Concept
In United States government contracting, a prevailing wage is defined as the hourly wage, usual benefits and overtime, paid to the majority of workers, laborers, and mechanics within a particular area. This is usually the union wage. Prevailing wages are established by regulatory agencies for each trade and occupation employed in the performance of public work, as well as by State Departments of Labor or their equivalents. Prevailing wage may also include other payments such as apprenticeship and industry promotion. In the United States, the Davis–Bacon Act of 1931 and related amendments pertain to federally funded projects. There are also 32 states that have state prevailing wage laws, also known as "little Davis-Bacon Acts". The rules and regulations vary from state to state. As of 2016, the prevailing wage requirement, codified in the Davis-Bacon Act, increases the cost of federal construction projects by an average of $1.4 billion per year. "Prevailing wages" were first established shortly after the Civil War in 1866 when the National Labor Union called on Congress to mandate an eight-hour workday. In 1869, President Grant issued a proclamation establishing the 8-hour day for government workers. Although the Congress had not yet established its authority to regulate private economic matters because of prevailing legal doctrines, it could regulate its own contracts and the targeted public works as a means to indirectly influence other labor markets. In 1891 Kansas was the first state to pass a "prevailing wage" for its own public works projects, and over the next thirty years was followed by seven other states (New York 1894, Oklahoma 1909, Idaho 1911, Arizona 1912, New Jersey 1913, Massachusetts 1914, and Nebraska 1923) in establishing minimum labor standards for public works construction. In the midst of the Great Depression, beginning in 1931 and prior to the end of World War II, twenty additional states passed their own prevailing wage laws.