920 Allowances:Repeal the Davis–Bacon Act

Savings in Millions of Dollars
  • 2016
  • 2017
  • 2018
  • 2019
  • 2020
  • 2021
  • 2022
  • 2023
  • 2024
  • 2025
  • 2016-2020
  • 2016-2025


Savings are expressed as budget authority and were calculated by comparing current federal construction spending of $277 billion annually, as found in U.S. Census Bureau, “Construction Spending: Value of Construction Put in Place at a Glance, November 2014,” January 2015, to spending levels in the absence of Davis–Bacon. Both spending levels were increased at the same rate as growth in discretionary spending, according to the CBO’s most recent August 2014 baseline. Davis–Bacon increases construction costs by 9.9 percent, as documented in Sarah Glassman et al., “The Federal Davis–Bacon Act: The Prevailing Mismeasure of Wages,” The Beacon Hill Institute, February 2008, and it extends to 32 percent of all public construction spending.


Technical Notes on Scoring

CBO Baseline

Unless otherwise noted, calculations for savings for each recommendation relies on the most recent Congressional Budget Office baseline, as found in “An Update to the Budget and Economic Outlook: 2014 to 2024,” published August 27, 2014, has been used.

Savings “Totals”

While totals for the five and 10 year savings are provided by section and for the complete set of recommendations, there are two reasons they should not be viewed as representing total savings for The Budget Book.

First, as noted in the introduction, The Heritage Foundation would recommend that the savings realized in the Function 050 Defense section would stay within the Department of Defense to strengthen the nation’s defense capabilities.

Second, the numbers cannot be deemed to represent the realized savings if every single recommendation were adopted because policy changes made in one program can impact spending levels in other programs.  Thus, the numbers in the table do not reflect any potential interactions between the various policy changes affecting spending or savings.


Heritage Recommendation:

Repeal the Davis–Bacon Act and prevent states from imposing prevailing wage restrictions on federally funded construction projects. This proposal saves $8.1 billion in 2016, and $86 billion over 10 years.


Repeal the Davis-Bacon Act to make road construction less expensive.

The Davis–Bacon Act requires federally financed construction projects to pay “prevailing wages.” In theory these should reflect going market rates for construction labor in that area. However the GAO and Inspector General have repeatedly criticized the Labor Department for using self-selected statistically unrepresentative samples to calculate the prevailing wage rates. Consequently, actual Davis–Bacon rates usually reflect union rates that average 22 percent above actual market wages.

The Davis–Bacon Act requires taxpayers to overpay for construction labor. Construction unions lobby heavily to maintain this restriction—it reduces the cost advantage of their nonunion competitors. But it needlessly inflates the total cost of building infrastructure and other federally funded construction by 10 percent.

The Congressional Budget Office has estimated that the Davis–Bacon Act applies to a third of all government construction—many state and local projects are partially or wholly funded with federal dollars. Without prevailing wage restrictions these projects would have cost $7.8 billion less in 2013. Congress should repeal the Davis–Bacon Act and prohibit states from imposing separate prevailing wage restrictions on federally funded construction projects. Doing so would save taxpayers tens of billions of dollars.

Repeal the Davis-Bacon Act to make road construction less expensive.

Contributing Expert

As senior policy analyst in labor economics at The Heritage Foundation, James Sherk researches ways to promote competition and mobility in the workforce rather than erect barriers that prevent workers from getting ahead.

See publications by James Sherk

James SherkSenior Policy Analyst in Labor Economics

Additional Reading