Prevailing Wage Laws Public Interest or Special Interest.pdfVIP

Prevailing Wage Laws: Public Interest or Special Interest Legislation? George C. Leef People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a con- spiracy against the public, or in some contrivance to raise prices. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary. —Adam Smith (1776) The public policy of the United States is broadly in favor of com- petition. Our antitrust laws are premised on the idea that in the absence of such legislation private interests would seek to create monopolies, fix prices, restrain trade, and stifle competition. Moreover, the federal government, as well as the states and munici- palities, has laws mandating competitive bidding on government contracts to guard the public against “sweetheart deals” that squan- der tax dollars. Open competition, in fact, is usually the undoing of those conspiracies against the public that Adam Smith saw as so prevalent. Cato Journal, Vol. 30, No.1 (Winter 2010). Copyright © Cato Institute. All rights reserved. George C. Leef is Director of Research at the John W. Pope Center for Higher Education Policy and author of Free Choice for Workers: A History of the Right to Work Movement. 137 Cato Journal One glaring exception to the general rule favoring competition is “prevailing wage” laws. Those laws mandate that on government construction projects, the labor component will