Monday, May 10, 2010

Davis-Bacon and hiring quotas on public works projects

An op-ed by Jim Host in the C-J, celebrating the minority-hiring efforts of the late Rev. Louis Coleman...

Coleman's efforts-- and the government set-asides that resulted-- are what economists call a "second-best solution". In this case, the government creates a problem-- most notably, through Davis-Bacon or "prevailing wage" laws on federal public works projects (and in 2/3rds of the states). They then work to reduce the problem through regulation (here, hiring quotas).

Prevailing wage laws create an artificially high wage-- to benefit unions-- but it comes at the expense of non-union workers (and taxpayers). Inadvertently, this has racial consequences. (That said, the origins of Davis-Bacon were explicitly racist back in the 1930s.)

Better yet: get rid of Davis-Bacon and reduce the burden on taxpayers, end redistribution to a powerful and well-off interest group, and obviate the need for corrective measures to help a group you've kicked in the shorts so often.


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