Friday, May 28, 2004

Roadwork Orange-Your Highway Taxes at Work!

This is orange season. As you travel the highways, you’ll see orange barrels, orange signs, and orange-clad people waving orange flags.

You will be interested to know that all of this roadwork orange can sometime cost more than it does to resurface the pavement and replace the guardrails. Maintaining Traffic, as it’s called in the trade, is a very expensive component of the cost of renovating roadways.

One reason for this exorbitant cost is the fact that construction laborers-the people who move the orange barrels and wave those orange flags-are paid $30.01 per hour. When the contracting company adds its margins for overhead, taxes and profit, the cost to you, the taxpayer, can grow to over $60.00 per hour.

Most paved roads in West Virginia qualify for some degree of federal aid and on federal aid construction projects, the Davis-Bacon Act requires that workers be paid not less than the local prevailing wage rates for similar work. In 52 of our 55 counties, the US Department of Labor (USDoL) has determined that the prevailing wage rate for a laborer who works as a Flag Person is $30.01 per hour.

The average hourly wage of all American non-farm workers is something over $15.00 per hour. So it is fair to ask how the USDoL came up with a prevailing wage of $30.01 per hour for the most common of labor in the nation’s second-poorest state.

The Davis-Bacon Act was passed in 1931, a time when every third man was looking for work. The law’s purpose was to protect organized labor’s wage pacts. This purpose has not changed in 73 years. Guess where the $30.01 comes from?

Libertarian economists have long argued that market forces need to be employed throughout the economy in order to accurately and fairly price goods and resources. On the other side, Liberals have thrown up the argument that only government can do certain tasks, such as road building in this example. By arguing from this vantage, they then expand the venue to justify the central planners’ role in determining local wage rates, prevailing or otherwise.

If you are an advocate of Labor, then you would view the Davis-Bacon Act as a victory for the common laborer. And victory it is, if you are prone to declare victory when day laborers are paid more than nurses. You would also argue that the Davis-Bacon Act prevents unscrupulous, out-of-state contractors from coming here with truckloads of Mexicans and taking jobs away from our local workforce. (This continues to be the preferred sound bite because it resonates so well.)

A student of history would disagree with these conclusions. Davis-Bacon has often been called the last of the Jim Crow laws. In 1931, the jobs of white union men weren’t threatened by Mexicans and NAFTA. Back then, the unions feared that black men would take their jobs. Davis-Bacon served Jim Crow well.

The Davis-Bacon Act has been both cruel and inept as social legislation. But rather than reverse it, seven decades of congressmen, senators and presidents have allowed it to stand so as not to alienate Labor.

What is the cost of a Flag Person? You can read highway project bid tabulations at the Contractors Association of WV website ( And once there, you will find bid prices ranging from $45.00 per hour and up. To put this in perspective, you now pay about 45¢ per gallon in gasoline taxes that fund road construction. You will have to buy 100 gallons of gasoline to pay enough tax to cover one hour of the Flag Person’s time. To pay this laborer for one regular 40-hour week, then plan on pumping 4,000 gallons. For most of you, this works out to six years of driving.

In its latest wage determination ruling, the USDoL decreed that the local prevailing wage for a Flag Person in Berkeley, Jefferson and Mineral counties is $21.71 per hour. Given all of the population growth and the construction boom going on in Berkeley and Jefferson counties, I would have thought that the central planners had applied their wage formula incorrectly. Especially so, since the unemployment rates there are negligible.

But, hey, I was never cut out to be a central planner. They are all-knowing gods and I am just a writer waving a red flag.

Prevailing wage rates for flag persons:

Morgan County, WV          $30.01 per hr.
Berkley County, WV          $21.71 per hr.
Jefferson County, WV        $21.71 per hr.
Frederick County, VA           $6.75 per hr.
Clarke County, VA               $9.25 per hr.
Loudoun County, VA            $9.25 per hr.

Friday, May 7, 2004

Common Sense Could Have Saved Our Nation More Than Money

When your business depends on defying gravity, it is appropriate to concern yourself with the cost of doing so. And that’s why Robert Crandall, the former CEO of American Airlines, became the sage of the modern air travel industry.

Crandall was dining in mid-flight when he noticed that his dinner salad had three olives. He went back to the office and calculated that his airline could save $40,000 per year in fuel costs just by eliminating one of those olives. And why not? It costs just as much to fly olives as it does cargo and passengers never booked flights based on salad garnishes.

Unfortunately, the airlines succumbed to this degree of frugality and missed seeing the big picture. In-flight hijackings of passenger planes have been going on since at least 1931. And there have been repeated cases of Arab terrorists hijacking planes in the jet age. That four aircraft were hijacked by Arab terrorists on 9/11 shouldn’t have come as a surprise.

Both common sense and the General Accounting Office had recommended fortifying cockpit doors for many years. But the industry and its regulators consistently rebuffed the idea. First of all, there was the cost of flying heavier doors. And the issue of safety came second. In the event of a crash, cockpit doors had to be pliable lest the flight crew be trapped in the wreckage.

Prior to 9/11, the airlines, the regulators, and law enforcement agencies all believed that prior hijackings would be the model for future ones. In other words, they thought that hijackers would force the plane down and bargain a ransom for the hostages. Flight crews were trained to go along with these ploys with their primary mission being to land safely. No one thought that hijackers would kill the pilots and attempt to fly the plane.

Now we know different. But did we have to learn the hard way?

In the aftermath of that terrible day, protecting pilots became a no-brainer, even among the bureaucrats. The desk pilots at the Federal Aviation Administration submitted a plan for replacing existing cockpit doors with bulletproof doors that would also prevent entry to the flight deck. The old doors weighed 25#. The new ones would weigh in at 50#. FAA estimated it would cost the industry some $11 million per year to fly the extra weight. Adding in the installation cost, FAA derived a life-cycle cost of well under $100 million.

Had we relied on common sense instead of the experts who work inside the beltway, the industry could have spent $100 million ten years ago and averted a disaster that has already cost over $100 billion. Now that the new cockpit doors have been installed, the airlines have been reimbursed to the tune of $100 million by the US taxpayer. The $100 million got spent anyway-just unwisely and untimely.

When the Rogers Commission investigated the Challenger shuttle explosion, commission members almost bought into NASA’s doubletalk and cover up. But then, the unexpected happened. The late Dr. Richard Feynman, a Nobel physicist, put a piece of the booster’s O-ring in his ice water glass. A few minutes later, he pulled it out and snapped it in half, thus demonstrating the effect of cold weather at launch. NASA reluctantly said, "Mea culpa!" and then went about changing launch procedures.

Sadly, there is no Dr. Feynman sitting on the 9/11 Commission. The commission consists of partisan snipers and its two co-chairmen are placaters. In this election year, the 9/11 Commission has distinguished itself as a failure even before it has written its report.

At a time when we desperately need a sober analysis of our national security procedures, we sold ourselves out to an impotent commission rather than demand truthful answers to the tough questions. Our vanity, like that of the Greek’s Icarus, let us believe that we could defy gravity forever. Yes, it’s hard to admit that we were so foolish for so long. But we need to get over our hurt feelings now. We know that there will be more attacks and we also know that they will coincide with the November election.

We are at war. But I am unconvinced that the American people understand this.