Stimulus: Way Fewer Jobs Than You Thought

State governments that contract jobs paid for with stimulus money will be required to pay workers on construction projects union wages rather than market rates — good news for workers but good news for not as many of them. 

The Office of Management and Budget included in the $787 billion stimulus bill the Davis-Bacon provision, a 1931 law typically only used on federal highway projects. But under the new spending plan, Davis-Bacon will apply to all state and local jobs on energy, housing, agriculture or construction.

Fox News

Higher costs per project mean fewer projects completed, especially since some “shovel ready” projects were bid as non-union jobs. Some local officials and economists say the union wage mandate means taxpayer dollars won’t be stretched as far as otherwise was planned.

“All this recovery money being spent, you have a lot of hands out,” said economist Jack Kyser. “And so people have said OK, this has to conform to Davis Bacon, which means prevailing wage. And so you get hung up. So as I say, you’re going to have projects, but you’re not going to have the money go as far as you’d wanted it to go.”

Los Angeles County officials who received $8 million in Community Development Block Grant money to weatherize homes for low-income people said they typically bid the job low and pay about $15 an hour for a worker to caulk windows. However, under union scale, that job pays $25 an hour and $5 in benefits, so instead of repairing 100 homes, they might do 50 homes for the same price.

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