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What is the Davis-Bacon Act?

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The Davis-Bacon Act of 1931 defines minimum wages on federal construction projects of $2,000 or more as the current prevailing wage for classes of contractors set by the Secretary of Labor, according to the U.S. Department of Labor. Laborers for these contracts who work more than 40 hours per work week get paid 1.5 times the prevailing wage rate.

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The pay scale is determined by comparing skilled worker rates for civilian jobs in local areas. The law mandates that contractors and subcontractors pay laborers who work at the job site once per week. Contractors and subcontractors post the prevailing wages for the project in a prominent and easily accessible area of the job site, notes the U.S. Department of Labor.

The legislation was designed to protect certain skilled labor positions in highly unionized urban areas, according to the Cato Institute. The impetus for the Davis-Bacon Act was the Great Depression. Government construction contracts for roads, infrastructure, dams and buildings increased due to public works programs. These new programs at the beginning of the 1930s amounted to half of all money spent on construction in the entire United States.

Prevailing wage rates during the early part of the Great Depression were based on union rates. At the time, unions were largely composed of white, skilled laborers. The Cato Institute reveals that the Davis-Bacon Act had a detrimental effect on unskilled African American workers because they were left out of government contract labor when unemployment rates were already high.

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