Interesting financial fallout from Katrina
Moms View Message Board: The Kitchen Table (Debating Board): Interesting financial fallout from Katrina
President Bush has suspended the Davis-Bacon Act in parts of Louisiana, Mississippi, Alabama and Florida. This law calls for paying prevailing wages in an area for federally funded work. For example, in the New Orleans area, the prevailing wage for an electrician is $14.30/hour, for a construction laboror or truck drive, $9/hour - hardly excessive prevailing wages.
On the other hand, three companies were awarded no-bid contracts by the Army Corps of Engineers to repair breaches in the New Orleans levees—the Shaw Group, Boh Brothers Construction and Kellogg Brown & Root, a subsidiary of oil giant Halliburton(Kellogg's contract is for $29.8 million, I have read). Louisiana-based engineering and construction firm The Shaw Group, with estimated yearly revenues of $3 billion, announced it had received two $100 million contracts—one from the Army Corps of Engineers, one from FEMA—to work on the levees, pump water out of New Orleans and provide housing assistance. And, contractors will be allowed to spend up to $250,000 on hurricane-related contracts and expenses without seeking competitive bids.
And the company that has the sole contract for recovering and taking care of the bodies of the dead, Kenyon, is a wholly owned subsidiary of Service Corporation International, a heavy political contributor to Texas politicians. For some reason, FEMA only allows private contractors to carry out this necessary work, not allowing local authorities or the National Guard to do it. Kenyon's billing so far works out to about $800 per day for each Kenyon employee working in New Orleans. This includes, of course, materials, overhead and profits. But it seems like a lot of money to me.
I wonder why these winners of no-bid contracts can't be required to pay prevailing wages. So many thousands of people in New Orleans have lost their jobs because of Katrina. Suspending Davis-Bacon will allow these very profitable contractors to make an even higher profit by taking advantage of people who have already lost so much.
I don't know the answers, but I do know that the Shaw Group, which is based out of Baton Rouge, is hiring HUNDREDS of employees, mostly displaced New Orleanians for all types of jobs from labor to office to engineering.
Presidents Roosevelt, Nixon and George H.W. Bush did the same thing for various reasons and for different periods:
Roosevelt: for three weeks in order to manage administrative adjustments in light of the New Deal
Nixon: for 28 days in February 1971 in efforts to reduce inflation pressures
George H.W. Bush : indefinitely suspended the Davis-Bacon Act during the recovery from Hurricane Andrew in 1992
(After President Bill Clinton took office in 1993, he re-instated the Act.)
Apparently 35 House members(all Republican) sent this request to the President :
Including Roger Wicker from Mississippi
Congressional request
"Congressmen Flake, Feeney, Musgrave and Other House Members Ask President Bush to Suspend Davis-Bacon for Hurricane Recovery Effort
Presidential Proclamation Would Hasten Recovery Effort
Washington, D.C. – Arizona Congressman Jeff Flake, who represents the state’s Sixth District, today sent President Bush a formal request to use his presidential power to temporarily suspend the Davis-Bacon Act for the Hurricane Katrina recovery effort. Congressman Flake organized the letter with Congressman Tom Feeney of Florida and Congresswoman Marilyn Musgrave of Colorado.
The Davis-Bacon Act can add weeks to federally financed construction projects, and it effectively discriminates against non-union contractors, often driving up costs. President George H.W. Bush temporarily suspended the Davis-Bacon Act during the recovery from Hurricane Andrew in 1992.
“The victims of this disaster deserve the swiftest and most efficient response that the federal government can provide,” said Flake. “With Davis-Bacon in place, recovery projects will be delayed and costs will be inflated, and that is unacceptable.”
To read about the act look here:
Davis Bacon Act
"The Davis-Bacon Act was amended in 1935 to ensure that contractors bidding on public works projects would not lower wages so as to be sure to make the lowest bid; and to permit government agencies, which were required to accept the lowest bids, to employ contractors who paid a "fair" wage rather than those who competed by reducing wage rates."
Interesting John. While reading Ginnys post the only thought that came to mind for me was time.
800 dollars does seem high.
But the company gets a kick
They are probably out of town so need room and board and special equipment flown in. Full body protect suits and mask for breathings. Boats and storage fees for the bodies too? No idea.... Refrigerated trucks. brought in... Hope they don't reuse those trucks.... body bags... I guess they don't reuse those.... Refrigerated storage units... Oh my goodness.. Mind boggling...
Plus this is very dangerous work.. I think the water is full with disease like ecoli which can kill you. Plus I don't think alot of people could do this work... There isn't much left.... John said I didn't want to know...
I don't see why the people of New Orleans have to be paid lower wages. They have already lost so much, and now they will be paid less than prevailing wage. Yes, it's our tax dollars, but do you honestly think the amount of difference if they are paid prevailing wage is going to be more than a drop in the bucket in all the recovering and rebuilding costs? It's not like $9/hour - the prevailing wage for construction workers - is an inflated or huge salary. That comes out to less than $20,000 a year for a normal 40 hour week.
I don't understand why Davis-Bacon would add weeks to settling federal contracts, or why it discriminates against non-union contractors, other than Congressman Flake and some of his colleagues saying so. All that means is that if contractors are paying less than union wages they can make a lower bid for the contract, which is surely not shutting them out. Union wages doesn't necessarily mean prevailing wages unless most of the workers in that trade are in a union.
After all, the intent of the Act was to be sure workers are paid "fair" wages. Does a disaster mean that people should be paid "unfair" wages? Bush's proclamation doesn't carry a time limit - would that suspension of the Act be in effect for a year, or more?
I'm delighted the Shaw Group is hiring people in New Orleans, but, after all, who are they going to hire?
I don't think $800 per day per employee is a lot to remove dead bodies. Especially if that includes overhead.
You know I hate to say it but I bet that 800 dollars isn't for the refrigerated storage and transportation.... I bet that is another per day fee.
Ginny they could hire thosands of houstonians who are also out of work and now are getting NO assistance from the various places due to all of our resources going to katrina victims.
Kaye, they could indeed hire thousands of Houstonians, and a lot of other Texans and Mississipians, but they still won't pay prevailing wage. They'll pay as little as they think they can get away with, because of the suspension of Davis-Bacon.
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