Prevailing Wage Laws
The Best Value for Our Economy and Taxpayers
Prevailing Wage laws are contracting standards that ensure taxpayers get the best possible value on public construction projects.
Prior to the enactment of prevailing wage laws, government-funded construction had become a race to the bottom—with low-wage, low-skilled workers brought in from outside the community to do local public works jobs and taking local tax dollars with them when they left. Projects were often marred by delays, poor workmanship, safety problems, and cost overruns.
Prevailing Wage laws changed all this, producing more local jobs, higher skilled workers, less poverty, and top quality highways, bridges, schools, water systems and municipal facilities.
The Davis Bacon Act established prevailing wage standards on federally funded projects, and twenty five states have prevailing wage laws for state funded projects.
Prevailing wage laws boost local economies and strengthen the middle class, but have no significant impact on public construction costs. This is because labor represents just 20% (and declining) of overall project costs and the use of skilled local workers increases worksite productivity, reduces material and fuel expenditures, worksite injury rates, worker reliance on taxpayer funded public assistance programs, and the risk of contractor non-performance.
HISTORY OF PREVAILING WAGE LAWS
The first prevailing wage law was enacted in Kansas in 1891, and was part of a broader effort to address a variety of problems on public works at the time–including safety conditions and child labor. Six other states, including Oklahoma, Idaho, Arizona, New Jersey, Massachusetts, and Nebraska each enacted prevailing wage laws prior to 1924.
Nationally, as more government-funded construction projects were performed by low wage, low skilled workers and marred by delays, poor workmanship and cost overruns the movement for public works construction standards at the national level only intensified.
In 1931, the effort succeeded when Republican President Herbert Hoover signed legislation co-authored by Congressman Robert Bacon (R-NY) and Senator, James Davis (R-PA).
This law, which established prevailing wage standards on all federally funded construction projects, became known as the Davis-Bacon Act (DBA). Over the years, DBA has been amended to include a system for making wage determinations and enforcement mechanisms. Today, the act is administered by the US Department of Labor’s Wage & Hour Division, which surveys 3,000 cities and counties across America each year to determine locally based prevailing wage rates.
Since 1931, dozens of states have also enacted Prevailing Wage laws (known as “little Davis Bacon Acts”), which typically cover state funded projects. Only nine US States have never enacted a prevailing wage law, and twenty five states currently have these laws in place.
After more than a century in existence, prevailing wage laws have been one of the few recurring points of broad bi-partisan consensus in state or national policymaking. From Republicans like Rep. Paul Ryan, Former Senator Rick Santorum, and President Ronald Reagan, to Democrats like Presidents Bill Clinton and Barack Obama.
WHY DO PREVAILING WAGE LAWS MATTER?
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