Background: The Davis-Bacon Act, at both the federal and state levels, is designed to outlaw wage exploitation in public construction contracts by preventing the undercutting of local standards.
Because public works contracts go to the lowest bidder, lawmakers decided it was in the best interests of the government and the general public to make sure that tax dollars are not spent on fly-by-night contractors that pay substandard wages to obtain contracts. "Prevailing wage" standards were established, which are set by scientific surveys of actual wages paid in local communities, and anyone awarded a government contract must pay at least those prevailing wages.
Critics say prevailing-wage standards are outdated laws that force the government to pay more than is necessary. But those who would throw out or weaken prevailing wage laws have failed to succeed at both the federal and state levels.
With the increasing frequency of Public Private Partnerships (PPP), which are public-works projects funded and/or operated through a partnership of government and private-sector companies, organized labor supports requiring that prevailing wage standards be extended to apply to all PPPs. Under current state law, prevailing wages must be paid only on state-contracted work for a building or facility in which a public agency will rent, lease or purchase at least 50% of the project. But there are many types of PPPs that don’t meet that threshold.
Labor’s Position: The Minnesota AFL-CIO is very concerned that our state’s prevailing wage law not only be preserved, but strengthened, to protect workers, communities and government. That’s why we support applying prevailing wage standards to all PPPs. When our tax dollars are spent on public construction – whether independently or with participation from the private sector -- family-wage jobs should be created or maintained and superior work should be expected.
"Low-balling" contractors that pay substandard wages are more likely to have less experienced or poorly trained workers -- and often, to have brought them into Minnesota from out-of-state. We should not reward them with public contracts.
There is no evidence that prevailing wage laws result in higher costs for the government. In fact, 2008 research by the Economic Policy Institute reviewing dozens of studies of prevailing wage laws, refutes claims that prevailing wage laws raise the cost of government public works projects. That research concludes that prevailing wage laws also help to reduce occupational injuries and fatalities, increase the pool of skilled construction workers, and actually enhance state revenues.
The Minnesota AFL-CIO will aggressively oppose attempts to weaken our state’s prevailing wage law or to exempt certain public projects from prevailing wage standards. When contractors compete on the basis of skill and productivity, we all benefit. When they compete to have the lowest wages or labor standards, we all lose.