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Jewish World Review August 10, 2005 / 5 Av, 5765 Setting high wages that keep people poor By John Stossel
http://www.JewishWorldReview.com |
In its contempt for the market, the federal government is
setting high wages that keep people poor.
On government construction jobs, federal law requires that
everyone be paid "the prevailing wage." By "prevailing wage," the feds mean
the wage the bureaucrats were prevailed upon to set. The Davis Bacon Act,
passed in 1935, requires every construction worker be paid exactly what the
bureaucrats decree.
The real "prevailing wage" is set by the law of free exchange,
of course: If you don't pay enough, no one will work for you. Demand too
much, and you won't get much construction work. Supply and demand make sure
people are paid a wage that's most efficient for the most people.
The Davis Bacon Act redefines the term "prevailing wage." For
the facts of the market, it substitutes the arbitrary whims of bureaucrats.
But the facts are the facts, and ignoring them is never safe. In this case,
the victims of the government's self-deception are the people the government
is refusing to see: the people for whom the real
prevailing wage — the amount they can earn on the open market — is lower
than that set by the government.
Under Davis Bacon, the government issues wage edicts that are
different in every town. The wage rates are based on a complicated formula
that supposedly averages previous union and non-union wages in a given town.
But, of course, the union contractors, because they're organized, are more
likely to get their wage data to the government, so the averages are skewed.
Construction had long been the kind of work where young people
could break in by helping, watching and working cheap until they acquired
skills. The Davis Bacon Act eliminates that.
When Chicago decided to repair the Cabrini Green housing
project, people who lived in the project assumed such a big job would
provide work for the unemployed young men who grew up there. But because of
Davis Bacon, every contractor had to pay high salaries — even for the
simplest jobs. So contractors, locked into paying high salaries, were not
about to take a chance on beginners. They hired the most experienced union
workers they could find. They used workers who would "normally never come
near our neighborhood," said aspiring construction worker John King. "I
think it's wrong that they do that. We want to provide. We're not just
derelicts and drug dealers and thugs."
If it weren't for Davis Bacon, people like King could have
competed for jobs by being willing to accept a lower wage. If you've got a
choice between inexpensive, inexperienced workers and expensive experts, it
often makes sense to hire at least some of the new people. Their work isn't
as valuable, but since their pay is lower, it may be a better deal for the
money — and if you hire a few old hands, too, the beginners can learn from
them, making their labor more valuable to you and putting them in a position
to charge more on their next job.
Unions claim Davis Bacon is necessary "to make sure government
buildings are well-built." Without first-class union labor, unions say, the
buildings might not be safe. That might sound reasonable if you didn't stop
to consider that most buildings are not government
buildings, and they're safe.
There are some in Congress who realize this and want to repeal
the Davis Bacon Act. There is almost no chance that they will succeed. The
people who like the law make good money from it and lobby well. The people
Davis Bacon hurts are less organized. When you're trying to learn a trade
and become a productive citizen, you don't have much time to lobby your
congressman.
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© 2005, by JFS Productions, Inc. Distributed by Creators Syndicate, Inc. |
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