ABC Discusses Impacts of Obama’s Regulatory Expansion and Trump’s Regulatory Relief on Merit Shop Contractors
September 9, 2020
On Sept. 3, ABC sent a letter to Rep. James Comer, the ranking member of the U.S. House of Representatives Committee on Oversight and Reform, explaining the negative impacts of the Obama administration’s regulatory expansion on ABC member contractors, as well as the Trump administration’s regulatory relief initiatives, which have helped to remove burdensome barriers to job creation.
“ABC member contractors applaud the Trump administration’s substantial deregulatory efforts, which brought to light cost and burdens these regulations put on contractors,” said ABC in the letter. “During the Obama administration, ABC members suffered from an aggressive and burdensome rulemaking agenda, where regulations were promulgated hastily with limited stakeholder input and questionable legal authority. Many of the Obama-era regulations were litigated, which created significant uncertainty for ABC member contractors and hampered economic growth. To promote economic growth, we must free industry from those regulations that create unnecessary and costly bureaucratic layers.”
ABC’s most pressing concerns are centered around three areas:
- Government-mandated project labor agreement policies that are inconsistent across federal agencies
- U.S. Department of Labor policies related to the Davis-Bacon Act that stifle competition and impose enormous burdens on contractor productivity and needlessly increase construction costs
- DOL policies that serve as barriers to workforce development
ABC described how these issues have a chilling effect on competition and impede job creation and economic recovery:
1. Government-mandated PLAs
- Anti-competitive and costly government-mandated PLAs on federal and federally assisted contracts drive up the cost of taxpayer-funded construction projects by between 12% and 20%.
- Government-mandated PLAs unfairly discourage merit shop contractors, which employ more than 87.4% of the U.S. construction workforce, from bidding on the projects. The negative impact of PLAs disproportionately harms small businesses.
- The needless paperwork, waste and red tape associated with the federal government’s evaluation and procurement of federal contracts potentially subject to government-mandated PLAs is especially frustrating. ABC is aware of just 12 contracts exceeding $25 million (totaling $1.25 billion) that were procured and built in the United States subject to federal government-mandated PLAs and PLA preferences out of 1,681 federal contracts (totaling $98.74 billion) from FY2009 through FY2019 that were subject to the Obama administration’s pro-PLA Executive Order 13502.
- In contrast, the prevalence of PLA mandates on federally assisted projects procured by certain blue states and localities are wasting billions of federal tax dollars, slowing the velocity of new infrastructure and stifling job creation and opportunity for all industry professionals during America’s economic recovery from the COVID-19 pandemic.
2. DOL’s Davis-Bacon Act policies
- ABC members frequently cite onerous Davis-Bacon Act regulations and compliance costs as reasons why they do not pursue public works projects subject to federal, state or local prevailing wage laws.
- Regulations implementing DOL’s Wage and Hour Division process to survey contractors and determine prevailing wage rates is inherently flawed and fails to produce accurate, prevailing or timely rates.
- In recent years, union wage rates have been found prevailing in a substantial majority of classifications, even though the percent of unionized workers in the U.S. construction industry measured by the Bureau of Labor Statistics has fluctuated between 12.6% and 14.5% during the past decade.
- DOL’s failure to provide detailed information about job duties that correspond to each published wage rate makes it difficult to determine the appropriate wage rate for many construction-related jobs. These wage determinations force federal contractors to use outdated and inefficient union job classifications that ignore the productive multitrade work practices successfully used in the merit shop construction industry.
- The Congressional Budget Office has estimated that the repeal of the Davis-Bacon Act would save $12 billion in federal construction costs between 2019 and 2028. ABC believes the CBO vastly underestimates the true inflated cost of the Davis-Bacon Act because the methodology is extremely conservative. In addition, the CBO does not address the associated increased costs on public works projects procured by state and local governments subject to state and local prevailing wage laws modeled after the federal Davis-Bacon Act. These are large markets and have a significant impact on state and local budgets and the quality of U.S. infrastructure, overall.
3. DOL’s workforce development policies
- To successfully expand apprenticeship opportunities and close the skills gap, all U.S. workers should have the opportunity to participate in DOL’s new industry-recognized apprenticeship program, particularly as federal registered apprenticeship programs supply only a small fraction of the construction industry’s workforce.
- While considering new industry programs in 2019, it appears DOL did not take into consideration that the overwhelming majority of America’s 8.17 million U.S. construction industry professionals never participated in any federal registered apprenticeship programs but are instead developed through industry-recognized and market-driven apprenticeships sponsored by companies large and small.
- Graduates of federal registered apprenticeship programs supply just 3.2% of the estimated 550,000 additional construction workers needed to meet industry demands in 2020 alone, according to ABC’s estimates prior to the economic downturn caused by the COVID-19 pandemic. At current levels of graduation, it would take more than 30 years for the federal registered apprenticeship program to meet industry demands for just this year.
Additionally, ABC identified the following anti-growth, Obama-era regulations that the Trump administration eliminated, reversed and/or modified. The Trump administration’s actions promote free enterprise, reduce regulatory burdens and costs and positively impact employers and workers in the industry.
- Rescinded the FAR Fair Pay and Safe Workplaces (Blacklisting) final rule
- Rescinded the DOL Persuader final rule
- Eliminated the OSHA Volks final rule
- Modified the DOL Overtime final rule
- Modified the OSHA Tracking of Workplace Injuries and Illnesses final rule
- Modified the OSHA Respirable Crystalline Silica final rule
- Modified the 2014 NLRB Ambush Elections final rule
- Reversed the 2015 NLRB Decision in Browning-Ferris Industries
- Repealed and replaced the 2015 WOTUS final rule
Lastly, ABC pointed out that ABC members continue to see meaningful regulatory relief from the Trump administration. In his first term so far, President Trump has eliminated $50.9 billion in overall regulatory costs across the government. ABC continues to strongly support comprehensive regulatory reform, which should include across-the-board requirements for agencies to evaluate the risks, weigh the costs and assess the benefits of regulations. This will better allocate limited resources and target efforts toward achieving the collective environmental, health and safety goals for the construction industry.
Read the full letter here.
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