Davis-Bacon Act – Definition

Cite this article as:"Davis-Bacon Act – Definition," in The Business Professor, updated November 23, 2018, last accessed October 22, 2020, https://thebusinessprofessor.com/lesson/davis-bacon-act-explained/.


Davis-Bacon Act Definition

The Davis- Bacon Act mandates the minimum wages for the construction workers (including laborers and mechanics) employed under a contract of over $2,000 and involved in constructing, repairing, or alteration of any public building or work. The Act is applicable to those contracts where the United States or the District of Columbia is a party. Here, the repairing and alteration include painting and decoration.

A Little More on What is The Davis-Bacon Act

According to the Davis-Bacon Act, all the contractors and subcontractors engaged in such a contract must pay the various class of workers employed on the site of the work no less than the locally prevailing wage rates and fringe benefits for corresponding work on similar kind of projects. The Department of Labor determines the locally prevailing wage rates under the direction of the Davis-Bacon Act. The wage rates are registered for each country of every state. The wage rates of a particular project depending on its location and the type of construction. There are different rates for different types of construction such as building, residential, highway, and heavy construction projects. The most current revision of the rate at the time of bidding needs to be regarded. Although, if there is a revision withing 10 days before the bid opening and the agency feels there are no adequate time to notify the bidders, the revision can be ignored.

In Addition to the main Act, Congress has added prevailing wage provisions to approximately 60 statutes, known as the ‚Äúrelated Acts‚ÄĚ. Under these provisions, federal agencies assist construction projects through loans, grants, loan guarantees, and insurance. The additional statutes involve constructions in transportation, housing, air and water pollution reduction, and health.

Along with the Davis-Bacon Act, the contractors and subcontractors engaged in the contracts exceeding $100,000 must also follow the provision of the Contract Work Hours and Safety Standards Act (amended). It mandates the employers to pay the laborers and mechanics including watchmen a higher rate for working over 40 hours a workweek. For each hour over 40, they are to get at least one and one-half times of their regular rate of pay. The overtime provision of the Fair Labor Standards Act may also be applied to such projects.

The provisions of the Davis-Bacon Act are applied across the 50 States in the U.S and the District of Columbia. The scope of the related Acts is determined by the terms of the statute applicable to the project.

References for Davis-Bacon Act

Academic Research on Davis-Bacon Act

The effect of the¬†DavisBacon Act¬†on construction costs in rural areas, Fraundorf, M. N., Farrell, J. P., & Mason, R. (1984). The Review of Economics and Statistics, 142-146. In this paper, the effect of the Davis-Bacon Act on construction costs is estimated by an econometric model in which costs are a function of the project’s physical characteristics and its location, as well as the applicability of the Davis-Bacon prevailing wage standards. Interviews with contractors on 215 randomly-selected non-residential buildings in rural areas provided the data.

The¬†DavisBacon Act: An Appraisal of Recent Studies, Goldfarb, R. S., & Morrall III, J. F. (1981). ILR Review,¬†34(2), 191-206. This paper explores the intensified controversy in recent years over the Davis-Bacon Act, which requires the payment of prevailing wages on federally funded construction projects. The paper reviews the evidence presented in recent studies on several aspects of the act, including how Davis-Bacon wage determinations compare to local construction wages as measured by sources other than the act’s administrators. The authors conclude that although the cost studies to date have been faulty in several respects, it is reasonably clear that Davis-Bacon is unattractive on grounds of economic efficiency alone.

DavisBacon Act: Vestige of Jim Crow, The, Bernstein, D. (1993).¬†Nat’l Black LJ,¬†13, 276.

The economics of the DavisBacon act, Gujarati, D. N. (1967). The Journal of Business, 40(3), 303-316.

Understanding political pricing of labor services: The DavisBacon Act, Reynolds, M. O. (1982). Journal of Labor Research, 3(3), 295-309. Examples of divergence between the intended (stated) and actual consequences of government intervention in the marketplace abound. In this paper, two legislative attempts to specify wage rates on government contracts are analyzed.

An Argument for the Repeal of the DavisBacon Act, Tracey, C. (2001). J. Small & Emerging Bus. L., 5, 285.

Government procurement: Past and current developments, Thai, K. V., & Grimm, R. (2000). Journal of Public Budgeting, Accounting & Financial Management, 12(2), 231-247. Government procurement has been a neglected area of study in higher education and research. This symposium is one of the first efforts in examining government procurement. This article will provide a brief overview of government procurement developments and summarize major themes of manuscripts included in the symposium.

Wage Protection Under the DavisBacon Act, Elisburg, D. (1977). Labor Law Journal, 28(6), 323.

Cost Implications of Changing DavisBacon Administration, Goldfarb, R. S., & Morrall III, J. F. (1978). Policy Analysis, 439-453. The Davis-Bacon Act requires that employees in federally supported construction be paid at rates equal to or above levels specified by the U.S. Department of Labor. The authors evaluate the desirability of changing the way in which these levels are chosen, using newly available wage data to derive estimates of cost savings and to point out some unexpected wage patterns.

Government Contracts, Social Legislation and Prevailing Woes: Enforcing the Davis Bacon Act, Morowitz, L. (1989). In Pub. Interest, 9, 29.

Do davisbacon minimum wages raise product quality?, Metzger, M. R., & Goldfarb, R. S. (1983). Journal of Labor Research, 4(3), 265-272. The Davis-Bacon Act requires labor on most federally financed construction projects to be paid a minimum wage, often equal to the union wage. Since contractors are apt to employ higher quality labor at this higher wage, Davis-Bacon supporters argue that higher quality output will result. Contrary to this reasoning, the paper shows that a Davis-Bacon type rule need not improve output quality.

An Analysis of DavisBacon Prevailing Wage Requirements: Evidence from Highway Resurfacing Projects in Colorado, Duncan, K. (2011). Healy Center for Business and Economic Research, Hasan School of Business, Colorado State University-Pueblo. In this paper, the author compares winning bids on state and federal highway maintenance projects in Colorado between 2000 and 2011 to determine whether federal prevailing wage and disadvantaged business enterprise regulations are associated with increased construction costs. The effect of the Davis-Bacon Act is evaluated when average wage rates prevail for almost all workers involved in highway maintenance for most of the period of the study. Summary data indicate that federal projects are more expensive than state projects, but projects funded by the federal government are also larger and more complex.

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