Arguments about prevailing wages have not changed much since the 1980s, the last time the U.S. government changed methods under the 1931 Davis-Bacon Act to determine a prevailing wage on most construction projects with federal funding. The Biden administration has opted to return to the three-step method used before 1983 to avoid overreliance on weighted averages.
This obviously is a way to capture more union collective bargaining agreements in the wage determination and boost required payments by any employer on covered projects.
Minimum wages date to the 19th century, but the U.S. federal minimum wage took effect in 1938 and has been adjusted since. The latest planned Davis-Bacon changes are of course fiercely debated between building trades and open-shop employers, the latter seeing them as a pay raise mainly for union employees. Non-union employers often hate prevailing wage work because they are accustomed to paying employees based on a crew member’s value or seniority, not on a collectively bargained rate that applies to all journey workers or apprentices. Nor do many open shop contractors like complying with related wage rules and risking violations.
Stripped of excessive parts on modular construction, delivery drivers and unlimited liability up the contracting chain, proposed Davis-Bacon Act updates are worthwhile.
Some aspects of the proposed changes should be dropped. They include applying rates to modular construction and to delivery drivers, and making more employers in the contracting chain liable for wage violations, which would expose more firms to liability for things beyond their control. But stronger protections against retaliation for workers who report wage violations are a good idea.
It’s important to acknowledge that prevailing wages hike payment costs by about 20% on public works where they apply. Construction workers, on the whole, earn the pay hike and deserve it. Open-shop employers need to give up perennial calls to abolish federal and state prevailing wage laws, a change that would expand market share for nonunion firms but likely drag down pay for all craft workers. A recent anti-Davis-Bacon Act study quoted by the Associated Builders & Contractors claimed the law “turns federal construction spending into a costly welfare system for union workers in some markets.”
We don’t see prevailing wages or the planned updates as an all-or-nothing matter. There’s more than enough room for open-shop contractors that build so much in the U.S., and for union sector employers that negotiate for their workers a better standard of living and retirement security—both of which have badly eroded in the U.S.
Stripped of the excessive parts about modular construction, delivery drivers and unlimited liability up the contracting chain, the proposed Davis-Bacon wage determination updates are worthwhile. Union workers and employers will gain, for now, and everyone will go on building as before.