The Obama administration did a small favor for unions last spring by declaring that land surveyors are henceforth covered by the Davis‐​Bacon Act, which requires that workers be paid the “prevailing” union wage when employed by a company doing construction or some other sort of manual work for the federal government.

It is perfectly understandable why the administration would do such a thing. Despite fervent union support in both of President Obama’s campaigns, he has delivered few tangible favors to them. Card‐​check didn’t happen even with a heavily Democratic House and Senate; the National Labor Relations Board’s threat to keep closed Boeing’s new non‐​unionized plant in South Carolina turned out to be an idle one, and the implementation of the Patient Protection and Affordable Care Act is giving more than a few unions heartburn about its implications.

However, the surveyor decision represents more than a mere bone being thrown to unions. Besides driving up costs for hundreds of businesses, its expansion likely violates numerous federal statutes, ignores the Administrative Procedures Act (APA), and uproots more than 50 years of precedent on how the government administers Davis‐​Bacon. It was also done without soliciting any input from the public or affected businesses.

Precedent / In 1962, the question arose whether Davis‐​Bacon covers surveyors, and the Kennedy administration concluded it did not. The secretary of labor, Arthur Goldberg, decided that preliminary survey work merely affects construction and is not covered by the act. Davis‐​Bacon would only cover surveyors if they “perform primarily manual work, such as clearing brush and sharpening stakes.”

Solicitor of Labor Charles Donahue later cemented President Kennedy’s policy on the matter, flatly stating that “preliminary surveys concerning construction are not subject to the Davis‐​Bacon Act.” The policy of exempting surveyors remained for eight different administrations, but then unions began a lobbying push to have the Obama administration amend the law by fiat.

The lobbying worked. In 2013, the Labor Department responded to the International Union of Operating Engineers, with the acting deputy administrator of labor promising that “steps will be taken to ensure that … appropriate consideration will be given to survey crew workers employed by contractors and subcontractors.”

The same day the Labor Department made that letter public, it issued “Memo 212,” which said that Davis‐​Bacon would now apply “where surveying is performed immediately prior to and during actual construction.” Memo 212 did not address Secretary Goldberg’s determination that “preliminary survey work” would be exempt from Davis‐​Bacon. The memo also ignored any impact on small businesses and any consideration of costs and benefits.

The letter also asked contractors and subcontractors to provide data to Labor to help them determine the applicable “prevailing” union wage for the job. The problem with this is that the federal government has a process for data collection from states and private entities set forth by the Paperwork Reduction Act, which (among other things) requires the Office of Management and Budget to review the data request and ensure that it is not too burdensome. No review was completed for this data collection.

Although this might appear to be an esoteric labor law matter, members of Congress took note of the change. In July, both the Committee on Education and the Workforce and the Committee on Small Business wrote Mary Beth Maxwell, the acting deputy administrator, asking why the Labor Department overturned 50 years of precedent and requested all economic analysis that the administration had conducted regarding the change. It seems clear no such analysis exists.

The group most affected by the expansion of Davis‐​Bacon, the National Society of Professional Surveyors (NSPS), received notice of the change only when a Washington state member received a letter from the Labor Department. The NSPS complained that the department “made an arbitrary and capricious decision without adequate, or accurate, research and investigation.” Even with regulatory guidance, agencies typically provide notice to regulated entities.

Legality / Administrative law may be an arcane and complex area, subject to countless interpretations and questions of fact, but it seems clear that the Labor Department simply ignored the APA when making the surveyor decision. The language on rulemakings could not be more precise: “General notice of proposed rulemaking shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice.”

The Department of Labor recently got its hand slapped by the courts for this sort of omission. Earlier in 2013, the D.C. Circuit Court of Appeals was asked in Mortgage Bankers Association v. Department of Labor to adjudicate whether loan officers are entitled to minimum wage and maximum hours provisions of the Fair Labor Standards Act. In 2006, the Bush administration concluded that they did not, and the Obama administration sought to reverse course. Because the Labor Department provided a definitive statement in the past upon which the private sector relied, the Court ruled unanimously that changing that position required the typical notice and comment process.

The Labor Department is not completely ignorant of the rulemaking process. It recently issued a final rule to expand Fair Labor Standards Act (FLSA) protections to in‐​home health care employees. The rule will impose millions of dollars in deadweight losses and slash more than 11,000 jobs based on its own analysis, but the administration still at least went through the formality of following the APA and gave sufficient notice to the affected entities and solicited comments. The department even amended Davis‐​Bacon through the notice and comment process not so long ago when it clarified “site of work” definitions during the Clinton administration, which reduced Davis‐​Bacon coverage requirements for construction contractors and subcontractors.

Impact on small businesses / Surveying is a profession almost solely composed of small businesses. According to the U.S. Census, there are roughly a thousand establishments nationwide, with 85 percent employing fewer than 10 employees and 96 percent employing fewer than 50 employees.

Under the Regulatory Flexibility Act, agencies must determine whether a regulation has a significant economic impact on a substantial number of small entities. The expansion of Davis‐​Bacon will undoubtedly affect every one of those 1,000 small businesses, but the administration is silent as to whether that number is a significant one.

In its expansion of the FLSA for in‐​home health care providers, the Labor Department conceded the rule would have a significant economic impact on a number of small entities. While there may be no precise definition for “significant” in government‐​ese, for in‐​home care providers it translates to costs per business ranging from $1,000 to $5,200. It doesn’t take much analysis to conclude that surveyors will incur wage increases costing them at least that much.

Paperwork nightmare / The costs of Davis‐​Bacon to taxpayers are well established. By forcing governments to pay vastly higher wages, the federal government will spend an additional $15.7 billion in the next decade because of the law, according to a study by the Congressional Budget Office. The Joint Economic Committee of Congress estimates that the law increases the cost of government construction by 22 percent—a dubious expenditure for a country supposedly in the midst of an infrastructure crisis.

Besides higher labor costs, the effort of ensuring compliance also costs the entities covered by Davis‐​Bacon. For instance, Davis‐​Bacon‐​related paperwork forces firms to spend more than 8.8 million hours each year completing 17 different federal forms to ensure compliance, according to the Office of Management and Budget. The estimated cost of doing that paperwork is approximately $200 million; expanding Davis‐​Bacon to more entities will only drive those figures higher.

Expanding Davis‐​Bacon to surveyors threatens to be a logistical hassle for newly covered businesses as well. The decision established that surveyors who normally spend more than half their time performing physical duties will generally satisfy the primary duty requirement. Thus, on some occasions surveyors will be covered under Davis‐​Bacon, and other times they will not be covered. For instance, if they arrive before construction, Davis‐​Bacon could apply, but if they arrive after work is complete, it might not apply. This compliance nightmare is already a familiar experience for regulated entities.

Dubious law / The rationale for the federal government paying construction workers and laborers more than they receive for other jobs has gone through several iterations since Davis‐​Bacon’s expansion, none of which stand up to a cursory examination.

The law’s existence means U.S. taxpayers pay more for government dams, roads, bridges, and buildings than would otherwise be the case. If we are to believe the mantra that we have a serious infrastructure problem in this country, such a law seems to be antithetical to solving it.

Davis‐​Bacon not only forces the government to pay more for labor, but it also results in higher compliance costs for businesses that do construction jobs for the government. Most of those costs are passed on to the government, of course, but the requirement also results in businesses having to hire more workers to do paperwork rather than build infrastructure. It represents socially unproductive labor. Creating a whole new class of workers to be covered by the law makes little sense; to do it via subterfuge and in a legally dubious manner is worthy of outrage.