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The Effect of Federal Davis-Bacon and Disadvantaged Business Enterprise Regulations on Highway Maintenance Costs

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  • Kevin C. Duncan

    (Kevin C. Duncan is Professor of Economics in Hasan School of Business at Colorado State University-Pueblo.)

Abstract

The author compares winning bids on state and federal highway maintenance projects in Colorado between 2000 and 2011 to determine whether federal prevailing wage and disadvantaged business enterprise regulations are associated with increased construction costs. The effect of the Davis-Bacon Act is evaluated when average wage rates prevail for almost all workers involved in highway maintenance for most of the period of the study. The federal minimum for work completed by disadvantaged businesses is 10%. The goal for Colorado exceeds this minimum by two to three percentage points. Summary data indicate that federal projects are more expensive than state projects, but projects funded by the federal government are also larger and more complex. Regression results indicate that, with controls for project size and complexity, no statistically significant difference is found in the cost of federal and state projects. Results also indicate that federal regulations are not associated with reduced bid competition, an important determinant of project cost.

Suggested Citation

  • Kevin C. Duncan, 2015. "The Effect of Federal Davis-Bacon and Disadvantaged Business Enterprise Regulations on Highway Maintenance Costs," ILR Review, Cornell University, ILR School, vol. 68(1), pages 212-237, January.
    • Handle: RePEc:sae:ilrrev:v:68:y:2015:i:1:p:212-237
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    Citations

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    Cited by:

    1. Matthew Hinkel & Dale Belman, 2022. "Should prevailing wages prevail? Re‐examining the effect of prevailing wage laws on affordable housing construction costs," British Journal of Industrial Relations, London School of Economics, vol. 60(4), pages 761-783, December.
    2. Kevin Duncan & Peter Philips & Mark Prus, 2014. "Prevailing Wage Regulations and School Construction Costs: Cumulative Evidence from British Columbia," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(4), pages 593-616, October.

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