Prevailing wage is, in labor circles, is generally synonymous with the Davis-Bacon Act, which requires contractors and subcontractors working on federal or District of Columbia construction contracts; or, federally-assisted contracts in excess of $2,000 to pay the workers no less than the current level of the prevailing wage in the area in which the construction project is carried out.
The prevailing wage is most often equal to the union wage, which means unionized construction companies can decide the rate of any federal project. The federal government and many state governments use various voluntary surveys to determine the wage that “prevails” in the field of construction. However, unionized contractors and construction crews have an exceptionally high incentive to respond to those surveys. By contrast, nonunion contractors have a low motivation to respond. As a result, even though only a small share of construction workers are union members, most of the contractors responding to the surveys report paying union scale, and thus union scale is determined to be the prevailing wage.
This decision making power intrudes on the mechanisms of the free market and artificially drives up the cost of construction. In fact, the additional costs attributable to the prevailing wage have been estimated to be over $1 billion in extra federal construction costs and over $100 million in administrative burdens annually.
AWF opposes prevailing wage laws because they artificially drive up the cost of federally funded construction; moreover, they impede fundamental laws of free market economies. While complete repeal of Davis-Bacon is the ultimate goal, AWF advocates for reform of the prevailing wage survey calculations.