Read this article. Prevailing wage laws require that certain government contracts can only be entered into if employees will paid a predetermined "prevailing wage" in the local area affected by the contract. What are the potential benefits and drawbacks to such a requirement? How should workers' rights to be fairly compensated be weighed against employers' wishes to manage costs?
Prevailing wage laws attempt to ensure that workers on government contract jobs are paid at a rate that is based on the prevailing rate in the location where the contract work will take place.
The federal government has a prevailing wage law, as do many states and localities. The federal prevailing wage law is known as the Davis-Bacon Act. It was adopted in 1931 during the height of the Great Depression in the United States. The Act mandates that employers in contracts exceeding $2000 must pay workers the prevailing wages and provide the prevailing benefits in the locality in which the work is performed. This determination is made by the United States Department of Labor. Employees who believe they are not receiving their rights under the Davis-Bacon Act may petition the Department. Contractors who have violated the Act may be barred from further contract work with the federal government and may have payments for work completed withheld.
In addition, many states and local governments have adopted prevailing wage laws. These laws mirror the federal law in important ways. However, application and enforcement of the laws can vary from place to place. In general, these laws have been adopted where labor movements have organized effectively.
Critics argue that prevailing wage laws raise the cost of government construction projects and eliminate competition that might reduce costs. However, prevailing wage laws help prevent abuse of workers and support competitive wages in local markets. These laws represent an attempt to support fair wages and give local contractors opportunities to participate in government contracts.
Source: Saylor Academy
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