Department of Labor increases wage standard for federal contractors

Vice President Kamala Harris announced a new federal rule last Tuesday that will increase wages for at least one million construction workers.

The rule, which the Department of Labor will implement, will require that workers on projects that receive federal funding be paid based on the prevailing wage of an area, which cannot be less than the amount paid to 30% of workers in the area. The current standard, put in place by the Reagan administration in the 1980s, is 50% of workers.

“This average can pull down the prevailing wage if some employers pay very little,” the White House said of the current standard in a release. “Setting the prevailing wage to the wage paid to at least 30% of workers makes it more likely that workers are paid a true prevailing wage.”

The administration projected that construction workers will receive thousands of extra dollars per year under the rule.

The new rule applies to the 1931 Davis-Bacon Act, which sets the floor for what contractors on federal projects must pay to their workers.

“This update to the Davis-Bacon prevailing wage protections means our members are poised for a brighter, more secure future with fair wages,” the United Association, the union that represents plumbers and welders, said in a post on Facebook. The union described the rule as a “groundbreaking victory” for its members.

Unions have long supported the proposed revisions to the regulation and praised the administration in March 2022 when the changes were announced.

“The proposed updates to the regulations will restore the Act’s intended bipartisan purpose to protect the hard-earned wages of construction workers, and in doing so, shield them from exploitation,” Sean McGarvey, president of the labor organization North America’s Building Trades Unions, said in a March 2022 statement.

The trade group Associated Builders and Contractors has said it will file a legal challenge to the new rule. The group backed former President Donald Trump’s unsuccessful reelection campaign in 2020 and praised him for his opposition to pro-union legislation.

Research published by the Center for American Progress in 2020 shows that workers benefit from prevailing wage standards. According to a report published in 2018 on the website of the public construction organization National Alliance for Fair Contracting, the policies help construction workers earn middle-class salaries and receive expanded health insurance. A study conducted by the Illinois Economic Policy Institute in 2018 determined that the use of prevailing wages as a standard help to narrow the income gap between white and Black workers.

The rule is scheduled to be published in the Federal Register on Aug. 23. It will go into effect 60 days later, on Oct. 22. The Department of Labor will begin enforcing the rule for future contracts once it goes into effect.

Published with permission of The American Independent Foundation.