Employment Effects of Prevailing Wages by Race

Earlier it was suggested that prevailing wages should reduce employment opportunities for groups subject to racial discrimination, such as blacks. The historical evidence is that from the very beginning some proponents of the Davis-Bacon Act and companion state legislation wanted to reduce construction employment for African-Americans.17 Although a detailed examination of this issue as it pertains to Michigan is beyond the scope of this study, some descriptive statistical evidence is consistent with the view that the Michigan law has disadvantaged blacks more than whites.

Chart 6 shows for Michigan and the nation the number of construction workers per 1,000 total employed for both blacks and whites, using data from the 1990 Census of Population.18 Note that for both blacks and whites, there were fewer construction workers in relation to the total labor force in Michigan than in the nation as a whole, but that the disparity was particularly striking for blacks. The percentage of blacks working in construction (here defined as "construction trades" and "construction laborers") was over 40 percent below the national norm. For whites, the disparity was less than 20 percent.

Employment in general in Michigan construction was lowered because of the negative consequences of strong prevailing wage laws, as well as possibly other factors, as discussed above. Yet employment was particularly reduced for blacks, consistent with the theory that prevailing wage laws reduce financial disincentives for employers to discriminate by race. Nationwide, blacks in 1990 were 74 percent as well represented in construction as whites (as measured by the percent of workers working construction). That underrepresentation may well reflect the discriminatory impact of the national Davis-Bacon Act as well as individual state prevailing wage laws.

The Michigan strong prevailing wage law, however, seems to compound the racial effects. In Michigan, blacks in 1990 were less than 50 percent as well represented in construction as were whites. The Michigan figure is well below that for the nation as a whole. While other factors could be at work here, it is not known what they are. There is very strong, even compelling, circumstantial evidence that the Michigan prevailing wage law has reduced employment opportunities in particular for blacks.19