Davis-Bacon Act

The Davis-Bacon Act, signed by President Herbert Hoover in 1931, requires contractors working for the federal government to pay the “prevailing” local wage. Expanded to include projects receiving federal funding or loan guarantees, the act effectively requires contractors to pay UNION scale wages. Rather than hire workers independently and pay union rates, most contractors rely on local unions to provide labor for federally supported construction projects. The act was later expanded to provide EMPLOYEE BENEFITS and require contractors or subcontractors to make necessary payments for these benefits. In right-to-work states, the act often accounts for the vast majority of union membership. Originally the Davis-Bacon Act was intended to prevent itinerant labor from undercutting wages during the GREAT DEPRESSION. Supporters of the act argue it helps ensure stability in construction-market wages and provides skilled labor for federal projects. Opponents argue the act increases the cost of federal construction projects, costing taxpayers billions annually.