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Are Prevailing Wage Laws Discriminatory?

If you work as a contractor on projects with federal funding, prevailing wage laws may be pertinent to your rate of pay. An opinion piece published in the Albuqurque Journal makes the argument that "prevailing wage" laws are discriminatory. Understand what these laws say and how they affect you.

(Photo Credit: daily sunny/Flickr)

Little Davis Bacon

The Davis Bacon Act (DBA) was enacted on March 3, 1931. It has been amended twice and temporarily suspended three times, twice to control spending on hurricane recovery, and once by President Roosevelt for the New Deal. In a publication by Powell & Booth, PC Presents, the authors discuss that the Davis Bacon Act is controversial, with some strong supporters and equally strong detractors.

The DBA affects public construction projects that exceed $2,000 in federal funding. It is designed to protect workers. By saying that contractors must pay their workers the prevailing wage generally earned in that area, workers are protected from low pay and contractors are unable to lower their bids for the project by paying workers less than the prevailing wage in the area.

Discrimination and Trade Unions

One motivation behind the passing of the DBA was to prevent "fly by night" contractors from coming into an area, winning the project and paying migrant workers low wages. This may be a form of discrimination, but the opinion piece in the Albuqurque Journal made a different discrimination argument.

The author points out what she claims is widely known, and is also included in the Powell & Booth report: that the federal government's assessment of prevailing wages in different areas of the country are inflated. Contractors must bid enough to cover paying workers the official prevailing wage, not necessarily the actual prevailing wage.

She makes the argument that it is trade unions who are behind keeping these laws in place and behind the inflated wage assessments. It may be less paranoid that it sounds; in 2009 Senate Bill 33 was passed in New Mexico. Prevailing wages are now "determined by the director of the Labor Relations Division of the Department of Workforce Solutions, at the same wage rates and fringe benefit rates used in collective bargaining agreements as supported by the unions."

It seems that smaller contractors in New Mexico are having trouble competing with those who employ unionized labor. The smaller contractors are less able to pay the prevailing wages and, therefore, bid too high to be awarded the contract. And this argument sounds like it is less about bidding on government contracts, and more about disabling trade unions. If the trade unions lose power, then more contractors could potentially bid lower, win the jobs, and pay workers less money.

In the end, this may simply be about whether one supports unions and higher pay for honest labor, or instead supports the claims of smaller contractors that the playing field is stacked against them because they can't afford to pay their workers.

Tell Us What You Think

Do you think prevailing wage laws should be supported, or should we allow for competition and lower costs, including lower wages? We want to hear from you! Leave a comment or join the discussion on Twitter.

1 Comment

  1. 1 SD 24 Feb
    There are multiple grounds for continued support for prevailing wage laws. I want to make two points: (1) the government study cited in the Powell & Booth paper is 37 years old! Since then, many high-quality, rigorous, peer-reviewed, academic journal-published studies have been conducted. Their findings? Yawn ... no statistically significant cost impacts from prevailing wage. (2) Claims about smaller employers not being able to compete under prevailing wage requirements are anecdotal and haven't been submitted to any serious scrutiny. The bigger issue is the (in)ability of small contractors to comply with a multitude of other compliance & record-keeping requirements associated with public works projects that have nothing to do with labor.

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