Since 1931, federal public works projects operate under a level-playing field with the Davis-Bacon Act that allows local contractors to be able to compete for work with low-wage, out-of-state contractors who are required to pay competitive prevailing wage rates. Many states also have their own “little” versions of the law, going back over a century and likewise apply the law on public bridges, schools, government buildings, etc. Contractors are then able to compete on other measures of efficiencies, rather than on the backs of labor.
The Davis-Bacon Act (named after two Republicans and signed by a Republican President) serves to keep money in the local community as opposed to rewarding out-of-town contractors with rock-bottom wages and benefits. Without it, local projects would be awarded to those who could always under-cut local contractors. Their workers (with negotiated pensions, health and welfare, and bona fide apprenticeship programs, etc.) spend money locally, pay taxes, buy homes and send their kids to the local schools, etc.
The genius of the prevailing wage is this has resulted in mostly broad local support for fair, middle-class jobs and explains the across-the-board appeal of rewarding responsible contractors for quality construction. The U.S. Department of Labor issues wage determinations, which are often tied to local union collective-bargaining rates, that is, when the local union’s rate is said to prevail in wage surveys. In addition, compliance requirements like weekly certified payroll records ensure greater transparency for the owner or the public agency. This makes sure the workforce is not being exploited at the expense of the taxpayer and fair contractors, allowing us to track compliance with the contract’s required payment of prevailing wages.