Prevailing wages are the pay rates that are legally required to be paid for all public work projects. This means that all people doing similar jobs in a similar geographic area will be paid the same minimum rates for their work.
Nearly half of all states do not have any specific laws regarding prevailing wages. This demonstrates the split between the effectiveness of this demand from American businesses. Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Utah, West Virginia, and Wisconsin do not require companies to pay prevailing wages to their deemed federal contracts. Michigan was the most recent state to repeal these prevailing wage laws in 2018.
Some would say that this is the best approach as the market could regulate itself, and talent can decide whether to take on the work. Others say that prevailing wages are a form of insurance over predatory companies, which take advantage of the labor market disparity to underpay top talent grossly.
Illinois, Massachusetts, Nebraska, New York, Texas, and Oregon do not have a minimum threshold for project price that qualifies for a prevailing wage. Other states (California, Rhode Island, Hawaii, and New Jersey) have low thresholds of $2,000 or less.
Of course, California is often extremely specific in its laws as it is the state with the largest number of people. Generally, the prevailing wage threshold holds firm at $1,000 or greater, but it is noted that the threshold increase to $25,000 for construction work and $15,000 for repair or maintenance.
Some laws are enacted due to ongoing situations affecting the economy. For example, California's construction labor market would be unfair to subject to a low threshold, as wage ranges can vary greatly in this industry at an entry level. If prevailing wages were to take hold, general laborers hired for a simple job might need to be compensated at exorbitant rates, which would negatively affect the federal market for that industry. Furthermore, California enjoys some of the highest real estate inventory turnovers, further requiring the state to pass legislation around thresholds for home repairs and residential renovations.
The highest threshold for no specific industry in Washington D.C and Wyoming is $100,000. Because prevailing wages take into consideration greater factors than the minimum wage, the prevailing wage can change at any time if industries or averages have been either largely depressed or have received an influx of new and loyal businesses.
Connecticut has the highest mentioned prevailing wage threshold at $1,000,000 for its new construction landscape. This means developers are often required to pay their workforce an average wage rather than a minimum one if they are on a federal contract.
Generally speaking, states try to avoid the prevailing wage clause as it can be extremely difficult to ascertain that number. They must conduct extensive research before bringing in teams for a federal contract, with many companies attempting to circumvent it altogether. If someone finds those with the ability to work on their project of high caliber, they will most likely try to hire them through an independent business or as an employee to set their rate. Some states do not have available prevailing wage information, so the company could find itself in a legal position without necessarily knowing what it did wrong.
Prevailing Wage Threshold
|Colorado||$500,000||does not apply to DoT projects|
|Maryland||$250,000||state government or state funds 25%+ of project|
|Connecticut||$100,000||$1,000,000 (new) $100,000 (remodel)|
|District of Columbia||$100,000||Davis-Beacon rates apply if in excess of $2,000|
|Vermont||$100,000||at least 50% funded by capital construction act|
|Ohio||$75,000||$250,000 (new) $75,000 (remodel)|
|Tennessee||$50,000||only for highway construction|
|Delaware||$45,000||$500,000 (new) $45,000 (repair)|
|Minnesota||$2,500||$25,000 (2+ trades) $2,500 (1 trade)|