You have undoubtedly come upon the term prevailing wages if you have considered bidding on a federal government construction project. However, you may not realize how critical it is to fully understand what this means or how it can affect your bid and employment practices. Keep reading for a brief overview of the subject.
Prevailing Wages Explained
In its simplest definition, a prevailing wage is the lowest allowable wage for similar jobs within a geographic area. It is different from the minimum wage and what is commonly referred to as a living wage. Prevailing wage laws are directly connected to state- and federal-funded construction projects and are generally certified regularly.
The concept originated from the Davis-Bacon Act of 1931, which stated that any contractors, subcontractors, or laborers working on public buildings or other public works projects valued over $2,000 must be paid a prevailing wage.
When They Apply
The most common application of prevailing wage requirements is on federal public works or service projects, such as road construction. However, some states and municipalities have adopted similar policies into their employment practices.
How They Affect Employment Practices
Adopting prevailing wage requirements can affect employment practices in several ways. First, it eliminates some racial disparities in pay by setting a standard for wages paid for similar types of work. Additionally, it protects certain classes of workers from having to compete with low-ball offers on contracts that are only possible because of low wages. This is a tremendous benefit for union workers and companies that offer highly-competitive compensation packages for top-quality employees.
Ensure Compliance With Prevailing Wage Laws
There can be a learning curve when working on contracts that require compliance with Department of Labor wage rules. That's where Prevailing Wage Consulting can help. We specialize in assisting businesses to maintain compliance with the Davis Beacon Act. Contact us today to see how we can help streamline your project management processes.
