Why prevailing wages?

Prevailing wage laws were developed to prevent the government from reducing local area construction wages. Historically, the unintended consequence of unregulated competitive bidding was the emergence of unscrupulous construction companies that would underbid work and then bring in low wage itinerate workers to complete the job. The net effect was the suppression of local area wages, and, as skilled workers left the industry for better paying jobs, the general decrease in productivity and craftsmanship in construction.

Since 1913, New Jersey law has required contractors to pay workers on public building projects no less than the compensation that prevails on similar projects in their geographic area (The New Jersey Department of Labor determines that rate). The law applies to state government, all levels of local government, and every instrumentality or agency of the state or any of its political subdivisions.

On a national level, prevailing wage legislation—the Davis-Bacon Act—mirrored state prevailing wage laws for federal work. Together, the Davis-Bacon Act and state Prevailing Wage Laws have been a bulwark of the construction industry and a great economic resource. They have resulted in decent wages, benefits including health care and pension, and a better standard of living for construction workers and local communities. They also benefit taxpayers by encouraging higher standards of safety, professionalism and productivity on the job-site, and helped reduce government welfare expenditures. When prevailing wage laws are properly enforced employers and their employees are taxed on the full wages they pay and receive, creating additional tax revenues.

While some claim that paying the prevailing wage leads to higher construction costs, almost all credible research concludes that there are no discernable differences in cost in construction between a prevailing wage project and one paying lower wages. Social benefits do exist with prevailing wage laws. Communities benefit from workers receiving fair wages, and access to health and retirement benefits, which reduces the need for public assistance. Moreover, prevailing wage laws help the construction industry recruit and retain productive workers, which helps construction projects succeed