by Sunburst Software Solutions, Inc.
Archives by Month

The History of Prevailing Wage

Print Friendly, PDF & Email

 

The act is named after its sponsors, James J. Davis, a Republican Senator from Pennsylvania and a former Secretary of Labor under three presidents, and Representative Robert L. Bacon another Republican from Long Island, New York. The Davis-Bacon act was passed by Congress and signed into law by President Herbert Hoover on March 3, 1931.

history of prevailing wagePrevailing wage laws have been the focus of public policy debate at the federal and state levels for decades. They are intended to protect workers and communities by ensuring that contractors compete on the ability to perform work competently and efficiently while maintaining community compensation standards.

Prevailing wage laws require that construction workers on public projects be paid the wages and benefits that are found to be “prevailing” for similar work in or near the locality in which the construction project is to be performed. The federal Davis-Bacon Act is enforced by the federal Department of Labor. It requires that private contractors pay construction workers the prevailing wage/benefit package on all contracts of more than $2,000 for construction, alteration, or repair of federal public buildings or public works. The federal law surveys contractors but contractors are not required to respond to the survey.

Oregon enacted its prevailing wage law in 1959 and then-governor Mark Hatfield signed it into law. It requires that prevailing wages be paid on projects that exceed $25,000 ($50,000 as of 1/1/006).  Under state law, the commissioner of the Bureau of Labor and Industries enforces the state law and sets prevailing wage rates twice a year based upon a survey contractors in Oregon are required to complete.

The state law has been challenged several times, but in the last attempt, in 1994, 62 percent of Oregon voters favored retaining the law including a majority in each of Oregon’s 32 counties. The state Legislature has made changes to Oregon’s law several times. In 1989, the Legislature clarified the law’s definition of public works revising the threshold test by adding the phrase “contracted for by”. The first prong of the test now is whether the construction work is .“carried on or contracted for by any public agency to serve the public interest.” In addition, the 1995 Oregon Legislature reaffirmed the goals of the prevailing wage law and instituted the state survey in lieu of relying upon the federal survey. In the just completed 2005 session, legislators passed SB 477, which among other changes, raised the threshold for projects qualifying under the law from $25,000 to $50,000.

Many still argue that the economic hardships of the depression era ushered in the federal Davis-Bacon Act, but others argue it was the desire of states and local government to protect itself against fly-by-night, low-wage construction firms winning bids on public contracts and adversely impacting local construction workers. In the early 1930s, federal and state governments were preparing to construct even more large public projects and they sought to protect themselves from falling contractors who performed “shoddy” work with “exploited,” “low-skilled” and an “imported” workforce.

Interestingly enough, those were not the words of labor advocates, but of the bill’s primary sponsors, Congressman Robert Bacon (R-NY) and Senator James Davis (R-PA), who viewed their bill not so much as a means to protect workers, but more as a way of providing some market stability in what was, and still is, an inherently unstable construction industry.

Bacon, a former banker, explained the need for the law when he detailed for his legislative colleagues how an out-of-state construction firm paying extremely low wages transported thousands of unskilled workers hundreds of miles to toil on a public project in New York:

“They were herded onto this job, they were housed in shacks, they were paid a very low wage, and … it seems to me that the federal government should not engage in construction work in any state and undermine the labor conditions and the labor wages paid in that state.”

Davis, the former Secretary of Labor under Presidents Harding, Coolidge and Hoover, went on to argue that “the least the Federal Government can do is comply with the local standards of wages and labor prevailing in the locality where the building construction is to take place.”

Some critics of prevailing wage laws have tried to place a “racist” label upon the original passage of the Davis-Bacon Act in 1931. While some may have had some intent to keep poor black construction workers from moving north to work, others saw it for what it still represents today – a way to assure that public money is not spent by hiring employers who pay low wages and disrupt the wage scale in other communities.

However, some critics still charge that the prevailing wage rate law continues to discriminate against minority and female contractors.  In response to a May 22, 1992 Wall Street Journal making such accusations, Rep. Edolphus Towns rose on U.S. House floor on June 24, 1992 in rebuttal:

“The truth is, minority and female workers have entered the construction industry in increasing numbers over the past fifteen years.  Because they are often the newest members of the industry, they are particularly vulnerable to wage-cutting practices the Davis-Bacon Act is designed to prohibit. Norman Hill, president of the A. Philip Randolph Institute, has characterized women and minority workers as `particularly vulnerable to exploitation such as the Davis-Bacon Act of 1931 is designed to prohibit.’”

Before passage of the Davis-Bacon Act in 1931, nine states and several cities had already passed a prevailing wage law.  Within four years of Davis-Bacon’s passage, sixteen more states added a state-level prevailing wage law (little Davis-Bacon acts).  At one time or another, forty-two states and the District of Columbia have had a prevailing wage law.  Thirty-two states currently have state prevailing wage laws on their books.

Since the U.S. Constitution prohibits the federal government from dictating contract terms for the states in construction, the Davis-Bacon Act does not cover construction work funded entirely by state and local governments. State prevailing wage laws set a minimum pay for construction workers on state and local projects, and the terms of the respective prevailing wage statutes among the states differ substantially.  The prevailing wage laws of some states are non-binding, while other states set wages for virtually all contracts at the collectively bargained wage rate.  In addition, different states treat jointly financed projects (e.g. state/federal, local/federal, private/public) differently. Some states defer to the federal statute while other states set the prevailing wage at the higher of the state or federal prevailing wage. Certain states also specifically include or exclude specific types of projects (e.g. road construction) and/or workers, and/or projects above or below a given threshold.

Kansas passed the first prevailing wage law in 1891.  New York was the second state to pass a prevailing wage law in 1894.  Similar laws in other states were passed in the first part of the twentieth century.  These laws provided the legal basis for the creation of the federal Davis-Bacon prevailing wage law at the federal level. By 1969, 41 states had prevailing wage statutes.

During the 1970s, many states began to suffer fiscal crisis.  On the belief that they might save tax dollars, many state and local governments began to consider repeal of prevailing wage laws.  Florida, which had enacted a prevailing wage law in 1933, was the first to repeal its law, in 1979. Eight states (Alabama, Arizona, Colorado, Idaho, Kansas, Louisiana, New Hampshire, and Utah) repealed their prevailing wage statutes in the 1980s.  The prevailing wage statute in Oklahoma was invalidated by a court decision in 1995.  At the present time, 32 states and the District of Columbia still have prevailing wage statutes, 10 states have repealed their prevailing wage statutes, and 8 states have never enacted a prevailing wage statute.

For more information on the Davis-Bacon Act, consult this article on Wikipedia.

—————————————————————————————————–

Author’s Note:

As of the date of this article:

  • 24 States follow the prevailing wage reporting requirements established by the U. S. Department of Labor and are required to file the Federal WH-347 Certified Payroll Report & WH-348 Statement of Compliance.
  • 14 States have their own prevailing wage laws and certified payroll reporting requirements and forms, which must be used when the construction project is fully funded with state dollars.
  • 12 States have multiple state agencies, each with their own prevailing wage reporting requirements and forms.
  • More states are adding electronic filing requirements, either of their own design or through the use of compliance systems by TRS Consultants, Elation Systems, or LCPtracker.

Update 2/15/2012:

  • 21 States now follow the prevailing wage reporting requirements established by the U.S. Department of Labor and are required to file the Federal WH-347 Certified Payroll Report AND WH-348 Statement of Compliance – OR – an acceptable substitute.
  • 14 States have their own prevailing wage laws and certified payroll reporting requirements and forms, which must be used when the construction project is fully funded with state dollars.
  • 15 states have prevailing wage laws that are monitored by multiple state agencies or require that the certified payroll reports be submitted electronically.  in this case a contractor must know which agency is providing the filing requirements so that the proper payroll report form can be generated or electronically uploaded.

Prevailing Wage Reporting Requirements

One Response to The History of Prevailing Wage

Leave a Reply

About Your Host:

Nancy Smyth, Certified QuickBooks ProAdvisor

Nancy Smyth, Sunburst Software Solutions, Inc.
QuickBooks Construction & Payroll Expert


I've been using and supporting QuickBooks products since the early 1990's. I've worked with thousands of contractors, assisting them with QuickBooks setup, Certified Payroll Reporting requirements, AIA Billing and Weighted-Average Overtime.


QuickBooks is a powerful product, but learning how to use it in your construction business can be difficult. I hope you find resources available here to be helpful.

Search our site
Stay updated!

Sign up to receive our latest QuickBooks Tips, Tricks & News via email:


Enter your email address:

Delivered by FeedBurner


We promise NOT to sell, rent, or otherwise distribute your name and email address!

FREE 30-Day Trials

Request FREE 30-day Trials of QuickBooks add-ons for Certified Payroll, AIA Billing & Payroll Wage Management. Save time and increase accuracy on time-consuming error prone tasks; so you get paid on time!

Free 30 day trials of QuickBooks integrated add-ons for certified payroll, aia billing and weighted-average overtime

Certified Payroll Training:
Learn how to complete a Certified Payroll (Prevailing Wage) Report and fulfill your reporting requirements - 2 hour recorded webinar - $99.99. Click here for more info.

certified payroll requirements webinar
QuickBooks Training

Frustrated with QuickBooks?

QuickBooks Premier ContractorLearn how to get the MAXIMUM possible results from QuickBooks in your construction business! Visit our new QuickBooks training website, Learn to use QuickBooks in your construction business.

QuickBooks Time Tracking

Save 10%/FREE 14-day trial!


QuickBooks Time Tracker