Quote:
Originally Posted by Devant
Well this is the dichotomy between economic theory and it's practical application in the market. If the market could only bear pennies an hour in compensation of course no one would waste their time working that job and they would resort to being part of black market economy or just not working.
In Economics there is a form of the Heisenberg principle which states any effort to try to influence one sector of the economy will inevitably shift the values and behavior of all other parts of that economy, so unless you are looking at things in a vacuum (which is impossible) all you can do is predict the most plausible trends based on previous data and history.
Your story of the bid is certainly influenced by political pressures which the Economist in his pure form would not consider, but there it is..influencing and changing all other values.
I think the practice of not going below a floor when bidding in the same industry is a form of self preservation and in a crude sense, price fixing (albeit legally) driven again by what the market will bear. You would not install a floor for X dollars below a certain threshold. Now what happens when a new comer out bids everyone by consistently going below that threshold. Well that becomes a situation that either the market will tolerate (in which case many businesses would cease to be able to do business and would cease to exist) OR the gov't steps in to level the playing field.
Capitalism in its true form would eradicate a middle class and you really would end up with a society comprised of have and have nots.
Funny I have performed many A-133 audits, front and center is the Davis Bacon Act. It really has changed how contractors and sub-contractors calculate their direct labor costs, and more importantly, what they can bury in overhead and pass back as costs to their clients.
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Granted, my experience is based just on that, my personal experience. Davis Bacon may have solved some issues for many trades, but for mine it serves to be bureaucratic BS at it's best. In my county, in FL, they only list one type of flooring installer, a tile setter, and his prevailing wage, according to the GOV, is $15.63/hour. The problem for me is that i use subcontractors who bid on the work for a lump sum. This turns the DBA for me, in to a paperwork aggravation. A must is keep track of how many people are on the job for how long.
Here is the kicker. My installation crew may decide they want to bring 5 helpers with them for this job. But for the amount they bid, and the number of people, and the number of hours they all work would net them an hourly wage lower than the DBA prevailing wage. So once again, the 5th helper gets to sit at home, not making any money for the 3 to 4 weeks the crew will be on the project.
I'm on the fence about your statement in bold, but only have personal theory to argue against it and sometimes that personal theory supports you statement. haha