New Report Finds States Using Federal Aid Swap Programs to Bypass Prevailing Wage, Other Federal Policies
A new report from the Midwest Policy Institute warns that states have created so-called federal aid swap programs that allow state and local governments to bypass prevailing wage standards, Buy America requirements, small and minority-owned business goals, and other federal policies.
The new report documents how in 2018, Iowa approved a federal-aid swap program allowing federal funds allocated to infrastructure projects to be exchanged with state funds, so federal construction standards, including Davis-Bacon, no longer apply. Since then, 15 of these swap programs have been established in the U.S., resulting in 18% of federal-aid dollars being swapped. According to the Midwest Policy Institute, this has resulted in 10% fewer highway projects built with prevailing wage standards; 4 percent fewer highway projects built with Disadvantaged Business Enterprise goals; and a total of $9 million lost in economic activity from local contractors and construction workers.
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