Legislating Racial Discrimination: The Davis-Bacon Act and Minimum Wage Laws

Legislating Racial Discrimination:  The Davis-Bacon Act and Minimum Wage Laws

William Derek Green


            It is an oft-stated maxim that the road to hell is paved with good intentions.  At the intersection of social and economic policy, this warning has perhaps most often been applied to the minimum wage, particularly by economists—on both sides of the political spectrum.  While the level at which a minimum wage becomes undesirable is a point of considerable debate, there is broad agreement that a minimum wage, when high enough, excludes from the labor market those whose productivity is worth less than the minimum that an employer is required by law to pay.[1]  The resulting unemployment is highest among those with the least opportunity to develop essential skills early in life, meaning that minorities, who may have decreased access to quality education, are likely to be among the most adversely affected.[2]  Today, minimum wage supporters are almost certainly motivated by good intentions despite the potentially negative effects of such a policy, but there exists a disturbing history of bad intentions in the imposition of minimum wage laws in the United States.[3]

            While the use of a minimum wage to exclude blacks from employment in apartheid-era South Africa[4] would not come as a surprise to anyone, most Americans would be shocked to learn that the same thing has happened in the United States in the form of the Davis-Bacon Act.[5]  This law came about as a result of union pressure to establish a minimum wage for federally-funded construction projects so that union workers could not be undercut by those willing to be paid less to perform the same work.[6]  Constituting a large proportion of those willing to be paid less were blacks migrating north to look for jobs and to escape the burdens of the Jim Crow-era south.[7]  Indeed, blacks constituted a disproportionately large percentage of the unskilled construction work force at the time of the bill’s passage in 1931.[8]  Eliminating blacks from employment on federally-funded construction projects was not the unintended consequence of race-neutral bill, it was a primary motive for passage of the Act.  Congressional testimony surrounding the Act is rife with references to maintaining “proper racial representation” and ending the use of “migratory labor.”[9]  More specifically, one representative lamented that a “contractor from Alabama…has cheap colored labor that he transports…and it is labor of a sort that is in competition with white labor throughout the country.”[10]  Another stated that “[y]ou will not think that a southern man is more than human if he smiles over the fact of your reaction to that real problem you are confronted with in any community with a superabundance or large aggregation of negro labor.”[11] 

            The Act was not merely intended to be discriminatory towards black employment.  There is evidence that it actually accomplished that goal with great success.  By ensuring that the local union wage rate was used on the majority of federally-funded construction project, blacks, who were largely excluded from union membership, were effectively shut out of the labor market for these projects.[12]  One study found that Davis-Bacon wage determinations were fifteen to forty percent higher than the prevailing market rate.[13]  Because all workers, skilled and unskilled, were subject to the same minimum wage rates, there was no benefit to hiring unskilled labor.  Blacks were primarily relegated to unskilled jobs and largely excluded from craft unions, so exceedingly few were hired—there was no reason to hire unskilled laborers if skilled laborers could be obtained in their stead and for the same rate.[14]  Accordingly, the period between 1930 and 1950, which was marked by extensive federal works projects, was also subject to a “rapid increase in the black/white unemployment ratio.”[15] 

            It would seem to the observer with even a cursory knowledge of Constitutional jurisprudence that the Davis-Bacon Act is potentially invalid under the test set out in Village of Arlington Heights v. Metropolitan Housing Development Corporation.[16]  In that case, the Supreme Court found that “[p]roof of racially discriminatory intent or purpose is required to show a violation of the Equal Protection Clause.”[17]  The Court noted further that discriminatory intent need not be the sole motivating factor in passing the challenged legislation for it to be Constitutionally invalid.[18]  Considering that “legislative or administrative history may be highly relevant” to showing discriminatory intent, “especially where there are contemporary statements by members of the decisionmaking body, minutes of its meetings, or reports,”[19] the Davis-Bacon Act would seem to be highly susceptible to being overturned in federal court.  The single time the Act has been challenged, however, the court granted the government’s motion for summary judgment, finding the Act constitutional.[20]

            None of this is to suggest that the Davis-Bacon Act should be repealed today.  Even though a piece of legislation was passed with discriminatory intent, it may still be non-discriminatory in practice, especially in light of 80 years of subsequent legislation.  Indeed, there is conflicting evidence as to whether the effects of the Davis-Bacon Act were ever discriminatory to begin with, much less today.[21]  But at the very least, economic theory tells us that minimum wage laws can be used to discriminate against disfavored groups, and the passage of the Act shows that even in America, legislators have actually imposed minimum wages for the purpose of discriminating against those groups.  Given the overwhelming popularity of minimum wage laws today, the history of the Davis-Bacon Act serves as a useful reminder that even something so seemingly harmless, so apparently well-intentioned as a minimum wage can be manipulated into something discriminatory and undesirable.

[1] See, e.g., Dan Fuller & Doris Geide-stevenson, Consensus Among Economists:  Revisted, 34 J. of Econ. Educ. 369 (2003).

[2] See, e.g., Walter Williams, Race & Economics, 39 (2011).

[3] See, e.g., Walter Williams, Minimum wage increases discrimination against poor people, Washington Examiner (March 5, 2013 at 5:30 PM) http://washingtonexaminer.com/walter-williams-minimum-wage-increases-discrimination-against-poor-people/article/2523335; For a more in-depth overview of the use of the minimum wage and other economic policies as a tool for government-enforced discrimination, see Williams, supra note 2.

[4] See, Williams, supra note 2, at 46-48.

[5] Davis-Bacon Act, ch. 411, 46 Stat. 1494 (1914) (current version at 40 USC §§ 3141-3144, 3146, 3147 (2012)).

[6] Williams, supra note 2, at 33, 34.

[7] David E. Bernstein, The Davis-Bacon Act:  Let’s Bring Jim Crow to an End, 2 (January 18, 1993) http://www.cato.org/sites/cato.org/files/pubs/pdf/bp017.pdf.

[8] Id.

[9] Williams, supra note 2, at 34, 35.

[10] Id. at 34.

[11] Bernstein, supra note 5, at 2.

[12] Id. at 3.

[13] Williams, supra note 2, at 35.

[14] Id. at 36.

[15] Id.

[16] Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252 (1977).

[17] Id. at 265.

[18] Id. at 265, 266.

[19] Id. at 268.

[20] Brazier Construction Co., Inc., v. Reich, Institute for Justice (Feb. 9, 2013, 8:00 PM), http://www.ij.org/brazier-construction-co-inc-v-reich.

[21] See, e.g., Peter Philips, Thoughtless Think Tanks:  Factoid Scholarship and Sound Bite Thinking About the History and Intent of Prevailing Wage Laws, Econ. Dept. Univ. of Utah (Feb. 2001) (arguing that scholarship criticizing the Davis-Bacon Act overemphasizes its discriminatory intent and effects); Dale Belman & Peter Phillips, Prevailing Wage Laws, Unions and Minority Employment in Construction:  A Historical and Empirical Analysis, in The Economics of Prevailing Wage Laws 101-122 (H. Azari-Rad & P. Philips eds., 2005) (arguing from an econometric standpoint that the effects of the Davis-Bacon Act have not been discriminatory towards blacks).

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