In Washington D.C. a project to redevelop the City Center, which is a 100% privately funded project, will, if the unilateral decisions stands, be required to conform with the Davis-Bacon Act, which, requires "prevailing wages" to be paid. Unfortunately, prevailing wage has been effectively defined as current union wage rates for comparative occupations.
This project, around $700 million, will not use and goverment funding nor will it house any government offices. Lawers for the developers and the city of Washington D.C. declared to investors that Davis Bacon would not apply. A review by the NLRB, in 2009, declared that Davis Bacon would not apply. However, in June, an administrator in the Wage and Labor Dept. of the NLRB ruled that it does apply. Why? Here is the so-called justification.
"The District owns the land, which it is leasing to developers for 99 years; it retains “direct authority” in the form of a limited veto over aspects of construction; and it has touted the public benefits of the project, such as more jobs and tax revenue for the city. Ergo, CityCenter’s hotels and restaurants are “public works,” just like the 14th Street Bridge."
Davis Bacon costs the American taxpayers $billions every year because of the artificial use of union wages, rather than average or even median wages of local trades, in government sponsored construction projects (at all levels of government). However, never in the history of the NLRB has anyone every tried to declare a project is subject to the Davis Bacon rules for the above reasons. It has been common for developers to lease lands owned by the government and not be subject to Davis - Bacon. And never has a project been declared a "public work" merely because it will have public benefit.
If this ruling is allowed to stand, not only will this project either cost the investors more (and therefore the public), or, it could result in the scope of the project being reduced, if not canceled entirely. And future investors will be less likely to invest in future projects with the threat of Davis Bacon rules being extended to private sector projects that have public benefits, which would be virtually every similar development project.
First Boeing, and now this. Will we eventually have to pay our lawncare people Davis Bacon wages?
Full story here.
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