Prevailing Wages

Basics

Prevailing wage laws require firms working under a government contract to pay the “prevailing” wage for each job, that is, at least the median or locally prevailing wage and any fringe benefits paid on similar projects in the region. Kansas passed the first prevailing wage law in 1891. It provided legal precedent for the 1931 passage of the federal Davis-Bacon Act, which established prevailing wages for federal public works jobs. The prevailing wage is different for each occupation and each city or county, and rules and regulations governing them vary by state.  Historically, prevailing wage laws have applied to public works jobs. Currently, thirty-two states and the District of Columbia have prevailing wage laws.

 

Current

Opponents in a number of states are attempting to repeal or weaken prevailing wage legislation at the state level.  These campaigns are based on the narrow and short-sighted conviction that government contracting should always go to the lowest bidder—regardless of worker compensation or workplace conditions.  Legislative initiatives include efforts to raise the threshold (the dollar value of the project) at which prevailing wage rates would apply (AK, IN), to exempt certain public entities (i.e. school boards) from their coverage (MD, MO), to erode the wage rates (IL, MD, MN), or to rescind state prevailing wage statutes entirely (AZ, LA, MI, MN, NJ).

 

FAQ

Why do we need “prevailing wage” laws?

At the heart of these laws is the conviction that government, as a major buyer in the construction sector, should not act to drive down wages. Indeed, the civic-minded reformers who initially pushed for prevailing wage laws believed that the government ought to use its buying power to enhance the welfare of workers and their families.

Don’t “prevailing wage” laws inflate government contract costs?

No.  A growing body of economic studies finds that prevailing wage regulations do not increase government contracting costs. In many settings, prevailing wage rates may be at or near what contractors would pay anyway.  Even when prevailing wage laws do “bid up” wages, there is little evidence that this is simply “passed through” as an increased cost: labor costs are only about a quarter of overall construction costs (so a 10 percent bump in wages would mean only a 2.5% bump in costs); higher wages are often offset by the higher productivity of skilled workers; and contractors my absorb the increased cost rather than pass them along.

 

Learn More

Both the AFL-CIO and the National Alliance for Fair Contracting maintain resource pages for prevailing wage research and legislative campaigns. The AFL “States of Denial” project has a nice summary of state-level attacks on prevailing wage laws.  See also the work of the Economic Policy Institute, including its 2008 survey of research on prevailing wage and contract costs.

Recent Research Highlights

Cities and Jobs: Local Strategies for Improving Job Quality and Access

Added August 22, 2011 Source: COWS
Issue: Minimum Wage, Other, Overtime, Paycheck Protection, Prevailing Wages, Wage Theft
State: Wisconsin

By: Pablo Mitnik In spite of the extraordinarily high productivity of U.S workers, a large share of the country’s workers hold bad jobs. These low-wage workers are not mainly teenagers without economic responsibilities, as is often claimed. Most are adults, most are married or have been married, and there is good evidence that the low

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Prevailing wage studies

Added March 15, 2011
Issue: Prevailing Wages

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Research Summary: Wisconsin public-sector workers are under-compensated compared to their private-sector counterparts

Added August 22, 2011 Source: COWS
Issue: Health Care, Minimum Wage, Overtime, Paycheck Protection, Prevailing Wages, Project Labor Agreements, Public Sector Bargaining, Retirement Security, Right to Work, Spotlight on Inequality, The Great Recession, Unemployment Insurance, Wage Theft, What Do Unions Do?
State: Wisconsin

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The Wisconsin Values Budget: Better Choices for Wisconsin

Added August 22, 2011 Source: COWS
Issue: Budget Basics, Child Care, Family Leave, Health Care, Other, Paid Sick Leave, Paycheck Protection, Prevailing Wages, Privatization, Project Labor Agreements, Public Sector Bargaining, Retirement Security, Revenue Options, Right to Work, Spotlight on Inequality, The Great Recession, Unemployment Insurance, What Do Unions Do?
State: Wisconsin

The Wisconsin Values Budget is a balanced approach to our fiscal challenges that demonstrates Governor Scott Walker’s choices are not necessary choices. Through sacrifice that is fairly shared, and by building on Wisconsin’s history of progressive innovation, we can maintain and further improve public structures that work for everyone. The Wisconsin Values Budget, unlike the

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Wisconsin’s Jobs: Don’t Credit (or Blame) Walker Where He Has No Real Influence

Added August 22, 2011 Source: COWS
Issue: Other, Paycheck Protection, Prevailing Wages, Project Labor Agreements, Public Sector Bargaining, Right to Work, The Great Recession, What Do Unions Do?
State: Wisconsin

Governor Scott Walker promised in his campaign to “create” 250,000 jobs during his first term, and his press office and the media regularly measure progress towards this goal. However, this brief says that Governor Scott Walker should not get credit (or blame) for overall jobs numbers in Wisconsin. These numbers are almost entirely driven by

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Wisconsin’s Public Employees: A Foundation for Quality of Life in the State

Added August 22, 2011 Source: COWS
Issue: Budget Basics, Health Care, Paycheck Protection, Prevailing Wages, Privatization, Project Labor Agreements, Public Sector Bargaining, Retirement Security, Revenue Options, Right to Work, Spotlight on Inequality, The Great Recession, Unemployment Insurance, What Do Unions Do?
State: Wisconsin

In this brief, we offer data on public-sector workers — their pay relative to the private-sector workforce, the size of Wisconsin’s public workforce over time, and analysis of what the wage reductions in the 2011-13 budget will cost different public workers — and data on the most most important cause of the state’s budget deficit:

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