V.I.

Labor's Loss;

 

FOR 54 YEARS, IT HAS BEEN untouchable, so sacred is it to organized labor. But unions have lost so much clout through declining membership and political defeats that Congress is now considering the unthinkable: cutting the budget by changing the Davis-Bacon Act. That could be good news for small companies.

Davis-Bacon requires that businesses that do government construction, repair, or decorating work pay employees the "prevailing wage" -- most often, union scale. The Reagan Administration has diluted the requirement by calculating rural and urban wages separately and basing Davis-Bacon rates on a broader range of local wages. Now, budget cutters are fighting to write these changes into law and to raise the contract size that triggers Davis-Bacon from $2,000 to $1 million, thus exempting 90% of federal contracts. Such changes, they estimate, could save the government around $1 billion a year.

The $2,000 threshold, which hasn't changed since 1935, means that "if you recarpet a suite of offices or repaint the interior, it has to be a Davis-Bacon contract," says Damon Tobias, an aide to Rep. Charles Stenholm (D-Tex.), author of a pending Davis-Bacon amendment. A higher threshold would open up contracts to companies that can't afford the wages mandated by the law, while other changes could help local firms compete with large, regional contractors.

Despite bipartisan support, Stenholm's bill faces stiff opposition in the House. But a similar provision, authored by Sen. Phil Gramm (R-Tex.) that applies only to Defense construction contracts, squeaked by in the Senate as part of the military authorization bill passed in June. Even if the provision, which would save $245 million in outlays over three years, loses in House-Senate conference, its Senate win marks a turning point and perhaps a sign of things to come. Says Charles T. Carroll, counsel to the Senate Labor subcommittee, "It was the first time Davis-Bacon [reform] has ever been successful on the Senate floor. That is a big change."