In this supplemental statement to Representative Timothy Walberg (Chairman of the Subcommittee on Workforce Protection), EPI Vice President Ross Eisenbrey and EPI Research Associate Dale Belman of Michigan State University identify serious errors in testimony by Heritage Foundation economist James Sherk, who was critical of the U.S. Department of Labor’s wage setting under the Davis-Bacon Act.  Because Sherk failed to include residential wages in his comparisons, failed to account for lower apprentice rates, and compared wage rates from different time periods, his estimate that Davis Bacon wages are too high by billions of dollars a year is not credible.

May 4, 2011

Honorable Timothy Walberg

Chairman

Subcommittee on Workforce Protection

Room 418 Cannon House Office Building

U.S. House of Representatives

Washington, DC 20515

Dear Chairman Walberg:

The Economic Policy Institute submits this supplemental statement to correct the hearing record and respond to serious errors in testimony submitted by James Sherk of the Heritage Foundation.  Dr. Sherk’s testimony grossly misrepresents the relationship between wages paid under the Davis-Bacon Act and what Dr. Sherk misleadingly calls “the market wage” — local construction wage rates published by the Bureau of Labor Statistics in its Occupational Employment Statistics (OES). In his written testimony, Dr. Sherk, a Senior Policy Analyst in Labor Economics at the Heritage Foundation, claimed that Davis-Bacon rates are generally set “well above market wages,” so high that they will increase the government’s construction costs by more than $10 billion this year^[1].  As we will show, this claim is false.