Your Labor Regulation Fact of the Day

The minimum wage of a laborer who places and picks up orange cones around a Federal highway project in California is set at $43.97 an hour (and yes, the wage rules are that detailed).  This is set by the Davis-Bacon Act and the wage determination is here (wage determination CA29, LABORER TRAFFIC CONTROL/LANE CLOSURE, Traffic Control Person II, wage plus fringe).

Here is your essay question:  Given that this equates to nearly $88,000 a year, how many truly unskilled workers would you expect to be hired by Federal stimulus projects, vs. other workers with more skills who are taking jobs below their skills and experience)?

  • GoneWithTheWind

    Every piece of legislation on spending or taxation should require first the public reading of the Davis-Bacon act. It is the largest inappropriate/unconstitutional transfer of tax money ever foisted upon us by dishonest politicians. I doubt that 1 in 100 voters could tell you what it is/does. If we required it to be read out loud in congress before they could vote on a spending or tax bill maybe the voters would wake up.

  • Mercury

    I would therefore guess that California is the state with worst condition roads in the country - or at least of all the states where the ground never really freezes. I've never been there but I hear LA roads in partcular look like the street scenes in 'Omega Man'

  • No, it's not Davis Bacon. It's the California "Department of Industrial Relations" (DIR) prevailing wage determination. Those determinations are avowedly set to whatever the local union agreement is for the work in question. We employ inspectors in three DIR/Local 12/Local 3 categories. For the most utilized category, Group 2, the wage is $42.63/hour. An additional $27.67/hour goes into various "trust funds" (health and welfare, pension, training, holiday-vacation-sick, etc.). If a non-union contractor performs the work, the total wages and benefits must total $70.30. So non-union "independent contractors" get that all in their checks. The unions pushed hard to win this some 20 or so years ago and, of course, it highly incentivizes young people without health issues or those who can otherwise get coverage to work non-union.

  • joe - the economist

    "Here is your essay question: Given that this equates to nearly $88,000 a year, how many truly unskilled workers would you expect to be hired by Federal stimulus projects, vs. other workers with more skills who are taking jobs below their skills and experience)?"

    ZERO!

  • joe - the economist

    Davis-Bacon act

    The Davis Bacon act was designed to keep Blacks unemployed

  • Ballistica

    The roads are atrocious...almost NYC level (from what I remember of NYC back in the 70s).

    It's a huge scam here in CA. They tell the people they need to raise taxes for roads and if you disagree you hate children and want to kill puppies. So everyone votes yes. Nothing gets done, money goes to allow homeless to stand on roads begging all day. Roads get worse.

    Next year new legislation or whatever because the roads are even worse and if you vote no you hate children and are racist. Everyone votes yes. Money goes to friends of politicians and nothing gets done. Repeat.

    Roads in Cali are probably worst in the nation now.

  • May Xu

    one share one vote, 10 shares 10 votes.

    $0 tax - 0 votes
    $10 tax - 10 votes
    $100 tax - 100 votes

    more you pay in tax, more votes
    less you pay in tax less votes

  • randian

    "Roads in Cali are probably worst in the nation now"

    Exactly as intended. California's progressives hate automobiles.

  • patrick k

    I believe San Francisco was recently determined to have the worst roads in the nation. They have been unevenly patched so many times that they literally rattle your car apart. For reasons no one can explain the roads are torn open every few years to lay something new. Next on the agenda is replacing the 100 year old sewer system. It never ends.

  • mlhouse

    What I never can understand is why the Left would prefer to have one $88,000 worker plus gold plated benefits versus 2 $44,000 workers with decent benefits. Even if you make the assumption that the 88k worker is more productive than the 44k worker, in these types of jobs, and if you add in the work rules that are literally made to minimize productivity, it is impossible that they are TWICE as productive. Putting down cones is not a high skilled job.

    The American labor market is actually pretty strong but most of that strength is build on demographics and not productivity. We still have a lot of underemployed people in this work and a lot of people outside the job market looking in. Many of them given the opportunity to work for $44,000/year and decent benefits would jump at the chance.

    I think as taxpayers we need to step back and look at this, but it has become almost impossible.

  • ErikTheRed

    The sad thing is that it might be worth it if they'd put the cones on their heads and sing Devo songs as we drove by.

    https://www.youtube.com/watch?v=j_QLzthSkfM

  • CC

    Treating gov spending like a piggy bank is what is causing local and even state governments to slide into bankruptcy. Road projects should be bid out with no rules on wages.

  • stevewfromford

    Sounds like a cone laying/picking up robot is around the corner.

  • Bruce Zeuli

    In my experience it's even more complicated that that. Davis-Bacon does not require you to pay your employees the documented wage + benefits. The act demands that you sign a document declaring that you pay your employees the documented wage + benefits. The distinction is important, once you understand how it plays out.

    For years I saw municipal bids awarded where the total winning bid amount was much less that the product of Contract Hours x Contract Rate. The bid would ask for 10,000 hours at an all in Davis-Bacon rate of $30 per hour. Even with $0 profit, your bid would have to be more than $330,000 just to cover the employer portions of your payroll. Yet the winning bid would be $165,00 or 50% of that amount.

    If you wanted to dispute that award, you could file a complaint and submit 20% of your company's bid (say $75,000) to the municipality up front. If they found in your favor the bidding process would start again and your $75,000 would be returned. If the finding went against you, they kept the $75,000. I learned that there had never been a successful challenge and so chose to keep my $75,000..

    We asked "How can a company provide labor at half the D-B rate and be considered an acceptable bidder?" On the record you got answers like "We don't tell the bidders how to run their businesses. If they elect to lose money on every contract, then that is up to them. Lots of companies help out the city that way." Off the record you got answers like "If we had the budget to pay Davis-Bacon rates, then we would hire our own employees. We use only outside labor when that's not possible."

    It would be interesting to see if these cone layers live the life of a $90k a year (plus benefits) worker. Maybe in that labor market they really earn those rates, but I wouldn't assume it.

    The take away for me is that there is signaling and then there is reality. Every city has dozens of web pages devoted to the benefits of feel good regulations like Davis-Bacon. But in reality, they have to get things done and that sometimes requires compromise.

  • kbiel
  • Mike Kevins

    That is obscene!