularity that 
is important in doing these surveys, plus the occupational 
waste survey has written classifications for the job.
    That doesn't exist and it is part of the problems that Dr. 
Sherrill mentioned with people participating in the survey 
because there is no written description of what a carpenter, or 
painter, or plasterer does and that can vary from locality to 
locality. That is the biggest problem in my mind. And I don't 
see any impetus after 80 years of trying to really get it right 
at the Department.
    Mr. Bucshon. If a contractor has a question regarding a job 
classification issue, what type of guidance does DOL offer?
    Mr. Mistick. Well, you can certainly call DOL and ask them 
and you might get a piece of oral tradition. For example, if I 
say, what is carpentry work to the DOL? They say well, what is 
ever done with the tools of the trade. Well that is not really 
an answer, is it?
    There have been instances more recently where the DOL has 
referred contractors to the contracting officer, who is the 
last person in the world to decide what job classifications 
are, this is a procurement specialist that has no background in 
the labor issues. So it is very difficult. It is not written 
down. It is also true in many state prevailing wage situations 
where there are no written guidelines for what the 
classifications are.
    Mr. Bucshon. Mr. Eisenbrey, I am a physician. I found it 
interesting that you were trying to correlate the incidence of 
workplace accidents and that type of safety issues related to 
how much people are paid on the job.
    And how that--I am trying to find out how that--make that 
mental leap why, I mean this is a traditionally held view I 
think about labor, that if a union isn't involved in a project 
that people are going to be more--are more going to be, are 
more likely to be injured and hurt on the job which is a view, 
by the way, that I don't hold.
    So I want to know, what specific data do you have, you 
know, that related to David-Bacon Act that there is any 
correlation at all with workplace accidents and injuries that 
just doesn't seem to apply to me.
    Mr. Mistick. What I cited was a study by Professor Peter 
Phillips from the University of Utah of what happened in Kansas 
after the repealed their state prevailing wage law. And I am 
not saying that there is a direct cause, but I am just 
reporting what happened afterward and----
    Mr. Bucshon. But I mean--I think--can interrupt for just a 
second. I think you wanted to get across to the committee that, 
like I said, a typical labor opinion that if labor isn't 
involved that there will be injuries on the job to try to muddy 
the water about the whole issue.
    Mr. Mistick. No, no, no, no.
    Mr. Bucshon. But the intent of this is not to say that 
people shouldn't have a prevailing wage, but the question in 
mind is, what are the statistics behind it?
    Mr. Mistick. Well actually what I said was, that there is a 
rationale for why that would happen, which is it--I didn't say 
anything about unions, what I said was, if you pay less, you 
are going to get less experienced workers who will be more 
likely to get hurt on the job. That if you pay--and take 
physicians. If you paid physicians half as much, would you get 
as high quality physicians? I mean I think the answer----
    Mr. Bucshon. Actually you would because they are all 
trained the same and my time has expired. Mr. Bishop?
    Mr. Bishop. Thank you. Thank you Mr. Chairman and thank you 
for having this hearing. You know, I am having a hard time 
believing that this hearing is about a survey methodology or 
survey quality. I think it is important for us to note that in 
the debate on H.R.1 there was an amendment offered by Mr. King 
of Iowa to repeal Davis-Bacon.
    Thankfully that amendment failed 189 to 233 but with one 
exception, every member of this sub-committee including the 
chairman of the full committee, voted for that amendment. So 
this hearing is much, much, more than about survey methodology.
    I would also note for the record that Congressman Bacon 
preceded me as the representative of New York One and he was a 
Republican I should point out, and I will also point out that 
Mr. Shrek (sic) you use--Sherk, pardon me, you use a lot of 
data from Long Island. I represent about half of Suffolk 
County, so chances are the carpenters and the electricians and 
the sheet metal workers you are referring to are people that I 
represent.
    And in preparing for this I read a document that you wrote 
Mr. Sherk, and I will just read the opening sentence of the 
last paragraph which says, ``Repeal Davis Bacon. America can no 
longer afford such special interest handouts''. Do you recall 
writing that?
    Mr. Sherk. I have written words to that affect many times.
    Mr. Bishop. Okay, well so am I to understand that a 
carpenter making $77,000 a year constitutes a special interest?
    Mr. Sherk. The special interest that I was particularly 
referring to is unions. So there have been studies of what 
happens when you repeal prevailing wage law.
    Mr. Bishop. All right, let us go to that. The difference 
between the prevailing wage and the market rate for Long 
Island, carpenter who is, if he is fortunate enough to work 40 
hours a week for 52 weeks a year would make approximately 
$77,000. The market rate, person would make about $59,000 a 
year.
    Now these $77,000 a year guy, remember, he is the guy I 
represent, okay. Now, if we were to impose a tax rate on that 
person, that reduced his take home pay by 30 percent, is it 
fair to say--I know you don't speak for the Heritage 
Foundation, but is it fair to say that the Heritage Foundation 
would refer to that tax rate as confiscatory?
    Mr. Sherk. We would oppose certainly any such taxes. But if 
you had say a subsidy, basically we believe people should keep 
what they earn.
    Mr. Bishop. Okay.
    Mr. Sherk. But----
    Mr. Bishop. But, but, but in order to keep what you earn 
you first have to earn it, correct?
    Mr. Sherk. If you are earning it----
    Mr. Bishop. But you are asking a person to take a 40 
percent reduction in pay to do the same job, is that not 
correct?
    Mr. Sherk. What you are basically requiring them to do is 
work on the open competitive market and not have, basically 
government----
    Mr. Bishop. But the fact is that if your construct were to 
take place. If we were to repeal Davis Bacon, that laborer or 
that carpenter now making 77 grand a year, would be making 59 
grand a year, right?
    Mr. Sherk. [Off mike.]
    Mr. Bishop. And so let us stay with that for a second. So 
he now has $18,000 less per year to spend. Now if we were to 
tax everyone, so that such that they had $18,000 a year less to 
spend, would there not be some enormous human cry that that is 
a job killing tax rate because we would be taking money out of 
the economy and out of circulation. Isn't that how that tax 
rate would be dealt with, perhaps reasonably?
    Mr. Sherk. Well effectively, what you are having is not a 
tax but a subsidy. So again, there are----
    Mr. Bishop. This is the individual who now has $18,000 less 
per year to spend, call it a subsidy call it a tax. He has got 
18 grand less per year to support his family. And he has 18 
grand less per year to buy goods and services which have a 
ripple effect through the economy. Is that not correct?
    Mr. Sherk. No, I don't believe that is correct.
    Mr. Bishop. Why is it not correct? If we were to tax that 
person $18,000 you would claim that we were taking money out of 
the economy. And that is the best thing for us to do is leave 
the money in the hands of the people because they know how to 
spend it better than the federal government. Is that not the 
case?
    Mr. Sherk. But what you have essentially got a law that 
requires--is your hiring of four construction workers for the 
price of five. If you paid the individuals market rates and 
assume that----
    Mr. Bishop. I am trying to deal with the people I 
represent. And if your recommendation were to ever take on the 
force of law, those people would be very, very adversely 
impacted.
    Mr. Sherk. Those fortunate enough to work on the federal 
construction jobs, some of them would see lower pay. Those who 
are unemployed right now might benefit from----
    Mr. Bishop. All right, let us try this. The prevailing 
wage, not the union wage, the prevailing wage for all counties 
in Virginia for a backhoe operator, which I guess would be 
called a laborer, is $11.28 an hour. That is around $450 a 
week, so roughly 23 grand a year. Is that what we have come to? 
We have come to arguing about whether or not we can afford to 
pay somebody 23 grand a year?
    Mr. Sherk. We did a study actually on Davis-Bacon rates in 
Virginia a couple years back. I haven't updated it since then, 
it was 2008. But what we found was actually that the Davis-
Bacon rates in Virginia, because of the inaccuracies,were about 
5 percent lower than the market rates and that you had inflated 
rates in northern Virginia, in the rest of Virginia they are 
substantially below the market rates. So it is--if you have got 
the--survey, I----
    Mr. Bishop. It increased it--let us say that it is--let us 
say you are right. I am sorry, my time----
    Chairman Walberg [presiding]. The gentleman's time is 
expired.
    Mr. Bishop. Thank you.
    Chairman Walberg. We will now go to the gentlelady from 
Hawaii, Ms. Hirono.
    Ms. Hirono. Thank you Mr. Chairman. I would like to insert 
into the record of this hearing a letter that was sent to the 
chairman of the full committee and the ranking member of the 
full committee from the Congressional Black Caucus, the 
Congressional Hispanic Caucus, Congressional Asian--Pacific 
American Caucus in response to the fact that we are having this 
subcommittee hearing wherein they say prior to the enactment of 
Davis-Bacon in 1931, there were many shocking examples of 
abusive labor practices and wholesale exploitation of female 
workers and workers of color.
    That is just part of what was in the letter to the full 
committee chairs and a ranking member. I would like to insert 
the rest of that letter for the record of this hearing.
    [The information follows:]
    
    
    
                                ------                                

    Chairman Walberg. Without objection. So ordered.
    Ms. Hirono. Thank you. I found the exchange that we just 
heard very interesting, and, Mr. Sherk, I am curious to know is 
the position of the Heritage Foundation, which does advocate 
market rates in this arena, whether or not the position of the 
Heritage Foundation or your own position for that matter, is 
that government not set minimum wage either?
    Mr. Sherk. Certainly my personal position would be that the 
minimum wage is destructive to those it tries to help, that it 
produces employment opportunities and the ability of people to 
get a start on the job ladder and move up. So generally 
speaking, I would be against that. But, in this case, it means 
that the David-Bacon rates--they even--the market rates. They 
are so far above and beyond even the minimum wage that they--it 
is apples and oranges.
    Ms. Hirono. So, the answer is that you would rather that--
you don't think that the government should set minimum wages 
either?
    Mr. Sherk. I, generally believe--speaking--I believe that 
minimum wage laws hurt those they are trying to help.
    Ms. Hirono. Thank you very much. We obviously have a 
disagreement on that.
    Mr. Eisenbrey, I don't think that you were able to complete 
your testimony, and it is very clear from this hearing that 
apart from the survey design and methodology, which we hope 
will be, you know, appropriate, that we don't have enough 
people participating in the survey, and I don't think you had a 
chance to finish your thoughts on some of the ideas that you 
would have to ensure a higher and more representational 
participation.
    Mr. Eisenbrey. Well, thank you. Can I make one other point 
before I answer your question?
    Ms. Hirono. Please.
    Mr. Eisenbrey. I just like the record to be, clear that 
when Mr. Sherk talks about the market rate, you shouldn't take 
that as a fact that he is asserting that the occupational 
employment statistics rate is the market rate, and he compares 
it to I think the building rate under Davis-Bacon, which is 
actually an unfair comparison because the OES includes 
residential construction where the rates can be half as much as 
the building rate.
    So, he is lumping in a lot of very low wage people and 
comparing them to people with higher skills in a narrower 
segment of the market, and it really isn't a fair comparison, 
and I would say everything that he said based on that has to be 
therefore taken with a grain of salt.
    Ms. Hirono. Thank you for that clarification.
    Mr. Eisenbrey. But in answer to your question, I think that 
the Department should be doing everything it can and it is 
making new efforts--you have heard from Mr. Markey--to get 
better responses to the surveys. I think that there are tools 
that the department hasn't looked at that they should.
    In Michigan one of the world's greatest survey institutions 
is at the University of Michigan, and they will pay people to 
complete surveys. That is an incentive that ought to be looked 
at.
    But, the more obvious one is to say that anyone--any 
subcontractor, anybody who is doing federal construction work 
and being paid by the government should complete these surveys. 
They should be required to complete the surveys as a condition 
of working on federal projects and getting federal taxpayer 
dollars. That would do a lot to increase the response rate.
    Ms. Hirono. Mr. Markey, would you like to respond to these 
two suggestions to improve your return rate?
    Mr. Markey. Well, we are taking----
    Chairman Walberg. Microphone, please.
    Mr. Markey [continuing]. We are taking efforts to improve 
the response rate. As I indicated it has usually been a series 
of mailings and with the low response rate in residential 
construction we have changed that methodology. We are 
supplementing mailings with telephone calls and visits to 
contractors and contractor associations. We have started that 
in--2010, and we have several surveys ongoing regarding that.
    After we cleaned up all the old surveys, as I talked about, 
we started piloting surveys under this new methodology where we 
don't have a one size fits all, and we don't survey every type 
of construction at the same time.
    If we look at the response rate in Georgia that we 
published in 2009, I think the survey was 2003 or 2004--and we 
look at the response rate in Georgia which we are currently 
surveying now, I think we have, just for a building in heavy, 
over 7,000 responses, for Georgia. We didn't have anywhere near 
that back in 2003 when we did this survey.
    Chairman Walberg. Thank you, the gentlelady's time has 
expired.
    Ms. Hirono. Thank you.
    Chairman Walberg. Move on to the gentleman from New Jersey, 
Mr. Payne.
    Mr. Payne. Thank you very much. It is a very interesting 
discussion, and it has been around for a long time. I, 
unfortunately, had to run to another committee so I know that 
many of the questions were asked and answered although I do 
have a question of Mr. Markey.
    You know, today's statement, and this is what the 
discussion even to the previous member had made claims that the 
Department of Labor survey is difficult to complete and 
presents a major problem.
    The GAO study found that 19 of 27 contractors and 
interested parties, 70 percent are interviewed, said that the 
survey was generally easy to understand though some identified 
challenges with completing specific sections such as how to 
apply the correct job classifications. Does the Department 
frequently receive complaints about the form, and what support 
do you provide to contractors completing this form?
    Mr. Markey. Well, when we do a survey, we conduct extensive 
pre-survey briefings. That includes all stakeholders. It--the 
building trades. It is contractors' associations. It is small 
contractors.
    Besides stressing the importance of responding to the 
survey, we go through the data collection form block by block. 
We send out to everybody who we determine has been involved 
with construction activity a letter requesting a response. With 
that is a two page instruction sheet that indicates how you 
complete the form.
    We have a--on our Web site we have our phone number that--
if they have any problems. And probably, most importantly, we 
get in a form and it indicates that--there are questions as to 
something on the survey, and I will direct one of Mr. Mistick's 
concerns about area practice.
    We immediately called that respondent and we say, did you 
mean this? Okay, you have put a question mark next to the 
classification as to whether it is really a carpenter or an 
electrician or whether they do a subspecialty of hanging 
sheetrock or pulling low voltage wiring. And we question them 
regarding that. So, I think there is a lot of technical 
assistance going on in the survey process.
    GAO in its report said that 70 percent of the respondents 
indicated they had no problems with the form. It was rather 
simple. We do on site verification through a private accounting 
firm, and one of the things they always ask is, did you have 
any problems with the form? What do you think about this? What 
do you think about that? And the response is, it is not 
particularly difficult or time consuming to fill out.
    Mr. Payne. Thank you. Also, you know, the whole question 
about prevailing wages and so forth, I--of course if, you know, 
I was the builder, I certainly would want to have wages as low 
as possible. I mean, I wish I can dictate the rate that my 
doctor charges. But, that is just not the way it happens. I 
mean, it would be great to have you know, what needs to be 
supplied as inexpensive as it can be, therefore the profit 
would be much greater.
    So, I, you know, I think in some of these instances, we 
have to look at the value of work done. What is the--how do we 
determine that? You know, someone comes in and just say the 
prevailing wage is just too high, and that is what many of the 
entrepreneurs say. The workers say that what they are doing, 
they think that what they are providing is equal to what they 
are paid.
    So, I guess this is an argument that, you know, we are 
going to see, you know, on and on according to what side of the 
shovel you are on. So, you know, I think it is driving down 
wages. I am not so sure, as have been indicated, to get more 
productivity. That is a new concept.
    We really have to, I think, make sure that we have 
qualified people. I am glad that the letter from the minority 
caucuses was introduced because there is a misconception that 
people feel that minority workers don't support Davis-Bacon, 
and we have our labor task force members who signed the letter 
just to the contrary.
    And so, I certainly think that this discussion is 
important, and hopefully we can improve it. But, I think to try 
to eliminate the Davis-Bacon Act would be a step in the wrong 
direction.
    Chairman Walberg. I thank you, gentlemen. And now turn to 
the gentleman from Ohio, Mr. Kucinich.
    Mr. Kucinich. Thank you very much Mr. Chairman, and I am 
going to ask some questions of the--for Mr. Markey from The 
Department of Labor. You know, in reading over the GAO report 
and you may have answered this already, so excuse me for asking 
it if you have, is it your position that if you had more people 
who were able to inspect, you could keep up with the flow of 
the work and therefore ensure better enforcement?
    Mr. Markey. Well, no, agencies are always looking----
    Mr. Kucinich. Could you speak into the mic?
    Mr. Markey. Agencies are always looking for more people but 
this is more related to the wage determination process. I 
indicated we have added people. As we continue to re-engineer 
the processes, we are timing each segment of how long it takes 
and we will add staff in the field as necessary.
    Mr. Kucinich. What can you see are the major challenges 
that you face with respect to having staff in the field to make 
sure that you keep up with the workflow? Are you facing budget 
cuts in terms of cutting back staff that would be able to seek 
proper enforcement?
    Mr. Markey. The Department has received a budget cut in 
wage now, and we are sharing it.
    Mr. Kucinich. How will that affect the work?
    Mr. Markey. With regard to this particular function of wage 
determinations, at this point in time we consider it critical 
enough that it is not affecting the work.
    Mr. Kucinich. You consider it what, please?
    Mr. Markey. We consider the wage determination process in 
our efforts to improve it and to shorten the timeframes of the 
age of wage rates, important enough that any cuts will not be 
absorbed in that portion of our operations.
    Mr. Kucinich. I am glad to hear you say that because in 
looking at your testimony you point out the historical 
importance of the Davis-Bacon Act, and I think that in this 
debate over Davis-Bacon wages that it is important that we talk 
about the construction benefits to the taxpayers, quality of 
work, workplace safety issues that may not be easily monetized, 
but once they are, actually indicate that the taxpayers overall 
are not just getting quality but they are getting value. Would 
you agree with that?
    Mr. Markey. Yes, I would.
    Mr. Kucinich. I would like to ask Mr. Sherk--I read your 
report repealing Davis-Bacon, which you advocate, and I heard 
you answer one of my colleagues. What do you--I am going to 
pick up on your comments about minimum wage. Do you think there 
should be a minimum wage?
    Mr. Sherk. Well, again, it is--the minimum wage only--you 
are talking basically 3 percent or so of workers. The--it 
doesn't--construction workers----
    Mr. Kucinich. Philosophically though.
    Mr. Sherk. But, generally speaking I think it hurts those 
it is intended to help that it prices low skilled--very low 
skilled--workers out of the labor market.
    Mr. Kucinich. So, right now the minimum wage is about 
$7.25.
    Mr. Sherk. Yes.
    Mr. Kucinich. Would you say that maybe more people would 
work if the minimum wage was like, say, $5?
    Mr. Sherk. Certainly you would have--right now if you are 
among skilled workers--say you are a high school dropout and 
you can only provide $6 an hour worth of value to the company. 
Well then nobody is going to pay you $7.25 an hour and benefits 
to bring you on. But, what you find is that when workers--they 
starve on minimum wage. It is an entry level wage. The two-
thirds of minimum wage workers get a raise within a year.
    It is the bottom rung of a career ladder, and you work your 
way up. Cut off that bottom rung, don't give them the 
opportunity to develop skills, and you wind up hurting them and 
preventing them from, you know, working their way up and 
earning higher pay.
    Mr. Kucinich. I am just doing some off the cuff math on 
minimum wage 15--the minimum wage at a yearly rate would be 
$15,080. That is at the $7.25 an hour. Let us say we made it $5 
an hour, it would be, I don't know, over $10,000, I guess. When 
you look at the federal poverty numbers, because you have to 
put this in a broader perspective, people would actually have a 
job and be driven into poverty.
    This is a conflict that we have here. So, what I would 
suggest to you, respectfully, is that the philosophy that 
brings any of us to these tables, on this side and on your 
side, have to meet some real world realities about, you know, 
what people need to make a living.
    And I know that in your testimony you sketch out--actually 
with respect to the minimum wage--with respect to Davis-Bacon 
wages, I know you try to establish the difference between the 
Davis-Bacon Act and the market wages in various communities. I 
looked at that. But the question is though, if you monetize all 
the value----
    Chairman Walberg. I thank the gentleman for his philosophy 
and appreciate that----
    Mr. Sherk. Thank you for that, Mr. Chairman.
    Chairman Walberg [continuing]. Yes. I thank you for that 
and----
    Mr. Kucinich. So is my time expired?
    Chairman Walberg. Your time has expired----
    Mr. Kucinich. I thought you were just thanking----
    Chairman Walberg [continuing]. Significantly. [Laughter.]
    Philosophy, philosophy, we all have it, and I thank you for 
yours whether I agree or disagree. I also thank the members of 
the panel for being here today to provide checks and balances 
to each other, to provide philosophy in the process and provide 
more information as we go forward in our committee 
deliberations.
    And now I turn to the gentlelady from California, ranking 
member Woolsey for closing comments.
    Ms. Woolsey. Thank you, Mr. Chairman, and I also thank the 
witnesses today and would like to ask the Department of Labor 
if they have items that they would like to submit for the 
record?
    Mr. Markey. Yes, we would.
    Ms. Woolsey. Mr. Chairman, would that be acceptable to you?
    Chairman Walberg. Without objection.
    Ms. Woolsey. Thank you. It is clear from today's testimony 
that the Department of Labor is taking steps to improve its 
prevailing wage survey process. They have instituted several 
reforms aimed at producing more timely, more accurate wage 
rates, and they continue to look at ways to advance the survey 
procedures.
    We have also learned of the problems with using Bureau of 
Labor statistics data in place of a true prevailing wage 
survey, which amounts actually to an imprecise wage rate and a 
wage cut for construction workers.
    So, as I said before, Mr. Chairman, the last thing 
construction workers need in this economy is to have their 
wages cut. We need to ensure that prevailing wage protections 
exist so that the federal government does not subsidize a race 
to the bottom with our nation's construction investments. 
Instead, we must continue to encourage competition, contribute 
to the development of a skilled workforce for the future and 
pay livable wages.
    I yield back.
    Chairman Walberg. I thank the gentlelady and would concur. 
We certainly want to see jobs, efficiency, all of that expand. 
We also want to make sure that there are no unnecessary 
hindrances to hiring and completing jobs.
    I have had the benefit of having a youngest son who is 
working in jobs probably as we speak. Today he will work for 
prevailing wage and he will work for non prevailing wage. He 
will do the same process at each site and will do the same 
quality work.
    But there will be significant difference in the wages that 
he receives. He understands that. He doesn't complain about the 
bottom line of the check at the end of the month.
    But he does complain about the fact that he knows there are 
jobs that he will not be on and there will be additional 
employees that will not assist him on some of those jobs in 
construction because of additional costs that to him, seem 
unnecessary.
    Now we know that it goes the other way as well, according 
to the GAO report. And I think that is the purpose of this 
hearing, this subcommittee and our deliberations, to find what 
moves this nation, its workforce, its economy forwards. I love 
Michigan. It is a state of my choosing.
    But I also know that state led the nation in an unrivaled 
unemployment recession, depression as it were, for too long and 
sadly, a couple other states have now joined it at the bottom 
of the pile.
    And regulations, cost structures, prevailing wages, 
requirements by the government in Davis-Bacon--whatever it 
might be that destroys the opportunity to move forward must be 
dealt with.
    And so we will continue looking at these issues and 
hopefully come to a conclusion that will benefit the worker, 
the employer, the regulator--I noticed I put regulator third, 
though I appreciate the work that is done, what you are asked 
to do, but nonetheless, ultimately it benefits the economy and 
moving forward in this great nation. It is too great to hold it 
back.
    So having said that, there being no further business, the 
subcommittee stands adjourned.
    [Additional submissions of Mr. Walberg follow:]

   Prepared Statement of Women Construction Owners & Executives, USA

    Women Construction Owners & Executives, USA (WCOE) is pleased to 
submit testimony before the Subcommittee to share our views about 
prevailing wages rates under the Davis-Bacon Act. WCOE is a national 
association representing women owners and executives in the 
construction industry. Members of WCOE include general contractors, 
architects, engineers, manufacturers, construction project managers, 
and trade subcontractors.
    Women represent a small, but growing, segment of the construction 
industry. According to the most recent U.S. Census Bureau Survey of 
Business Owners from 2007, 10% of construction firms nationwide are 
women-owned businesses. The Center for Women's Business Research 2008 
Biennial Update reported that there were nearly 500,000 women-owned 
construction firms nationwide. American Express OPEN's 2011 ``State of 
Women-Owned Businesses Report'' highlighted the recent growth for 
women-owned businesses in the construction industry. Between 2002 and 
2010, there has been a 41% growth in the number of women-owned 
construction firms. Furthermore, construction is one of only two 
industries in which the growth of women-owned businesses regarding 
number of firms, employment and revenues has outpaced industry-level 
growth.
    The issue of prevailing wage rates determined by the Department of 
Labor (DOL) under the Davis-Bacon Act is critical to women construction 
company owners. WCOE's membership includes both union signatory and 
non-union companies and they mirror the overall industry statistics 
(2010 Bureau of Labor Statistics) with nine out of ten companies 
operating under ``open shop'' guidelines.
    The majority of our members are classified as small businesses 
according to SBA criteria and since 87+% are non-union or ``open 
shop'', they are at a significant disadvantage when federal, state and 
local construction contracts require union wages and benefits. In 
addition, the March 2011 Government Accountability Office (GAO) report 
``Davis-Bacon Act: Methodological Changes Needed to Improve Wage 
Survey'' findings that DOL does not provide a fair determination of 
local prevailing wages comes as no surprise to us. The 50 percent rule 
under Davis-Bacon requires DOL to collect wage data on at least three 
workers from two different employers. This calculation is not likely to 
be representative of the actual wages paid to construction workers 
especially when both of the employers surveyed are paying union rates. 
Union signatory construction companies (13%), which tend to pay higher 
total compensation (wages and benefits) than non-union companies (87%), 
are not representative of the entire industry.
    We understand the repeal of Davis-Bacon is nearly impossible in the 
current climate, however we urge the Subcommittee to focus on 
redirecting the wage and benefit research to the states and localities 
who have a better understanding of local dynamics within the 
construction industry. At a minimum, DOL should be mandated to include 
non-union wages and benefits when deciding the prevailing wage for any 
area. After all, these wages do represent 87% of the construction 
industry work force.
    Recently, the Small Business Administration (SBA) implemented its 
women owned small business procurement program to provide women-owned 
businesses greater access to federal contracting. The Women Owned Small 
Business Federal Contract Program (WOSB-8m), which has taken eleven 
years to enact, permits contracting officers, for the first time, to 
restrict competition for federal contracts to women-owned businesses in 
83 industries where women-owned firms were determined to be 
underrepresented. Twelve of these broad 4-digit NAICS industry codes 
(which encompass 60 six-digit specific NAICS codes) are in the 
construction industry. The Davis-Bacon requirements are a barrier to 
women-owned construction companies securing government contracts. 
Implementation of the WOSB-8m Program in these 60 construction NAICS 
codes may not do much to help open the doors to federal construction 
projects unless the Davis-Bacon requirements are revised. If the WOSB-
8m program is about providing parity, then we submit the prevailing 
wage methodology and requirements currently utilized will severely 
limit women-owned construction companies' ability to compete for 
government contracts.
    In summary, we believe Congress should re-examine the industry 
standards for determining prevailing wage rates and take into 
consideration the established fact that 87% of construction companies 
in this country are non-union. WCOE would like to thank the 
Subcommittee for giving us the opportunity to share our views.
                                 ______
                                 


                                ------                                

    [Additional submission of Mr. Eisenbrey follows:]

                                                       May 4, 2011.
Hon. Timothy Walberg, Chairman,
Subcommittee on Workforce Protections, U.S. House of Representatives, 
        Washington, DC 20515.
    Dear Chairman Walberg: The Economic Policy Institute submits this 
supplemental statement to correct the hearing record and respond to 
serious errors in testimony submitted by James Sherk of the Heritage 
Foundation. Dr. Sherk's testimony grossly misrepresents the 
relationship between wages paid under the Davis-Bacon Act and what Dr. 
Sherk misleadingly calls ``the market wage''--local construction wage 
rates published by the Bureau of Labor Statistics in its Occupational 
Employment Statistics (OES). In his written testimony, Dr. Sherk, a 
Senior Policy Analyst in Labor Economics at the Heritage Foundation, 
claimed that Davis-Bacon rates are generally set ``well above market 
wages,'' so high that they will increase the government's construction 
costs by more than $10 billion this year.\1\ As we will show, this 
claim is false.
---------------------------------------------------------------------------
    \1\ James Sherk, ``Examining the Department of Labor's 
Implementation of the Davis-Bacon Act,'' Testimony before the Education 
and Workforce Committee, U.S. House of Representatives, April 14, 2011, 
page 1.
---------------------------------------------------------------------------
    Dr. Sherk contends that, ``The Wage and Hour Division uses 
unscientific methods and unrepresentative data to estimate prevailing 
wages. Unsurprising, Davis-Bacon rates typically bear little relation 
to actual prevailing wages. * * * Davis-Bacon rates vary wildly from 
actual market pay.'' \2\
---------------------------------------------------------------------------
    \2\ Sherk testimony, page 7.
---------------------------------------------------------------------------
    To support his contention, Dr. Sherk's testimony includes a table 
which compares, for selected cities and counties, the wage obtained 
from the OES with what Sherk labels the ``Davis-Bacon'' rate. The 
``Davis-Bacon'' rates in his table are usually considerably different 
from the OES rate, and are more often above the OES rate than below the 
OES rate.
    In fact, there is no reason to expect the rates to be the same 
because they measure different things. The Davis-Bacon rates are 
segmented among four types of construction and construction labor 
markets, they are collected from different geographic areas than the 
OES and at different times, and they typically collect information on 
much more detailed occupational breakdowns than the OES. As currently 
constructed, the OES is both significantly different and quite 
incapable of meeting the statutory requirements that the Davis-Bacon 
surveys have been designed to meet. The OES is not an appropriate 
benchmark for comparison and should not be idealized as the true 
``market rate.''
    In any event, the wild variation and the upward bias Dr. Sherk 
found in his Davis-Bacon rates are the product of Sherk's own invention 
and do not accurately represent the relationship between either the 
``market rate'' or the OES and wage determinations under the Act. In 
truth, they are caricatures that result from misues of the data: 
selecting only the Davis-Bacon rates for building construction while 
excluding the typically lower rates for residential construction, using 
different time periods for the Davis-Bacon and OES rates, and 
misunderstanding the difference between an occupational survey and a 
wage determination.
Failure to Include Residential Rates
    To support his claim that Davis-Bacon rates are generally too high, 
Sherk reports an hourly Davis-Bacon rate for electricians in Jackson, 
MI of $38.57. This is the published Davis-Bacon rate for building and 
heavy construction in Jackson County and is far above the OES estimate 
of the hourly rate for electricians of $27.14. However, the Davis-Bacon 
residential construction rate for Jackson County is only $22.79. If we 
take as a rule of thumb that about half of construction workers are 
employed in residential work, the average hourly wage of electricians 
is $30.68, about 13% above the OES hourly wage, rather than the 42% 
Sherk reports. Inclusion of residential rates for the other trades 
Sherk sampled--carpenters and plumbers--actually eliminates the upward 
bias Sherk identified. The estimated difference between the Davis-Bacon 
and OES hourly wage changes from one in which the Davis-Bacon rate is 
substantially above to one in which it is somewhat below the OES rate.
    Reviewing Sherk's table of ``Davis-Bacon and Market Determined 
Rates for various cities,'' \3\ we added information on the residential 
rate by trade for the county, averaged this rate with the building rate 
provided in Sherk's testimony, and calculated the difference between 
the OES and the more appropriately averaged building and residential 
rates. The differences between the OES and Davis-Bacon rates are 
generally smaller than those reported by Sherk, and we find that the 
OES rate is above the averaged Davis-Bacon rate more often than not.
---------------------------------------------------------------------------
    \3\ Sherk, testimony, page 8.
---------------------------------------------------------------------------
Comparing Davis-Bacon Rates from 2010 and 2011 to OES Rates from May 
        2009
    Dr. Sherk's second mistake is in comparing Davis-Bacon wage 
determinations which were in effect in 2011 with OES data from May 
2009. When Davis-Bacon rates which were in effect in May 2009 are used, 
the apparent differences between the Davis-Bacon and OES rates are 
substantially narrower.
    The Davis-Bacon wage determinations for Alameda and Contra-Costa 
Counties cited in the Heritage study went into effect between June 2010 
and January 2011, between a year and a year and a half after the OES 
rates. The determinations for Sonoma County used in the Heritage study 
were closer in time to the OES rates for electricians (June 2009) and 
plumbers (August 2009) but the carpenter rate dated from July 2010, 
more than a year after the period covered by the OES data. Using this 
non-comparable data, and neglecting to adjust for residential rates, 
the Heritage study reported differences between Davis-Bacon rates and 
OES rates of between 27.5% and 86%.
    The difference between the Davis-Bacon determination and the OES 
rate is considerably smaller when the Davis-Bacon rate which was in 
effect in May 2009 is used. As shown in Table 2, the second set of 
columns, the comparable rate for carpenters in all three counties was 
$34.75, not $37.75 as reported in the Heritage report. The rates for 
electricians in Sonoma County were $42.33 for non-residential and 
$33.25 for residential electricians, rather than $44.00 and $36.11 as 
reported by Heritage. The correct rates for plumbers in Sonoma were 
$45.90 and $40.80 rather than $55.25 and $51.11. Parallel reductions 
occur for electricians and plumbers in Contra Costa and Alameda 
counties.
    Using the appropriate Davis-Bacon rates considerably narrows the 
difference between the OES and Davis-Bacon. For example, Heritage 
reports that the Davis-Bacon rate was 40.1% above OES hourly wages for 
Sonoma carpenters, 54.1% for electricians and a remarkable 86% for 
plumbers. Averaging in the lower residential rates, and using the 
Davis-Bacon rates which were in effect in May 2009, the differences 
were a far more modest 29.3% for carpenters, 16.5% for electricians and 
45.9% for plumbers.
    We have not checked to see whether the rest of the time periods 
used in Dr. Sherk's comparisons are equally inappropriate, but we 
suggest that the committee do so before citing any of Dr. Sherk's 
calculations.
Failure to Adjust Davis-Bacon Rates for the Use of Apprentices
    To put Dr. Sherk's third mistake into the simplest terms, he does 
not take into account that the surveyed Davis Bacon rate does not 
include apprentice rates and will therefore be higher than the average 
rates actually paid on a project.
    Davis-Bacon rates are determinations of the hourly rate paid to 
journey level trades workers. They differ from wage survey data in that 
lower legally permissible rates, such as those paid to workers in 
certified apprenticeship programs, are not incorporated into the 
determinations. For example, under the apprenticeship adjustment 
allowed by the Davis-Bacon Act, apprentices in certified four-year 
carpentry apprenticeship programs will typically be paid 60% of the 
journey rate in their first year, 70% in their second year, 80% in 
their third year, and 90% in their fourth year in their program. While 
these lower rates are captured by OES data, Davis-Bacon wage 
determinations do not reflect the lower rates of apprentices.
    How would adjusting the Davis-Bacon wage determinations for the 
presence of apprentices affect the apparent differential between the 
Davis-Bacon and OES rates? This will vary with the number of 
apprentices in the construction labor force in an area and the length 
of the apprenticeship program, and the reduction in journey level 
wages. Carpentry apprenticeship programs usually take four years, 
plumbers' and electricians' take at least five years. We examined the 
effect of allowing for apprenticeship rates in Sonoma, Alameda and 
Contra Costa counties assuming that programs take four years and that 
wages start at 60% of the journey wage in the first year of the program 
and rise by ten percentage points annually.\4\ If 10% of the workers in 
a trade are enrolled in four-year apprenticeship programs, the adjusted 
Davis-Bacon wage would be 97.5% of the Davis-Bacon journey level 
determination.
---------------------------------------------------------------------------
    \4\ These are conservative assumptions as the apprenticeship 
programs for electricians and carpenters last at least five years. 
Further, the proportion of apprentices in the labor force may well be 
greater than 10%: the Northern California Brotherhood of Carpenters 
reports that apprentices comprise 20% of the workforce in their region.
---------------------------------------------------------------------------
    Adjusting for the lower rates paid apprentices reduces the Davis-
Bacon rate by between 83 cents and $1.10 per hour. As a result, the 
Davis-Bacon rate for carpenters is between 17 and 26% above the OES 
rate, the electrician rate is between 14 and 21 percent above the OES 
rate, and the plumbing rate is between 21 and 42% above the OES rate. 
These differences are far smaller than the 27.5% to 86% differences 
reported by Dr. Sherk.\5\
---------------------------------------------------------------------------
    \5\ Another issue, one which is more difficult to examine, is 
whether the definition of an occupation used in Davis-Bacon surveys is 
comparable to that used in OES surveys. The Davis-Bacon rate is the 
rate paid to a journey level worker, a worker who is broadly trained in 
an occupation. OES definitions of construction occupations are broader, 
and may include less skilled workers, than the standards used for 
Davis-Bacon definitions. For example, the OES definition of a 
carpenter's work--``Construct, erect, install, or repair structures and 
fixtures made of wood, such as concrete forms; building frameworks, 
including partitions, joists, studding, and rafters; and wood 
stairways, window and door frames, and hardwood floors. May also 
install cabinets, siding, drywall and batt or roll insulation. Includes 
brattice builders who build doors or brattices (ventilation walls or 
partitions) in underground passageways.''--would allow a worker who was 
trained in a relatively narrow set of skills, such as installation of 
concrete forms, to be classified as a carpenter. In contrast, such a 
narrowly trained worker is less likely to be classified as a carpenter 
under the Davis-Bacon definition.
---------------------------------------------------------------------------
    Looking again at Sherk's first example, and taking into account the 
lower wage rates for apprentices, the OES-Davis-Bacon comparison for 
Jackson County is vastly different from how it was portrayed in the 
Heritage Foundation testimony. Rather than the Davis-Bacon rate for 
carpenters being 13.9% more than the OES rate, it is 3% less ($20.39 
vs. $20.98). Rather than being 42% higher than the OES rate, the Davis-
Bacon rate for electricians is only 10% more ($29.91 vs. $27.14). And 
rather than the plumbers/pipefitters rate being 16.2% higher than the 
OES rate, as Dr. Sherk claimed, it is actually 4% lower ($27.17 vs. 
$28.23).
Conclusion
    After correcting for Dr. Sherk's many errors, and in particular for 
his failure to include the Davis-Bacon residential rate in his 
comparison, it becomes evident that Davis-Bacon rates are not 
remarkably different from the OES rates, let alone an idealized market 
rate. There are significant differences in a few areas, but overall the 
Davis-Bacon wage determinations Dr. Sherk selected tend to be lower 
than the OES rates once the appropriate corrections are made. The 
savings Dr. Sherk purports to estimate from more accurate Davis-Bacon 
wage determinations are fictitious.
    Please let us know if you have any questions about this analysis. 
And thank you again for the opportunity to testify before the 
subcommittee on this important matter.
            Sincerely,
                            Ross Eisenbrey, Vice President,
                                         Economic Policy institute.
                                    Dale Belman, Professor,
          School of Labor and Industrial Relations, Michigan State 
                                                        University.
                                 ______
                                 
    [Questions submitted for the record and their responses 
follow:]

           Questions for the Record Submitted by Ms. Woolsey

 question for dr. andrew sherrill, director, education, workforce, and 
     income security issues, u.s. government accountability office
    Critics of the Davis-Bacon prevailing wage survey process rely a 
statement on page 20 of GAO Report 11-152 that ``about 63 percent [of 
the Davis-Bacon prevailing wage rates published by the Department of 
Labor as of November 12, 2010] were union-prevailing, in contrast, 
about 14 percent of construction workers nationwide were represented by 
unions in 2010, according to BLS figures, as support for their 
contention that it is ``far from representative'' (written testimony of 
James Sherk, Senior Policy Analyst in Labor Economics with the Heritage 
Foundation) and fails to determine ``true `prevailing' wages and 
instead has repeatedly issued wage determinations that are vastly 
inflated above true market rates seen on private sector construction 
projects'' (written testimony of D. Thomas Mistick appearing on behalf 
of the Associated Builders and Contractors, Inc.), accordingly please 
describe in sufficient detail so that it can easily and promptly be 
retrieved the source of information that supports the above-referenced 
statement on page 20 of GAO Report 11-152; and explain in detail how 
GAO determined that ``about 63 percent [of DOL's published Davis-Bacon 
prevailing wage rates] were union-prevailing?''
  question for mr. thomas m. markey, deputy administrator, office of 
  program operations, wage and hour division, u.s. department of labor
    Mr. John Fraser, Acting Administrator, Wage and Hour Division of 
the Department of Labor testified in a hearing on July 30, 1997 held 
jointly by the Subcommittee on Workforce Protections and the 
Subcommittee on Oversight and Investigations of the House Education and 
the Workforce Committee that only about 29 percent of the Davis-Bacon 
prevailing wage determinations issued by DOL were based on 
collectively-bargained ``union'' wage rates while 48 percent were based 
on ``non-union'' wage rates (weighted averages), and 23 percent 
included a mixture of ``union'' wage rates and ``non-union'' wage 
rates; (1) please state whether the relative percentage of ``union,'' 
non-union,'' and ``mixed'' Davis-Bacon prevailing wage determinations 
has changed since Mr. Fraser testified in 1997 and, if so, please 
describe the current portion of Davis-Bacon prevailing wage 
determinations that are ``union,'' non-union,'' and ``mixed;'' (2) 
please describe in sufficient detail so that it can easily and promptly 
be retrieved the source of information that supports your answer to the 
prior request; and (3) please explain in detail how you determined the 
answer to question (1).
                                 ______
                                 

     Response From Mr. Markey to Questions Submitted for the Record

    Question: Mr. John Fraser, Acting Administrator, Wage and Hour 
Division of the Department of Labor, testified in a hearing on July 30, 
1997, held jointly by the Subcommittee on Workforce Protections and the 
Subcommittee on Oversight and Investigations of the House Education and 
the Workforce Committee that only about 29 percent of the Davis-Bacon 
prevailing wage determinations issued by DOL were based on 
collectively-bargained ``union'' wage rates wile 48 percent were based 
on ``non-union'' wage rates (weighted averages), and 23 percent 
included a mixture of ``union'' wage rates and ``non-union'' wage 
rates; (1) please state whether the relative percentage of ``union'', 
``non-union,'' and ``mixed'' Davis-Bacon prevailing wage determinations 
has changed since Mr. Fraser testified in 1997, and if so, please 
describe the current portion of Davis-Bacon prevailing wage 
determinations that are ``union,'' ``non-union'' and ``mixed;'' (2) 
please describe in sufficient detail so that it can easily and promptly 
be retrieved the source of information that supports your answer to the 
prior request; and (3) please explain in detail how you determined the 
answer to question (1).

    Response: The relative percentage of union, non-union, and mixed 
Davis-Bacon prevailing wage determinations has changed since 1997. 
Union vs. non-union rates vary considerably based on the type of 
construction, and new wage determinations often reflect a different 
distribution of union, non-union, and mixed wage classifications than 
was reflected on the wage determinations they replace.
    A breakdown by wage determination shows a different picture in 2011 
than in 1997. Only 5% of the total building wage determinations are 
100% union wage determinations, 4% are 100% non-union, and 91% are 
mixed (union and non-union) wage determinations. For residential 
construction, 3% are union, 50% are non-union, and 47% are mixed wage 
determinations. For highway construction, 17% are union, 44% are non-
union, and 39% are mixed wage determinations. Lastly, for heavy 
construction, 12% are union, 20% are non-union, and 68% are mixed wage 
determinations.
    At the hearing it was stated that the Government Accountability 
Office's report indicated that 63% of all Davis-Bacon and Related Act 
wage rates were the collective bargaining agreement (CBA) rate. It 
appears that the 63% figure was derived by counting every wage rate for 
each different classification (occupation) for each type of 
construction (building, heavy, highway, and residential). As explained 
below, this methodology results in a somewhat misleading statistic.
    A predominantly union wage determination will contain many more 
classifications and rates than a non-union wage determination because 
CBA classifications are more narrowly defined, with work performed 
broken down into finer categories and each with a separate rate. There 
may be as many as 6 to 8 different rates for a union crane operator and 
the same could apply to other classifications, particularly the heavy 
equipment operator and truck driver classifications. For example, the 
Hawaii wage determination is a CBA/union wage determination that 
applies to building, heavy, highway, and residential construction. 
There are 120 union classifications and rates on the Hawaii wage 
determination, and each rate is counted separately for each 
construction type and for each county covered by the wage 
determination.
    Conversely, for predominantly non-union wage determinations such as 
those applicable to Crenshaw County, Alabama, there are 23 non-union 
rates and 6 union rates for building construction, for heavy 
construction there are 12 non-union and 5 union rates (all 5 rates are 
for varying sizes of a crane), for highway construction there are 45 
non-union rates, and for residential construction there are 17 non-
union rates.
    Additionally it is noted that the surveys for building construction 
usually result in considerably more classifications than the other 
types of construction. This is probably due to the required number of 
crafts necessary on a building construction site. Even though 91% of 
building wage determinations are mixed, mostly union rates are more 
likely to prevail in building construction as opposed to the other 
three construction types, each of which requires considerably fewer 
classifications.
    The Wage Determination Generation System (WDGS) enables the 
generation of publishable wage determinations and generates reports and 
details of wage determinations. The Wage Determinations OnLine (WDOL) 
website (www.wdol.gov) provides a single location for the public to 
view and obtain appropriate Davis-Bacon wage determinations. Both WDGS 
and WDOL were used to view and calculate the percentage distribution of 
union, non-union, and mixed wage determinations provided in this 
response.
                                 ______
                                 

    Response From Mr. Sherrill to Questions Submitted for the Record

    Question for the Record: Critics of the Davis-Bacon prevailing wage 
survey process rely on a statement on page 20 of GAO report 11-152 that 
``about 63 percent [of the Davis-Bacon prevailing wage rates published 
by the Department of Labor as of November 12, 2010] were union-
prevailing; in contrast, about 14 percent of construction workers 
nationwide were represented by unions in 2010, according to BLS 
figures,'' as support for their contention that it is ``far from 
representative'' (written testimony of James Sherk, Senior Policy 
Analyst in Labor Economics with the Heritage Foundation) and fails to 
determine ``true `prevailing' wages and instead has repeatedly issued 
wage determinations that are vastly inflated above true market rates 
seen on private sector construction projects'' (written testimony of D. 
Thomas Mistik appearing on behalf of the Associated Builders and 
Contractors, Inc.). Accordingly, please describe in sufficient detail 
so that it can easily and promptly be retrieved, the source of 
information that supports the above-referenced statement on page 20 of 
GAO Report 11-152, and explain in detail how GAO determined that 
``about 63 percent [of DOL's published Davis-Bacon prevailing wage 
rates] were union-prevailing?''

    GAO Response: To analyze the percentage of union-and nonunion-
prevailing Davis-Bacon wage rates we used data from Labor's Wage 
Determination Generation System (WDGS). Labor uses the WDGS to create, 
modify, and issue wage determinations based on data collected through 
the WD-10 survey forms. The dataset we received, which included 
separate files for union-prevailing and nonunion-prevailing wage rates, 
represented published prevailing wage rates as of November 12, 2010. We 
combined the files and then calculated the percentage each type of rate 
represented of published rates. Our results showed that 63 percent of 
the published wage rates were union-prevailing while 37 percent were 
nonunion-prevailing. To verify our findings, we shared the results of 
our analysis with Labor officials, who conducted the same analysis with 
similar results.
    The source of the 14 percent figure we cited is Bureau of Labor 
Statistics, Economic News Release: Union Members--2010, ``Table 3. 
Union affiliation of employed wage and salary workers by occupation and 
industry'' (Jan. 21, 2011).
                                 ______
                                 
    [Additional submission of Mr. Sherk follows:]

                                                    Washington, DC.
Hon. Timothy Walberg, Chairman,
Subcommittee on Workforce Protections, Room 418 Cannon House Office 
        Building, U.S. House of Representatives, Washington, DC 20515.
    Dear Chairman Walberg: The Davis-Bacon Act (DBA) requires 
contractors on federally financed construction projects to pay at least 
the locally prevailing wage to their employees. These minimum Davis-
Bacon rates are calculated by the Wage and Hour Division of the 
Department of Labor. The Government Accountability Office (GAO) has 
identified serious flaws in how the Department of Labor calculates 
Davis-Bacon rates. The GAO report shows that the Labor Department does 
not use a scientifically representative sample and bases wage rates on 
very few observations--in some cases, as few as three workers.\1\
    Last month, your committee held a hearing to examine this report. 
At that time, I testified that these errors render DBA wage estimates 
inaccurate and scientifically meaningless.\2\ I compared Davis-Bacon 
wage determinations with estimates of market pay calculated by the 
Bureau of Labor Statistics' Occupational Employment Statistics (OES) 
survey. I explained that Davis-Bacon rates typically exceed market pay 
and that correcting the flaws in the DBA determinations would result in 
considerable savings for taxpayers.
    Writing for the Economic Policy Institute (EPI), Ross Eisenbrey and 
Dr. Dale Belman responded to this testimony with a supplemental 
statement submitted to your office.\3\ They argued that I made 
``serious errors'' and that my testimony ``grossly misrepresents'' the 
relationship between DBA and market wages. In particular, the EPI 
strongly objects to comparing DBA rates and OES construction wages.
    I am submitting this letter as supplemental testimony to respond to 
the EPI's accusations and correct the record. The EPI makes four 
principal arguments: (1) OES data are incapable of meeting the 
statutory requirements for DBA prevailing wages and are not an 
appropriate benchmark for market wages; (2) my analysis fails to 
include DBA residential rates; (3) my analysis compares more recent DBA 
rates to older OES rates; and (4) I fail to adjust for the use of 
apprentices on the job. Adjusting for these factors, EPI contends that 
DBA rates are similar to OES figures.
    These arguments are either completely inaccurate or highly 
misleading. As I will show, Davis-Bacon rates do in fact considerably 
exceed market pay. Congress could achieve considerable savings by 
either repealing the act or requiring the Department of Labor to use 
scientific methods to calculate DBA rates.
Appropriateness of OES Figures for Prevailing Wage Determinations
    The EPI objects to comparing DBA rates with OES wage estimates. 
They write that:
    As currently constructed, the OES is both significantly different 
and quite incapable of meeting the statutory requirements that the 
Davis-Bacon surveys have been designed to meet. The OES is not an 
appropriate benchmark for comparison and should not be idealized as the 
true ``market rate.'' \4\
    The Department of Labor disagrees. The Bureau of Labor Statistics 
conducts the OES survey primarily so that Labor can enforce prevailing 
wage statutes. The Service Contract Act requires federal service 
contractors to pay their workers existing market wages. The Foreign 
Labor Certification program requires employers of high-skill immigrants 
to pay at least market wages. The Labor Department uses OES figures to 
enforce these programs.
    This is because the OES survey contains none of the flaws the GAO 
identified in DBA determinations. Unlike DBA determinations, the OES 
uses scientific representative sampling techniques and makes 
appropriate adjustments for non-response. The survey has a very large 
sample size, and the BLS updates it annually. The OES is the most 
reliable occupational wage data that the federal government produces.
    As I acknowledged in my testimony, the OES cannot--by itself--meet 
the statutory requirements for DBA enforcement. The DBA covers both 
wages and benefits, but OES does not include data on employee benefits. 
However, OES figures meet the statutory requirements for setting DBA 
wages and serve as an appropriate benchmark for market wages. In a 
letter to Congress explaining its decision not to use OES figures, the 
Clinton Administration nonetheless expressly acknowledged this fact.\5\
Davis-Bacon Act Covers Little Residential Housing
    The EPI also objects to the specific comparisons between Davis-
Bacon and OES/market wages that I made in my testimony. Their main 
objection is that I compared DBA ``building'' rates with OES figures 
that include both nonresidential and residential workers. They argue 
that an average of DBA ``building'' and ``residential'' rates is much 
closer to OES wages than the ``building'' wages are.\6\ They argue that 
improving the accuracy of DBA determinations would therefore result in 
relatively little saving for taxpayers.
    This argument is highly misleading. The EPI correctly points out 
that DBA residential wage rates can be significantly lower than 
building or heavy construction rates. These residential determinations 
are riddled with the same inaccuracies and methodological flaws the GAO 
identified in the building determinations. That they differ markedly 
from each other is not surprising.
    However, the Davis-Bacon Act covers little residential housing. 
Less than 8 percent of direct federal construction spending goes to 
residential projects.\7\ An even smaller portion of state and local 
government construction spending--government some of which the federal 
subsidizes and is covered by the DBA--goes to residential projects.\8\ 
Most federally funded construction projects build government buildings 
or infrastructure. Lower DBA residential rates do little to reduce 
federal costs.\9\ The relevant comparison is the difference between 
market wages and DBA rates on projects the government actually pays 
for.
Cross Industry and Nonresidential Building Rates Similar
    Contrary to the EPI's assertions, nonresidential building rates do 
not differ significantly from the overall construction rates. Looking 
only at them would not change the finding that DBA rates substantially 
exceed market wages.
    The OES survey collects wage rates by occupation and by detailed 
industry. These detailed industries include residential building, 
nonresidential building, heavy civil and engineering construction, and 
specialty trade contractors. Unfortunately, the OES does not publicly 
release these industry-level wages for Metropolitan Statistical Areas. 
The MSA-level data only report occupational wages across all 
industries.
    I used cross-industry MSA data in my testimony to compare local 
Davis-Bacon and OES rates. Although national OES rates for just 
nonresidential building construction do differ from the cross-industry 
figures, they do not differ greatly. For example, nationwide, plumbers 
and pipefitters earn an average hourly wage of $24.10. In the 
nonresidential building sector, they earn $25.42 an hour.
    Table 1 shows national hourly wages for several construction 
occupations. The first line reports the overall cross-industry wage--
the local-level figures I reported in my testimony. The next two lines 
report the wages for residential and nonresidential building 
construction. Nonresidential building wages are usually somewhat higher 
than the cross-industry construction wages. However, the difference is 
modest: only about 5 percent.\10\
    The flawed DBA methodology significantly inflates the cost of 
taxpayer-funded construction projects. Using nonresidential building 
rates instead of the cross-industry figures does not change this 
finding.

              TABLE 1.--HOURLY WAGES BY CONSTRUCTION SECTOR
------------------------------------------------------------------------
                                                          Average Hourly
                  Occupation/Industry                          Wage
------------------------------------------------------------------------
Carpenters:
    All Construction Industries........................          $21.19
    Residential Building Construction..................          $19.72
    Nonresidential Building Construction...............          $23.19
Cement masons and concrete finishers:
    All Construction Industries........................          $19.00
    Residential Building Construction..................          $19.47
    Nonresidential Building Construction...............          $20.08
Drywall and ceiling tile installers:
    All Construction Industries........................          $19.79
    Residential Building Construction..................          $19.12
    Nonresidential Building Construction...............          $20.73
Electricians:
    All Construction Industries........................          $24.25
    Residential Building Construction..................          $21.65
    Nonresidential Building Construction...............          $24.07
Plumbers, pipefitters, and steamfitters:
    All Construction Industries........................          $24.10
    Residential Building Construction..................          $22.66
    Nonresidential Building Construction...............          $25.42
------------------------------------------------------------------------
Source: Department of Labor, Bureau of Labor Statistics, Occupational
  Employment Statistics, ``May 2010 National Industry-Specific
  Occupational Employment and Wage Estimates'' at http://www.bls.gov/oes/
  current/oessrci.htm#23

Timeliness of Comparisons
    The EPI further objects to ``comparing Davis-Bacon wage 
determinations which were in effect in 2011 with OES data from May 
2009.'' They argue that ``[w]hen Davis-Bacon rates which were in effect 
in May 2009 are used, the apparent differences between the Davis-Bacon 
rates and OES rates are substantially lower.'' \11\
    This argument is completely mistaken. I reported the most recent 
Davis-Bacon and OES rates at the time of the hearing.\12\ This is the 
appropriate comparison. Neither survey is, of course, immediately up-
to-date. No agency can conduct a survey instantaneously. However, OES 
survey data are processed more rapidly and updated more frequently than 
Davis-Bacon determinations. This--along with its scientifically valid 
methodology--is one of the principal reasons to prefer OES figures.
    The Bureau of Labor Statistics updates OES figures each May with 
data from the previous year. Consequently, the OES always reports 
figures from the previous 12 to 24 months. DBA surveys are much less 
current. The Labor Department currently takes three years to process 
DBA survey results. The Labor Department wants to reduce that time to 
17 months, but--as the GAO reported--it is not close to meeting this 
goal.\13\
    Once it releases determinations, the Labor Department can take 
years, even decades, to update them.\14\ For example, the Davis-Bacon 
building rates in Kent County, Michigan, date to 1987.\15\ The 
residential survey for Hillsdale, Michigan, has not been updated since 
1979.\16\
    The EPI suggests comparing OES surveys conducted in 2009 and 
released in May 2010 with Davis-Bacon surveys primarily conducted 
before 2006 and released by May 2009. This comparison makes little 
sense and reveals nothing about the accuracy of either survey.
    The EPI's suggested comparison also reveals nothing about taxpayer 
savings from using BLS data. If Labor used OES figures, it would use 
the most recent data available. These are the correct figures to 
compare to current Davis-Bacon rates.
Helpers and Apprentices
    The EPI finally complains that I do ``not take into account that 
the surveyed Davis Bacon rate does not include apprentice rates and 
will therefore be higher than the average rates actually paid on a 
project.'' \17\ This charge reflects a misunderstanding of how the OES 
classifies low-skill construction workers.
    OES occupation categories follow the Standard Occupational 
Classification (SOC) system. As the EPI explains, construction unions 
use a formal apprenticeship system, and apprentices earn lower wages as 
they develop their skills. Merit shop (non-union) construction firms 
typically use craft training programs and also pay entry-level 
construction workers lower wages.
    The SOC classifies these less-skilled workers separately. The OES 
reports the wages of ``helper'' workers separately from the rates for 
fully experienced employees. Table 2 displays the difference in these 
wages for several occupations. Helpers typically earn about 40 percent 
less than experienced workers.

       TABLE 2.--WAGES FOR HELPER AND REGULAR CONSTRUCTION WORKERS
------------------------------------------------------------------------
                                                   Hourly Wage Rates
                                             ---------------------------
                                                 Helpers       Regular
------------------------------------------------------------------------
Carpenters..................................       $12.93        $21.19
Electricians................................       $13.23        $24.25
Pipelayers, plumbers, pipefitters, and             $13.18        $24.10
 steamfitters...............................
------------------------------------------------------------------------
Source: Department of Labor, Bureau of Labor Statistics, Occupational
  Employment Statistics, ``May 2010 National Industry-Specific
  Occupational Employment and Wage Estimates'' at http://www.bls.gov/oes/
  current/oessrci.htm#23

    In my testimony, I compared the journey-level DBA rates with the 
OES rates for fully experienced employees. The EPI objects that this 
does not include apprentices' lower wages. My figures do not include 
helpers' lower wages either. I reported an apples-to-apples comparison 
of the rates paid to fully experienced employees using Davis-Bacon 
rates and OES data.
    The EPI suggests comparing the OES rate for experienced workers to 
a weighted average of apprentice and journey-level DBA rates. This 
would deflate DBA rates to account for low-skill workers without 
similarly adjusting OES figures. This would present an inaccurate and 
misleading comparison.
Conclusion
    The flawed Davis-Bacon determination methodology reports wage rates 
that differ significantly from those actually paid to construction 
workers. The EPI's arguments to the contrary do not withstand scrutiny. 
The Occupational Employment Statistics survey uses a scientifically 
representative sample, is updated far more frequently than Davis-Bacon 
rates, and is an appropriate benchmark for market wages. Looking at 
non-residential building wages instead of the cross-industry wages only 
slightly changes the national averages. Comparing an average of 
apprentice and journey-level wages to the rates paid to experienced 
non-union construction workers would be misleading.
    The committee should also note what the Economic Policy Institute 
did not say. Not once did Mr. Eisenbrey and Dr. Belman defend the 
existing Davis-Bacon methodology as scientific or accurate. They kept 
silent because the methodology is indefensible. No professional 
economist could suggest using a self-selected sample to estimate wages 
or drawing statistical inference from a sample of five workers. They 
did not dispute the main point I made to the committee: The Labor 
Department uses a deeply flawed methodology to determine Davis-Bacon 
rates.
    This flawed methodology leads to Davis-Bacon rates that 
significantly exceed market pay. The savings from more accurate DBA 
wage determinations are real and substantial. Congress should seriously 
examine requiring the Labor Department to use scientific methods to 
estimate Davis-Bacon wages.
    Thank you again for the opportunity to testify about this important 
matter.

                                               James Sherk,
 Senior Policy Analyst in Labor Economics, the Heritage Foundation.
                                endnotes
    \1\ U.S. Government Accountability Office, Davis-Bacon Act: 
Methodological Changes Needed to Improve Wage Survey, GAO-11-152, March 
2011, at http://www.gao.gov/new.items/d11152.pdf.
    \2\ James Sherk, ``Examining the Department of Labor's 
Implementation of the Davis-Bacon Act,'' testimony before the Committee 
on Education and the Workforce, United States House of Representatives, 
April 14, 2011, at http://www.heritage.org/research/testimony/2011/04/
examining-the-department-of-labors-implementation-of-the-davis-bacon-
act.
    \3\ Ross Eisenbrey and Dale Belman, ``Supplemental Testimony: The 
Department of Labor's Implementation of the Davis-Bacon Act,'' Economic 
Policy Institute, May 4, 2011, at http://www.epi.org/analysis--and--
opinion/entry/supplemental--testimony--the--department--of--labors--
implementation--of--the--davis/. Ross Eisenbrey is Vice President of 
the Economic Policy Institute; Dr. Belman teaches at Michigan State 
University.
    \4\ Ibid., p. 2.
    \5\ ``BLS's Occupational Employment Statistics (OES) survey is a 
feasible/viable approach for wage rates in that it produces: wage rate 
estimates by occupation for individual Metropolitan Statistical Areas 
(MSAs) and for nonmetropolitan areas; and, data by SIC code which can 
be differentiated between building, residential, and heavy/highway 
general contractors.'' Letter from Bernard Anderson, Assistant 
Secretary for Employment Standards, to Senator Arlen Specter and 
Senator Tom Harkin, January 17, 2001.
    \6\ Eisenbrey and Belman, ``Supplemental Testimony: The Department 
of Labor's Implementation of the Davis-Bacon Act,'' p. 2.
    \7\ U.S. Census Bureau, ``Federal Construction,'' at http://
www.census.gov/const/www/fedpage.html. Figures seasonally adjusted.
    \8\ U.S. Census Bureau, ``State and Local Construction,'' at http:/
/www.census.gov/const/www/statepage.html. Figures seasonally adjusted. 
Just 2.7 percent of state and local construction spending in 2010 was 
on residential projects.
    \9\ Additionally, since DBA determinations are minimum rates, lower 
rates do not necessarily imply lower construction costs. The government 
would need enough market power in a locality to drive wages below 
market rates for an inaccurately low DBA determination to reduce costs.
    \10\ The results in particular localities will differ--above and 
below--from this national figure. By definition, this does not affect 
the average national Davis-Bacon premium.
    \11\ Eisenbrey and Belman, ``Supplemental Testimony: The Department 
of Labor's Implementation of the Davis-Bacon Act,'' p. 2.
    \12\ Since then, the BLS released the May 2010 occupational wage 
estimates.
    \13\ U.S. Government Accountability Office, Davis-Bacon Act: 
Methodological Changes Needed to Improve Wage Survey, pp. 12--18.
    \14\ One component of DBA surveys is regularly kept up-to-date: 
union wage determinations. The Labor Department updates union-
prevailing DBA rates without conducting a new survey when unions 
negotiate a new collective bargaining agreement. Since union wages are 
typically higher than non-union wages, this raises DBA rates. However, 
the flawed DBA survey reports that union wages prevail in almost two-
thirds of sampled jurisdictions. Actual union density stands at 13 
percent in the construction industry, and union wages prevail in only a 
handful of urban areas. This misreporting of the prevalence of union 
wages introduces a further inaccuracy into the flawed Davis-Bacon 
determinations.
    \15\ U.S. Government Printing Office, Davis-Bacon Wage 
Determinations by State, General Decision MI20100006, at http://
frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=Davis-
Bacon&docid=MI20100006.
    \16\ U.S. Government Printing Office, Davis-Bacon Wage 
Determinations by State, General Decision MI20100043, at http://
frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=Davis-
Bacon&docid=MI20100043.
    \17\ Eisenbrey and Belman, ``Supplemental Testimony: The Department 
of Labor's Implementation of the Davis-Bacon Act,'' p. 3.
                                 ______
                                 
    [Whereupon, at 11:42 p.m., the subcommittee was adjourned.]