Prevailing Wage

Established by the Department of Labor & Industries, the prevailing wage is the hourly rate paid in the largest city in each county, and to the majority of workers, laborers, and mechanics. The prevailing wage generally includes, not only the hourly wage paid to the worker, but also all overtime pay and other benefits. Prevailing wages specifically apply to public workers and vary based on the local wage conditions in a given city or county.

Establishing the prevailing wage

To determine the prevailing wage a survey is done every three years. Contractors (carpenters, electricians, laborers) and unions provide data for the survey which includes information about the benefits and wages they are paid for each job classification.

The survey will include data about the majority and average wage in the largest county as well as the county average and the existing wage rate. The gathered information is then used to determine whether there should be a new prevailing wage rate. If the prevailing wage rates are changed, they are published on the first business day in August and in February and take effect 30 days after publication.

Benefits of the Prevailing Wage Rate

The notion of prevailing wages was established just after the Civil War in conjunction with other labor developments such as the eight hour work day. Congress maintained they did not have the right to regulate contracts, but they did allow that they could use public works as a mean to manipulate labor markets.

Proponents of the prevailing wage rate theory argue that it can be used to advance certain priorities such as gas reduction, workforce development, and green building. Others argue it unnecessarily increases the costs of certain public projects, limits competition, and is nothing more than a "product of a bygone era."

Who must use the prevailing wage rate?

Current prevailing wage rate laws pertain to "contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works."

Under the regulations established by the Davis-Bacon Act and Related Acts, if a contractor or subcontractor is working on certain federally funded contracts they must be paid the locally prevailing wage rates and fringe benefits. Workers may also be eligible for one and one-half times their regular rate of pay for all hours worked over 40 in a workweek.