Obama Administration Panders to Unions Again - NLRB Rules Private Funded Project Must Abide by Davis-Bacon

By
Real Estate Agent with Retired

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.

Comments (12)

Than Maynard
Coldwell Banker Heart of Oklahoma - Purcell, OK
Broker - Licensed to List & Sell - 405-990-8862

The Davis_Bacon act is complete crap. I used to have to try and match the rates when I did commercial work for the federal government or state universities. The "prevailing" wage was double what I usually paid

Sep 12, 2011 06:10 AM
Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

While I do think people need good wages. That is not the case here. The wages non union are good so govt should butt out. If they want to do anything they should make sure all the workers on the porject are citizens or legal aliens

Sep 12, 2011 07:12 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Mike

I would not think that this project would under Davis-Bacon.

Good luck and success.

Lou Ludwig

 

Sep 12, 2011 07:36 AM
Mike Saunders
Retired - Athens, GA

Than - mixed feelings, but overall I would generally agree with you, especially when union wages arre the default prevailing wage

Charlie - people do need good wages, but, this is not the way to manipulate it

Lou - thanks for visiting, but, obviously someone thinks differently

 

Sep 12, 2011 08:13 AM
Richard Iarossi
Coldwell Banker Residential Brokerage - Crofton, MD
Crofton MD Real Estate, Annapolis MD Real Estate

Mike,

This administration is nothing if not consistent in their undying support of everything "Union."They're scared as hell of losing any Union support, and it shows in their behavior.

Rich

Sep 12, 2011 08:21 AM
Edward Peterson
eDrake - Hamden, CT
eDrake; CT

One of the funny things about obama is that he manages to piss off his base almost as much as those who appose his ideas and direction for this country. I know every President never has the total undying relationship of their constituents but I do not recall one this confused, misguided and/or arrogant to alienate everyone a high percentage of the time - he certainly is an unwanted anomaly.

Sep 12, 2011 08:58 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

The law means nothing to the NLRB.   They are totally in the pocket of the unions. 

They should simply cancel the project.  The cost benefit has been lost.  The can put it back together again in 2013.

Sep 12, 2011 11:40 AM
Broker Nick
South Florida Real Estate & Development, Inc. - Coconut Creek, FL
Broker Nick Relocation Broker Service

Congratulations - This post is now featured in Silent Majority Group of Active Rain!

Sep 12, 2011 03:49 PM
Vern Eaton
Askov, MN
Realtor 651-674-7449

You don't have to be in a Union to get good wages.  I have seen the opposite in my area a few times.  A company owner actually paid non-union workers more money than those that joined the union.  It caused a stir, but he got his point across.

Sep 13, 2011 03:59 AM
Mike Saunders
Retired - Athens, GA

Rich - you got that right

Edward - but, he certainly knows how to pander to the unions

Georgia - I wouldn't count on it though

Lenn - but it does yet have a chance to go to the supreme court

Nich - thanks

Vern - that does happen some times, but not often,

Sep 14, 2011 04:06 AM
Ted Baker
Carmody and Associates LLC - Winter Haven, FL
MidFloridaMediation.com

Spot on, Mike, as usual.  And don't forget the California efforts recently to provide workers comp insurance to babysitters - with two hour breaks, minimum of eight hours of sleep (I don't even get that) and demands that the babysitters food requests be provided.

It is interesting that the liberals frequently push for an increase in the minimum wage - despite the fact that it impairs hiring and job growth.  The fact is that the minimum wage applies to a very small segment of the economy and frequently those it does apply to move through the minimum with increases in short order.  The true beneficiaries of the minimum wage are... wait for it...  the unions.  Many union contracts are tied to a multiplier of the minimum wage.  So an increase in the minimum wage generates higher payments to unions (who are not paid minimum wage). 

Most of the legislative programs in the first two years of the current administration seem to be disproportionately biased in their benefits to unions.  When they lost their legislative majority in 2010, they increased their activity in the area of agency regulations and other rule making.  THe very activist NLRB and the EPA are examples.  

I understand that our system is now ridiculously responsive to special interests who fund campaigns - regardless of the party in power - and that winning elections has immediate impact on which special interests will benefit.  But it is hypocrisy to pander to unions and then wonder why your policies hurt the economy and promote unemployment.  

Someone needs to remind these folks that it is short sighted to kill the goose that lays the golden eggs if you need to live off the golden eggs in the future.

Sep 15, 2011 12:25 AM
Mike Saunders
Retired - Athens, GA

Ted - that's why unions are always supporting minimum wage increases. Studies by universities show that the biggest beneficiaries are not those that earn minimum wage but higher age earners. One of the most reliable studies also shows that each 10% increase in minimum wage (i.e from $5.00 to $5.50) shows a short term decrease in employment of about 1% for minimum wage earners. But most economists argue that over the long run employment increases. So, those pushing minimum wage increases are willing to sacrifice minimum wage earners, for union workers.

Sep 15, 2011 03:31 AM