Davis-Bacon / Prevailing Wages Myth vs. Facts

Enacted by the U.S. Congress in 1931, the Davis-Bacon Act is part of a series of legislation passed during President Franklin Roosevelt’s New Deal to raise wages and protections for working families. The act created the concept of “prevailing wages” on federal projects – promoting high standards for the good of construction workers and their communities and decreasing the amount contractors could sacrifice their workers to have the lowest bid.  

State prevailing wage laws (also known as “little Davis-Bacon acts”) provide similar protections on state-funded projects. These laws help ensure that construction workers, including BAC members, are paid fair wages. Where unions negotiate going rates for regions, they create a rising tide to lift all ships. 

Prevailing wages on federally funded construction projects have not only stabilized local wage rates and labor standards for local wage earners and local contractors, but also prevented low-road contractors from bringing in low-rate workers from out of state. Even though the Davis-Bacon Act serves as a pillar holding up workers' rights, organizations like Associated Builders and Contractors (ABC) have shared myths about the benefits of prevailing wages. 

MYTH: Prevailing wages drive up costs for the federal government. 

FACT: Productivity rates are significantly higher with highly skilled, well-trained workers who ensure the construction is completed safely, on time and on budget. Low-wage workers tend to have less skill and create inferior construction requiring repairs, revisions, and lengthy delays, driving up the costs.

MYTH: Prevailing wages are only for union workers. 

FACT: The prevailing wage that must be paid on federal projects is based on the wages and benefit package paid for construction work in each community, whether they are union or not.

MYTH: Repealing prevailing wage laws will cut wages automatically, decreasing the cost of construction for taxpayers. 

FACT: Studies clearly show that worker wage and benefit cuts do not lead to savings for taxpayers. If a worker is paid half a wage of the area, but he does not have the necessary skill and takes twice as long to do the job, a penny has not been saved. Also, as many BAC members know, if the job originally is done by low-skilled labor, the chances are good that the work has been done so poorly, it will need to be redone before opening or repaired sooner than if installed the right way the first time.   

In addition, “labor costs only account for 23 percent of total construction costs,” a study by the Illinois Economic Policy Institute cited, “so minor changes in productivity and in materials and fuels usage can offset any effect of paying prevailing wages.”

MYTH: Prevailing Wages only help construction workers. 

FACT: Paying local workers standard wages for public works leads to taxpayer money being put back out into the community spent on groceries, going to restaurants, or local entertainment -boosting the economy by over $1 billion annually.

To learn more scan the QR code or visit: https://bacweb.org/issue/prevailing-wage

Resources: The Economic Impact of Prevailing Wage Law Repeals on Construction Market Outcomes by the Illinois Economic Policy Institute.