A big part of the problem with prevailing wage laws is that prevailing wages don’t prevail.
The federal government and many state governments use a voluntary survey to determine the wage that prevails in construction. Union contractors have an extremely high level of motivation to respond to those surveys. Nonunion contractors, by contrast, have a low, and sometimes even negative, 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.
The problem has been highlighted in this summer’s U.S. Senate debate on immigration reform. The Senate reform bill requires that newly documented immigrant construction labor be paid Davis-Bacon wage rates.
But the federal government already has a system, administered through the Department of Labor’s Employment and Training Administration (ETA), for determining prevailing wages for immigrant workers.
The differences between Davis-Bacon Act (DBA) wages and the ETA’s determinations are significant.
For example, the DBA rate for a carpenter in Portland, Oregon is $28.41 plus $11.16 in fringe benefits. The ETA determines prevailing wages for the same job at four skill levels ranging from $11.80 to $24.06 plus benefits.
Similarly, the DBA rate for a plumber in Springfield, Massachusetts is $32.54 plus $16.73 in benefits, while the ETA rates range from $15.41 to $24.81. The DBA rate for a cement mason in Des Moines, Iowa is $28.50 plus $12.28 in fringe benefits, while the ETA rate is between $10.03 and $17.97.
— David Denholm
