White House Reinstates Wage Rules along Gulf Coast

The disasters of Hurricanes Katrina and Rita along the Gulf Coast of the US were exacerbated by government ineptitude and generally bad planning. However, the decision by the president to suspend the Davis-Bacon Act, which guarantees wages levels on federal projects, was worse than his nomination of Harriet Miers to the Supreme Court. In a fit of wisdom, Mr. Bush has reversed himself, and effective November 8, the act will again apply in the devastated region.

The Bush administration has not only consumed the Kool-Aid of blind faith in the private sector, it has mixed up a potion that always favors capital over labor. This is every bit as bad as always favoring labor over capital. In this case, with federal money pouring in, having sufficient capital to execute a reconstruction plan wasn’t’ the problem; Mr. Bush’s $200 billion pledge of aid would cover that. No, the issue was in getting enough hands to do the work.

With thousands upon thousands of people displaced, their return to New Orleans and the rest of the area was always going to be influenced by whether they could earn a living upon their return. For those with nothing to go back to, lower wages certainly weren’t going to help. Moreover, with higher wages, aggregate demand in the region would increase more and faster. Employees would buy more dry wall, more electrical wire and more shingles to repair their homes sooner. Things would get back to normal quicker.

As one would expect of a Democrats, California Congressman George Miller was all over the Bush administration for this suspension. With its reversal, he said, “At least those wages will be protected where federal money is involved, and that's very important to the economy of that region. This is why we couldn't understand how the president could take such a callous position immediately after the hurricane to just decimate the protections for the wages of people who are trying to rebuild their families, their communities, their lives.”

But the real reason for Mr. Bush’s change of mind if not of heart was the loss, again, of his own conservative base. Steven LaTourette (R-OH) said to CNN, “The danger we have in the Gulf Coast in general is profiteering. When you have these large contracts and again, when you suspend some protections ... it appears you can pay people whatever you want to pay and the rest of the money goes into the profit column of the corporation.” There are GOP members of the House who understand that people have to be able to buy groceries with their paycheck if the Gulf is to recover. Mr. Bush’s wise reversal of policy makes that more likely now.


© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
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