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16 August 2017

What’s Going on With the Davis-Bacon Act? Why Prevailing Wage Is in the News

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Among the many laws and regulations in construction, sometimes it’s easy to get lost in the legal lingo. The Davis-Bacon Act (or “prevailing wage” law) is one that many contractors are familiar with, but with the constant updates, revisions and repeals occurring from state to state, it’s difficult to stay informed. Are you keeping up with the Davis-Bacon Act? Join us as we sift through the details. Find out where it all started, which states are making changes and why, and where it’s headed in the future.

What Is the Davis-Bacon Act? (In 30 Seconds or Less)

At its most basic, the Davis-Bacon Act requires contractors working on federal-government jobs to pay laborers a wage and benefits equal to what other union and non-union shops pay their workers in the same area for more or less the same project. In other words, it’s the wage that “prevails” locally for a given trade or type of work.

People may also refer to the many Davis-Bacon related acts and other legislation that impose prevailing wages. But the Davis-Bacon Act is really one bill, which traces back to the early 20th century.

Where Davis-Bacon Began

Prior to Davis-Bacon, several local laws required a prevailing wage on public-works projects. However, in the 1920s, many grew worried over declining wages and displacement of local workers by migrant laborers. This was Rep. Robert Bacon’s concern when he introduced an early form of the federal bill in 1927. Versions of it failed 13 times, until the Great Depression shifted Washington’s attention to a bill that would control collapsing wages.

The Davis-Bacon Act of 1931 was sponsored by two individuals — Rep. Bacon and former labor secretary Sen. James Davis. They each felt laborers and mechanics in the construction industry were being hurt by low wages and could be helped when it came to government jobs. Many times these low-paid workers were unskilled, recent immigrants.

The authors of the Act set out to establish a local wage standard, which the U.S. Department of Labor (DOL) would determine, that contractors must pay workers on public projects. This, they hoped, would make it fair to everyone — the contractors, the government and the workers. Contractors could place their bids on jobs competitively, knowing they’d all have to pay their workers the same rate.

Since then, numerous amendments and related laws have expanded prevailing wage legislation.

Where Is Davis-Bacon Today?

Today, according to the DOL, “The Davis-Bacon and Related Acts apply to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works.”[1]

Trainees and apprentices may receive less than the predetermined rates, as long as they’re in a DOL program. Additionally, employers must pay any employee working on a contract that exceeds $100,000 one and a half times the employee’s basic rate for all hours above 40 worked on a prevailing wage job in that week.

Contractors and workers can find out the wage determinations by visiting the government-run website Wage Determinations OnLine and entering the proper criteria.

 

Under the big umbrella of the Davis-Bacon Act are smaller umbrellas — sets of state laws referred to as the Little Davis-Bacon Act (LDBA) — that are individualized per state and apply to state-funded projects. When both federal and state levels fund projects, which might be the case in some highway projects, both laws would apply, but the contractor would comply with whichever law is most stringent.

What’s Next for Prevailing Wage?

Not everyone is in agreement that prevailing wage laws are positive for the health of the industry. In fact, in early April 2017, Arkansas joined 21 other states without a prevailing wage when it repealed its LDBA. It was the second state to eliminate prevailing wage this year after Kentucky signed a repeal bill in January.[2]

On the other side of the country, in Nevada, prevailing wage has been in the spotlight over the past few months. Legislators are currently trying to reverse amendments made about two years ago. AB154 would lower the threshold that makes university or public school work eligible for prevailing wage. That means existing prevailing wage law would cover more jobs. Additionally, this seeks to raise the rate contractors pay on school district and Nevada System of Higher Education construction projects from 90% to 100% of the prevailing wage.

At the federal level, Rep. Steve King from Iowa is working on repealing the Davis-Bacon Act. The U.S. House of Representatives introduced King’s H.R. 743 in January as a bill to repeal the Davis-Bacon Act completely. Sen. Mike Lee introduced its companion bill in the Senate. If enacted, H.R. 743 would make any reference in any law to a wage requirement of the Davis-Bacon Act null and void.[3]

King and Lee have expressed concern that the Davis-Bacon Act affects taxpayers and federal contractors negatively, with prevailing wages costing 20-25% more. Lee said in a press release that contractors would have “the ability to hire more workers of all skill level” if Congress were to repeal the act.[4] Many proponents of the repeal also believe that the prevailing wage raises construction costs and therefore raises taxpayer dollars.

However, there are also groups debating that theory. A study conducted in Ohio, “The Economic, Fiscal, and Social Effects of Ohio’s Prevailing Wage Law,” concluded that there is no increase in construction costs due to prevailing wages: “Over the past 16 years, 76% of the studies examining the effect of prevailing wage laws on construction costs find no impact, including 82% of the studies focused on public school construction.” The authors also state that repealing prevailing wage will not only decrease the income of construction workers but that it will increase poverty and reliance on public assistance.[5]

For the bill to take effect, the House and the Senate will each have to pass it, and President Trump will have to sign it before it becomes law. In the meantime, a healthy debate will no doubt continue.

Stay Tuned

For almost a hundred years, legislatures have expanded, modified and in some cases repealed the Davis-Bacon Act and LDBA. Though we briefly mentioned the recent legislation in Arkansas, Kentucky and Nevada, if the history of prevailing wage in America has shown us anything, it’s that we can expect many more changes to come. As the voices on both sides of the topic continue to work diligently towards their desired outcome, only time will tell the fate of the Davis-Bacon Act.