An
AP story reports that Bush has rescinded his suspension of the
“prevailing wage” clause in the Davis-Bacon Act in Katrina-stricken areas.
Essentially, by law, the feds have to pay roughly union scale rates for
disaster reconstruction work, unless the requirement is suspended by
Presidential order.
The reason given for the suspension of Davis-Bacon was an attempt to
reign in reconstruction costs given the magnitude of the task ahead. The
reason for rescinding the suspension: pro-labor congresscritters asked
nicely.
Meanwhile, I’m seeing some incredible ugliness already in the Katrina
claim files as a result of demand surge.
Personally, I wish that supply and demand would take care of wage
setting, without interference of legislation or Presidential decree. I’m
not sure whether that would mean reconstruction would be more or less
expensive, but it would provide part of the economic backdrop for the most
efficient reconstruction possible.
Regardless, the earnings releases for some insurers and reinsurers that
have more penetration in the NOLA metro area and the Mississippi Gulf Coast
are going to be mighty interesting to read over upcoming quarters, I fear.