Letter to The Honorable Julie A. Su, Acting Secretary, U.S. Department of Labor (September 28, 2023)

Summary

The House Committee on Small Business writes to Acting Secretary Julie A. Su of the Department of Labor (DOL) on September 28, 2023, to inquire about DOL's recent rule change to the Davis-Bacon Act and related acts. It states that the final rule makes two major changes to the methodology used to determine the prevailing wage for construction workers and increases prevailing wages for approximately 32 percent of construction workers. The Committee states that it appears DOL may not have properly considered small entities, and that the direct employer costs for small businesses are estimated to be an additional $39.3 million during the first year. It requests information no later than October 12, 2023; the signature block names Roger Williams, Chairman, Jake Ellzey and Aaron Bean.

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Full text

                                           September 28, 2023

The Honorable Julie A. Su
Acting Secretary
U.S. Department of Labor
200 Constitution Ave. NW
Washington, D.C. 20210

Dear Acting Secretary Su:

        The House Committee on Small Business (the Committee) writes to inquire about the
Department of Labor’s (DOL) recent rule change to Davis-Bacon Act and related acts. The final
rule makes two major changes to the methodology used to determine the prevailing wage for
construction workers employed in federal and federally subsidized construction projects.1 The
final rule implements the three-step method, known as “30 percent rule,” to identify prevailing
wage.2 This method increases prevailing wages for approximately 32 percent of construction
workers and also revokes the separation of metro and rural wage data.3 It appears that the DOL
may not have properly considered small entities during this rulemaking process.

        The DOL estimates that the total number of potentially affected small businesses ranges
from 101,700 to 127,800 out of the total number of 152,900 to 184,500 of affected firms.4 This
means the majority of the affected firms are small businesses. Besides the shocking 32 percent
increase in prevailing wages, revoking the separation of metropolitan and rural data sets will
improperly skew the data towards metropolitan cost of living prices rather than rural cost of
living.5 The direct employer costs for small businesses are estimated to be an additional $39.3
million during the first year.6 Additionally, the rule change strengthens enforcement of minimum
wages, adds news anti-retaliation provisions, and reinforces cross-withholding procedure for
recovering back wages.7

       It is important for agencies to examine small businesses interests, which make up 99.9
percent of all businesses in the United States, when passing any new rule. America’s small
businesses deserve to have their voices heard and considered. We therefore request the following
information as soon as possible but no later than October 12, 2023:

1
  Davis-Bacon and Related Acts, 88 FR 57526 (2023) (to be codified at 29 CFR 1, 3, and 5).
2
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  Isabella Hindley, DOL’s Davis-Bacon Final Rule Could Worsen Inflation, AM. ACTION FORUM (Aug. 16, 2023).
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  Id.
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The Honorable Julie A. Su
September 28, 2023
Page 2 of 3


     1. Several commenters brought up the concern that the number of small businesses is
        underestimated, so the number of affected small businesses might be higher.8 Did the
        DOL consider any other options that would lessen disproportionate impact on small
        businesses compared to other businesses?

     2. The DOL has estimated regulatory familiarization costs to be $25.5 million, based on the
        assumption that it will take 4 hours of a human resources staff member to review the
        rulemaking.9 However, since small entities often have limited human resources or legal
        personnel on staff, how did the DOL reach the conclusion that it will only take four
        hours?

     3. Where can small businesses go to examine your analysis on the impacts this rule will
        have on their operations?

     4. The DOL acknowledges thar one potential alternative to this rule would be to relax the
        requirements regarding recordkeeping.10 The DOL has discretion not to require some of
        the records, which would lessen the burden on small entities.11 Why did the DOL not
        utilize this discretion to help small businesses?

     5. Revoking the separation of metropolitan and rural data sets will likely result in higher
        prevailing wage rates in rural communities. How was the cost of living in rural versus
        metropolitan communities factored into the decision to revoke this separation?

       To schedule the delivery of your response or ask any related follow-up questions, please
contact Committee on Small Business Majority Staff at (202) 225-5821. The Committee on
Small Business has broad authority to investigate “problems of all types of small business” under
House Rule X. Thank you in advance for your cooperation with this inquiry.

                                         In God We Trust,




_________________________                             _________________________
Roger Williams                                        Jake Ellzey
Chairman                                              Member of Congress
Committee on Small Business                           Committee on Small Business




8
  Id.
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   Id.
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   Id.
The Honorable Julie A. Su
September 28, 2023
Page 3 of 3



_________________________
Aaron Bean
Member of Congress
Committee on Small Business




cc:    The Honorable Nydia M. Velasquez, Ranking Member
       Committee on Small Business


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