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Do Prevailing Wage Laws Help or Hurt Public Construction? Part 1

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The government defines prevailing wages as the hourly wage, standard benefits, and overtime paid to the majority of workers within a defined area. Regulatory agencies established prevailing wages for different sectors of the United State’s various industries to improve the efficiency and productivity of workers.

While the foundation of prevailing wages can be traced all the way back to its roots in the post-Civil War era, their implications in the present are still noteworthy, especially when considering the effect of prevailing wages on public construction. In part one and two of this two-part article, the Nashville construction lawyers at Cotney Construction Law will dispel some of the uncertainties surrounding prevailing wage laws so you can decide if government-sanctioned public contracts are right for your firm.

The Origin of Prevailing Wage Laws

After the North’s victory in the Civil War, the U.S. Congress passed the National Eight-Hour Day law, effectively establishing the standard workday as we know it. Instituting an eight-hour day that didn’t reduce the current daily wage rate created an incentive for public workers to increase their efficiency and productivity in lieu of working additional hours to complete projects by their deadline. For construction workers, who were paid on a daily basis, this changed everything. As a result, a new wave of construction innovations were developed to enhance the overall structural quality of projects while simultaneously expediting the building process.

Misconceptions About Prevailing Wages

Prevailing wage laws can be confusing since these laws vary from state to state. It’s important to familiarize yourself with the laws specific to your area so you aren’t caught off guard by any discrepancies in wage information on your government contract. Some of the common misconceptions regarding prevailing wages include:

Misconception #1: Prevailing wages are an average of all wage rates paid.

Answer: Prevailing wages vary by state. In some areas, the prevailing wage is calculated as the union package or the weighted average of the top 50 percent of wages reported in a survey of contractors.

Misconception #2: Prevailing wage laws help protect smaller firms.

Answer: Prevailing wages often prove advantageous for national contractors, but detrimental to local employers. When the mandated wage exceeds the community’s market value, larger entities can put forth bids that almost always disqualify local firms. In addition, the paperwork required for prevailing wages can demoralize local firms from placing a bid on government projects.

Misconception #3: Repealing these laws will lead to the undoing of years of advancements in workplace health and safety.

Answer: Construction projects in the private sector aren’t responsible for prevailing wage regulations. The inherent need for quality construction that lasts for decades or longer drives workplace safety whether or not prevailing wages are part of a project.

If you would like to speak with a Nashville construction attorney, please contact us today.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.