March 27, 2003
DETERMINING THE PREVAILING WAGE FOR PUBLIC PROJECTS
By: John Moran, Associate Analyst
You asked how state and federal agencies determine the prevailing wage to be used in public construction projects.
State law allows the state Department of Labor (DOL) either to use U.S. Department of Labor's prevailing wage rates for Connecticut or hold its own hearings in order to gather data to calculate prevailing wage rates. CT DOL uses the federally calculated prevailing wage for the various areas of the state.
The federal Davis-Bacon Act requires the U.S. DOL to gather wage rate information to determine the prevailing wage for every area in the country. The information is gathered through voluntary surveys completed by unions, contractors, and government agencies. The prevailing rate is (1) the wage paid to a majority (at least 50%) of the laborers or mechanics in a particular job classification in a geographic area or (2) if the same wage is not paid to a majority of workers in a classification, then the average of the wages paid in that classification.
STATE LAW AND PREVAILING WAGE
The state's prevailing wage law requires the state and towns to pay workers on large public works construction projects the same wage as is “customarily” paid for the same work in the town where the work is being performed. It applies to all new construction projects costing $400,000 or more and alteration and repair jobs costing $100,000 or more (CGS § 31-53 et seq.).
The state DOL may set the prevailing wage rates for a project either by holding a hearing to gather wage information or by adopting the Davis-Bacon prevailing wage determinations of the U.S. DOL. The state has always used the federally calculated rates for a few reasons, according to John McCarthy, state DOL legislative liaison:
● It saves money because the state avoids holding its own hearings and doing the calculations itself.
● The state is bound to use the federal prevailing wage in any project getting federal assistance such as federal highway dollars or housing and urban development assistance, so using the federal prevailing wage allows all projects in the state to use one set of prevailing wage rates.
The federal Davis-Bacon Act and related acts require the U.S. DOL to continuously gather wage rate information in order to calculate the prevailing wage for every area in the country. The federal government conducts voluntary surveys of contractors, construction trade unions, and others in the field to gather the information. Following federal regulatory definitions, the U.S. DOL's Wage and Hour Division then determines prevailing wage as the wage paid to the majority (more than 50%) of the laborers or mechanics in the area in question. If the same wage is not paid to a majority of those working in the same classification, then the prevailing wage is the weighted average of the wages paid in that classification (29 Part 1 CFR 1.2). If the surveys show that the union wage rate is the rate for more than half of the employees of a particular classification, the union rate becomes the prevailing rate.
The federal government calculates prevailing wage for the following types of construction work:
1. residential (includes apartment buildings of fewer than four stories),
2. commercial buildings (includes apartment buildings more than four stories),
3. heavy construction (includes sewer systems and other infrastructure), and
4. highway construction.
The wage rates are calculated by county or metropolitan statistical area (MSA). Counties are divided between rural and urban counties, and a rural and urban county may not be put in the same MSA. In Connecticut, Litchfield and Windham are rural counties, and Fairfield, New Haven, Hartford, Tolland, Middlesex, and New London are all urban counties (as determined by the U.S. Bureau of Labor Statistics). In general, wages are higher in urban than in rural counties.
NEW CONNECTICUT WAGE RATE SURVEY
The U.S. DOL recently adopted a new policy to do entire state surveys that cover all four types of construction rather than just for a single MSA or county or for one or two types of construction. While this policy will allow it to issue new rates for an entire state all at once, it also lengthens the timeline for completion due to the greater amount of data gathered.
Currently, the U.S. DOL is following this policy in preparing a new set of Connecticut prevailing wage rates. Maria Duffy, a senior wage analyst at the northeast regional DOL office in Philadelphia, estimates the new Connecticut wage rate will be published no earlier than the end of the year. In the meantime, the current prevailing wage rate remains in effect. Under the new policy DOL hopes to survey every state every three years, although Duffy thought that might be difficult to achieve considering workload and staffing of the Wage and Hour Division. In the past, a set of prevailing wages could remain in effect for from two to 10 years.
This new Connecticut survey includes:
1. projects actively underway in the state from April 1, 2001 to March 31, 2002,
2. data collection (surveys mailed out and responses collected) from July 1 to September 27, 2002,
3. over 4,200 survey responses from a universe of 4,500 known active projects and more than 2,000 contractors contacted (a single contractor may provide a response for each project he is involved with).
Duffy said she and other U.S. DOL representatives met with contractor associations, building trade unions, the Connecticut Homebuilders Association, the state DOL, and state Department of Transportation for help with the survey and to develop a contact database. The state provided considerable payroll information for various state-funded projects, she said. The survey participation rate has not yet been determined.
Both state and federal DOL officials say that one of the biggest hurdles for the data collection is that a significant portion of the contractors in Connecticut, and elsewhere, refuse to participate in the surveys. They say these contractors either do not want to divulge their employees' hourly wage and benefits to the federal government or they simply do not want to be bothered with a federal form that they are not required to fill out and submit. Duffy noted that all information gathered regarding any contractor or union is kept completely confidential, but this reassurance apparently is not enough to encourage some contractors to participate.