Published date: 10/25/2023

Anytime there’s big news in the industry we work in, the initial gut reaction for many of us is to think: how does this affect my business or agency? Or how might this impact my job?

And there’s nothing wrong with that. It’s fairly typical.

When Davis-Bacon was thrust back into the spotlight recently with the Final Rule updates, it was very much one of those scenarios. However… it’s so much more than just that. It’s also an opportunity to be reminded of the “why” behind the rules and regulations that have defined public works for decades. 

If you are one of the many people working in construction that have been told you need to do “x, y, or z” because “the law says so” – or you’re someone who just kind of “fell” into a compliance role and was expected to learn things on the fly (lucky you!) – AND you never had anyone actually explain why all these rules and regulations matter, this new series of blogs might just be for you. We’ll be covering a list of reasons why you should care about prevailing wages.

Here’s just a few to start.

Prevailing Wages Help Prevent the Exploitation of Construction Workers

Prevailing wages help prevent the use of cheaper, unskilled labor in the construction industry that can often lead to a “race to the bottom” type mentality of cutting wages and employing unethical hiring practices.

Why we should care:

By establishing a baseline of minimum pay, prevailing wages help rectify power imbalances in the labor market, preventing workers from being taken advantage of and instead promoting dignified livelihoods. Enforcing prevailing wages not only mitigates the risk of underpayment and overworking employees but also fosters a more balanced employer-employee relationship, boosting morale, job satisfaction, and overall productivity.

Additionally, the impact of prevailing wages extends beyond individual workers, benefiting their families and the broader community. Adequate compensation enables workers to meet their basic needs, access healthcare, provide a better education for their children, and contribute more to local economies. This creates a positive cycle of prosperity that reduces reliance on social welfare systems, alleviates income inequality, and combats poverty. In essence, prevailing wages represent a commitment to human dignity, social justice, and equitable economic growth.

Removing Prevailing Wages Negatively Impacts Industry Standards

The less skilled and less trained labor that accompanies cheaper costs typically brings with it lower standards of work which lead to a host of other drawbacks for public projects.

Why we should care:

Without prevailing wage regulations, the allure of hiring cheaper labor to cut costs and boost profits would tilt the market towards favoring workers that aren’t properly trained and equipped with the necessary skills to safely and efficiently complete a quality project. While this may initially benefit some employers in the short run, it leads to long-term negative consequences that affect the quality of work delivered in return for our tax dollars. This in turn can diminish the culture of public works construction by creating a false narrative around what is and is not acceptable.

Undercutting wages can compromise superior workmanship and safety hazards while increasing maintenance costs – damaging project integrity and industry reputation. Furthermore, the absence of prevailing wages discourages skilled workers from entering or staying in the industry, hindering workforce growth, innovation, and progress.

Prevailing Wages Support the Local Economies

By setting wages at a level that sustains a reasonable standard of living, prevailing wages support the local economy – affording workers more disposable income.

Why we should care:

When workers are paid in accordance with the true value of the skills necessary for the job, they gain the financial stability needed to meet their basic needs and actively contribute more to their communities. It also results in increased disposable income, which, in turn, fuels consumer demand. As workers support local businesses through their spending, it generates a continuous flow of revenue within the community, supporting existing businesses and fostering the emergence of new enterprises.

Moreover, the positive effects of prevailing wages extend beyond immediate transactions. Workers with the financial means to invest in education, development of skills, and their own health contribute to an overall increase in human capital within the community. This in turn attracts more businesses and industries, and increases the potential for sustained growth in the affected communities. As the local economy thrives, it generates additional tax revenues that can be reinvested in public services and infrastructure, creating a self-sustaining cycle of prosperity that benefits the entire community.

If you are looking to learn more about Davis-Bacon and prevailing wage compliance, check out our online courses at https://lcptracker.com/academy/.

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These materials are being issued with the understanding that LCPtracker is not engaged in rendering legal or other professional services and is providing these for informational purposes only. If legal, accounting, or tax expert assistance is required, the services of a competent legal, accounting or tax professional should be sought.