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New rules for construction labor jobs may increase wages 

On Behalf of | Sep 20, 2023 | Wage And Hour Claims

Labor laws have recently been changing, as announced by Vice President Kamala Harris in Philadelphia in early August of 2023. The changes are an update to the Davis-Bacon Act of 1931. This act requires that the government has to pay “prevailing local wages” when hiring construction workers for public projects.

One important definition is that of a “prevailing wage” itself. The definition that will now be used is the same one that was utilized between 1935 and 1983. By shifting back to the older definition, reports claim that the hourly earnings for both subcontractors and contractors should go up. The government said in a statement that this could increase earnings by thousands of dollars annually, something that is important to workers as the cost of living continues to go up.

How many people will be impacted?

According to these reports, there are over one million construction workers who could see wage increases due to this change. They are working on federally supported projects that themselves are worth around $200 billion. Needless to say, this change will impact a significant portion of the workforce.

Why is this law being put into place?

This update to the law is to ensure that companies will pay fairly. After all, government projects are awarded to the lowest bidder. A company that was trying to bid for that project would thus have a financial incentive to underpay their workers. Doing so could keep the bid lower and increase the odds that they would win those lucrative government contracts. By stipulating that employers have to pay prevailing wages as the minimum rate, this ensures that companies won’t have that incentive to take advantage of their own workers.

Harris claims that this is already a problem, stating that workers are not being paid as much as they deserve, in line with the value that their work provides to the company. She also noted that increasing the wages earned by those who were in unions could, in turn, help everyone’s overall wages increase. 

New rules moving forward

This is a significant update that will have a major financial impact on the construction industry and government contractors. That’s why it’s so important for those involved to understand what the update means and the legal obligations it creates.