Then, in accordance with its regulations, Labor calculates the prevailing  wage by determining if the same wage rate is paid to the majority (more  than 50 percent) of workers employed in a specific job classification on  similar projects in the area. Recent Efforts to Improve Data Collection and Processing Have Not Yet Addressed Key Issues with Survey Quality

Labor has taken several steps over the last few years to address issues  with its Davis-Bacon wage surveys. Officials said completing these surveys will  allow them to focus on more recent surveys. For highway surveys, Labor officials said they began using  certified payrolls as the primary data source because certified payrolls  provide accurate and reliable wage information and eliminate the need for  Labor to verify wage data reported in surveys. However, while it is too early to fully assess the effects of Labor’s 2009  actions, our review found that changes to data collection and processing  may not achieve expected results. Beyond concerns with processes and timelines, we also found that critical  problems with Labor’s wage survey methodology continue to hinder its  survey quality. 1).24, 25  Moreover, in 1997, Labor’s OIG reported that issuing rates by county may  cause wage decisions to be based on an inadequate number of responses. In the four surveys we reviewed, more than one-quarter of the wage rates  were based on data reported for six or fewer workers (see fig. 2). Contractors may lack the necessary resources,  may not understand the purpose of the survey, or may not see the point in  responding because they believe the prevailing wages issued by Labor are  inaccurate, stakeholders told us. Both contractor associations and union officials said improving  transparency in how the published wage rates are set could enhance  understanding of the process and result in greater participation in the  survey. Conclusions and Recommendations

While Labor has made some changes to improve the wage determination  process, further steps are needed to address longstanding issues with the  quality of wage determinations and enhance their transparency. In our  report, we suggested that Congress consider amending its requirement  that Labor issue wage rates by civil subdivision to provide the agency with  more flexibility. To improve the quality and timeliness of the wage  surveys, we recommended that Labor enlist an independent statistical  organization to evaluate and provide objective advice on the survey,  including its methods and design; the potential for conducting a sample  survey instead of a census survey; the collection, processing, tracking and  analysis of data; and the promotion of survey awareness. We also  recommended that Labor take steps to improve the transparency of its  wage determinations, which could encourage greater participation in its  survey.
Why GAO Did This Study

This testimony discusses the Department of Labor's (Labor) procedures for determining prevailing wage rates under the Davis-Bacon Act. Davis-Bacon wages must be paid to workers on certain federally funded construction projects, and their vulnerability to the use of inaccurate data has long been an issue for Congress, employers, and workers. More recently, the passage of the American Recovery and Reinvestment Act of 2009, focused attention on the need for accurate and timely wage determinations, with more than $300 billion estimated to provide substantial funding for, among other things, federally funded building and infrastructure work potentially subject to Davis-Bacon wage rates. In the 1990s, we issued two reports that found process changes were needed to increase confidence that wage rates were based on accurate data. A third report found that changes then planned by Labor, if successfully implemented, had the potential to improve the wage determination process. However, in 2004, Labor's Office of Inspector General (OIG) found that wage data errors and the timeliness of surveys used to gather wage information from contractors and others, continued to be issues. The testimony will discuss (1) the extent to which Labor has addressed concerns regarding the quality of the Davis-Bacon wage determination process and (2) additional issues identified by stakeholders regarding the wage determination process. This testimony is based on our recently issued report, titled "Davis-Bacon Act: Methodological Changes Needed to Improve Wage Survey."

What GAO Found

In summary, we found that recent efforts to improve the Davis-Bacon wage survey have not yet addressed key issues with survey quality, such as the representativeness and sufficiency of survey data collected. Labor has made some data collection and processing changes; however, we found some surveys initiated under these changes were behind Labor's processing schedule. Stakeholders said contractors may not participate in the survey because they do not understand its purpose or do not believe the resultant prevailing wages are fully accurate. In addition, they said addressing a lack of transparency in how the published wage rates are set could result in a better understanding of the process and greater participation in the survey. We suggest Congress consider amending its requirement that Labor issue wage rates by civil subdivision to allow more flexibility. To improve the quality and timeliness of the Davis-Bacon wage surveys, we recommend Labor obtain objective expert advice on its survey design and methodology. We also recommend Labor take steps to improve the transparency of its wage determinations.