Prevailing Wage Laws: Legislating Inequity

Oregon Economic Opportunity Project

Introduction and Summary

“Prevailing” wage legislation requires that a particular wage rate be paid to laborers working on government construction projects. The rate is determined through government surveys and is usually found to be substantially higher than the market rate. Many politicians and unions argue that paying the “prevailing” wage rate is beneficial and fair because it provides a just wage for hard-working families, results in quality construction and provides a responsible example for construction firms paying lower rates on private projects.

The federal “prevailing” wage law was adopted in 1931 as the Davis-Bacon Act and, though revised, still states the guidelines under which wages are determined for federal construction projects. If more than 50% of workers in a single classification work for the same wage rate, that rate is used. If 50% do not, a weighted average rate is calculated.1 After passage of the federal act, many states adopted their own versions, known as “little” Davis-Bacon Acts. Oregon’s “little” Davis-Bacon Act, the Oregon Prevailing Wage Act, was passed in 1959.

The effects of Davis-Bacon laws have been repeatedly analyzed at both the state and national levels and found to be harmful. They are costly to administer, increase the cost of public works projects, and violate the privacy of workers seeking to freely negotiate wage rates on their own. Whether oneevaluates the Davis-Bacon Act’s federal adoption history or debates its application to public/privateprojects here in Oregon, the detrimental effects of “prevailing” wage laws indicate that they should be repealed.

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About the author: Elizabeth Harrison is the recipient of The Woodard Family Fellowship at Cascade Policy Institute. She completed this paper as part of her 2006 summer research internship, made possible by a grant from The Woodard Family Foundation of Cottage Grove, Oregon. Ms. Harrison thanks Cascade Policy Institute and The Woodard Family Foundation for the opportunity to do this research and Cascade Academic Advisor Michael Barton, Ph.D., President John A. Charles, Jr. and Publications Director Kathryn Hickok for their review.

The views expressed herein are the author’s own.

About Cascade Policy Institute: Founded in 1991, Cascade Policy Institute is Oregon’s premier policy research center. Cascade’s mission is to explore and promote public policy alternatives that foster individual liberty, personal responsibility and economic opportunity. To that end, the Institute publishes policy studies, provides public speakers, organizes community forums and sponsors educational programs. Cascade Policy Institute is a tax-exempt educational organization as defined under IRS code 501(c)(3). Cascade neither solicits nor accepts government funding, and is supported by individual, foundation and business contributions. Nothing appearing in this document is to be construed as necessarily representing the views of Cascade or its donors, or as an attempt to aid or hinder the passage of any bill before any legislative body. The views expressed herein are the author’s own. Copyright 2005 by Cascade Policy Institute. All rights reserved.

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