Federal Davis-Bacon Act Reforms

Permanent repeal of Michigan's prevailing wage law will have some limited benefit in lowering highway construction and maintenance costs, but any significant impact will require reform of the federal Davis-Bacon Act. This is especially true at the state level where almost all projects have some federal aid in them that then require adherence to the Act. It has been estimated that Davis-Bacon repeal would save $3.3 billion per year in construction costs on federal projects. Major reforms could save Michigan some $29.6 million of its $546.8 million capital outlay budget assuming 3/4 of this work is contracted out, that wages represent 20.6% of costs, and that the 35% reduction in wages proposed by Professor Wolfram is possible. Because it is not clear that this reform can be achieved, no savings are assumed in the later analysis.