Biden Administration Pushes for Higher Construction-Worker Pay

Under the law, federal contractors must pay the same wage that local workers get for similar types of construction work. The Labor Department surveys contractors around the country and publishes more than 100,000 prevailing wage rates for every type of construction work across counties in the U.S.

It can take several years to complete a survey, according to a 2019 report by the department’s inspector general, by which time many of the wage calculations are outdated. In some cases, the wage rates haven’t been updated in 40 years, the report said.

“The goal of this entire proposal is to ensure that we are keeping up with local wages that are actually paid to construction workers across the country,” said Jessica Looman, the department’s acting wage and hour division administrator. The rule would require more frequent surveys, she said, in an attempt to avoid situations where federal projects can sometimes undercut local wages.

Construction worker pay has risen rapidly over the past year. In February, average hourly earnings in the industry were up 5.1% from the year before. Earnings were up 5.2% in January, the fastest wage growth since records began in 2007, according to the Labor Department.

The proposal would also make a technical change in how the agency calculates the prevailing wage. Right now, if surveys don’t find that at least 51% of workers make a similar wage, officials use a weighted average of all the survey responses. Under the proposal, the agency would only resort to a weighted average if at least 30% of workers don’t make a similar wage.

“We think it’s a more accurate reflection of prevailing wages paid in communities,” said Ms. Looman.

Industry groups say prevailing wage rules in the Davis-Bacon Act make it hard for contractors to compete on price when bidding on federal projects. That makes it almost impossible for smaller firms to work on federal jobs, said Ben Brubeck, vice president of regulatory affairs at the Associated Builders and Contractors.

The new rules, he said, would make it harder still. “This is going to result in increased costs for taxpayers and increased costs for infrastructure projects,” he said.

The new rules “will modernize and strengthen prevailing wage laws to protect thousands of workers on federal construction projects from rampant wage theft,” said AFL-CIO President

Liz Shuler

in a statement.

The proposal would also protect workers from retaliation if they report inadequate wages on construction projects. And they would offer more transparency around the prevailing wages so contractors know how much they would have to pay before bidding on federal construction projects.

The proposal is the latest initiative by the Labor Department on pay and other issues around work funded with federal dollars. The administration has already raised the minimum wage for federal contractors to $15 an hour. It has also mandated that larger projects use project labor agreements, in which contractors negotiate with unions or other worker groups around pay and work conditions before a project begins. And it recently indicated it would give preference to grant applications that promise to promote union organizing.

The changes come as the government gets ready to spend roughly $1 trillion over five years on new infrastructure projects under the bipartisan law signed by President Biden in November.

Davis-Bacon rules apply to roughly 1.2 million construction workers and cover about $187 billion a year in federal construction spending.

Write to David Harrison at [email protected]