Bush Suspends Pay Act In Areas Hit by Storm
Funny, the argument that I hear from an “anti-Bush” friend is that Bush is refusing to pay the “going rate” for labor in post hurricane reconstruction. I believe the going rate he is referring to is actually termed the “prevailing rate” for labor. The “going rate” literally means the current market price for a commodity, the “prevailing rate” appears to be a composite number that is more influenced by negotiated union wages. If people are willing to work for $8 per hour instead of $9 per hour then that is the “going rate” for labor. The labor unions naturally have distaste for government work being handed out at the non-union “going rate” instead of the higher “prevailing rate” (Links here and here).
As far as I can tell the Davis-Bacon act of 1931 was a bit of racist legislation built to prevent black Alabamians from gaining employment on New York construction jobs, protecting the interest of the majority white union workers in the state of New York. (Links here, here, and here).
The statement I most commonly see from the Davis-Bacon supporters if that the additional pay will boost the local economy by boosting income in the area via federal funds (which will be borrowed by the government). Normally I would call this redistribution of wealth (welfare) by creating a higher tier minimum wage. Since we as a nation do not have the money to pay for any of the reconstruction, and will have to borrow all the money to fund it, I think I will call this redistribution of possible wealth, that will hopefully be made (the wealth) in the future by an younger generation which is already over loaded by the debt of their fore-fathers. The jobs themselves, being temporary, would have no long-term effect on area wages, since supply and demand will take over after the government reconstruction efforts end (and please nobody get me started on why our government should not be subsidizing people to live in a bowl by the sea by making the entire country pay for it).
People who wish to boost the local economy in Louisiana should think about the lowering of wealth in the rest of the country that has to support the reconstruction.
Just a special thought: There is a possibility that the construction unions will receive a rude introduction to “going rate”. People in many diverse professions are being introduced to “going rate” on the globalized labor market (doctors, lawyers, technicians, engineers, programmers, accountants, assembly line workers, textile workers, etc..). I’m sure there is a group somewhere on another continent that will figure out a way to compete for construction labor (or the economy might adjust other wages to the point that we can no longer afford to pay for any “prevailing wage” labor). But that’s for a future blog entry…