The Davis Bacon Act of 1931 and more than 60 other federal statutes require contractors on federally-assisted construction projects to pay wages at the rates prevailing in the communities where they work. Similarly, the Service Contract Act of 1965 provides that on contracts worth more than $2,500 for services provided to the federal government—such as janitorial, custodial, security guard services, maintenance, clerical work, and certain health and technical services—contractors must pay employees at least the wages and fringe benefits prevailing in the local community. Such laws exist so that the purchasing power of the federal government is not used to depress local labor standards. Often referred to as the “prevailing wage,” the amount is typically based on non-union wage scales so local wage and labor standards are not undermined. When prevailing wage standards are applied, contractors win federal contracts based on having the most productive, best equipped, best trained and most productive workforce.
Studies have shown that workers who are paid the prevailing wage are more productive, and higher productivity can lower construction costs without lowering wages. Prevailing wage laws benefit blue-collar workers and their communities by:
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