People of Color Benefit from Prevailing Wage Laws

Economic data show that prevailing wage laws shrink racial income gaps in construction.

Prevailing wage laws reduce pay discrimination in construction. In particular, people of color who work in the construction trades benefit when states have prevailing wage laws– contrary to strange claims made by critics of prevailing wage in their push to repeal these laws.

Prevailing wage is essentially a minimum wage for construction workers on publicly-funded projects. The law ensures that workers employed on infrastructure projects funded by taxpayer dollars are compensated according to local market rates. Most states have prevailing wage laws and the United States has a national prevailing wage policy, called the Davis-Bacon Act.

Opponents of the federal Davis-Bacon Act and state prevailing wage laws sometimes allege that the laws are rooted in racism. Opponents say that the Davis-Bacon Act, which was passed in 1931, was enacted to keep African Americans from competing for jobs in the construction industry. This claim on intent is often made without empirical evidence on the actual effect that prevailing wage laws have on minority groups.

However, peer-reviewed research has found no relationship between prevailing wage laws and the racial composition of the construction labor force. This is because prevailing wage standards apply to all construction workers regardless of background. As long as they can do the work, all workers with the same level of skill proficiency performing the same job duties with the same equipment must be paid the same prevailing wage and benefits package– no matter their race or any other demographic characteristic unique to the individual.

The Congressional Black Caucus even addressed the federal Davis-Bacon Act, stating:

Davis-Bacon has been instrumental in bridging the wage gap for historically disadvantaged sectors of our society. In the face of decaying social and economic opportunities, this measure provides women and minorities with an important tool to achieving greater parity with their mainstream counterparts.

A recent study by the Illinois Economic Policy Institute and the University of Illinois at Urbana-Champaign finds that African Americans working in construction in states with prevailing wage laws are more likely to earn an annual income classified as “middle class.” On average, African Americans experience a 24% increase in annual incomes due to prevailing wage.

Read the Study, State Prevailing Wage Laws Reduce Racial Income Gaps in Construction: Impacts by Trade, 2013-2015, Here.

State prevailing wage laws reduce racial income gaps in construction, particularly between African American workers and white (non-Latino) workers. While prevailing wage boosts African American worker incomes by 24%, the effect on their white counterparts is just 17%– helping to reduce racial income inequality. In fact, if states without prevailing wage enacted these laws, the income gap between white construction workers and African American construction workers would close by at least 7%!

AA prevailing wage effect

Prevailing wage stabilizes minimum wage and benefit standards on public construction projects– regardless of racial background. Ultimately, prevailing wage is good for America’s middle class.

Read the full report here.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s