Prevailing wage is the minimum pay rate, base wage plus fringe benefits, required for each trade classification on covered public works. On federal projects, rates come from Davis-Bacon wage determinations published by the U.S. Department of Labor for each county and construction type (building, residential, heavy, highway). Many states have their own prevailing wage laws, often called “little Davis-Bacon” acts, with their own thresholds and rates.
Why it matters
Prevailing wage changes your labor cost, your estimate and your compliance workload. Bidding a public job with private-work wage rates is a fast way to lose money. The applicable wage determination is generally the one in the bid documents or in effect at contract award, and it has to be posted on site. Underpaying, even by accident, can lead to back wages, withheld contract payments and debarment.
Worked example
Illustrative: a county wage determination lists Laborer Group 1 at $31.20 base and $18.40 fringe, a total of $49.60 an hour. If your normal rate is $26 plus $9 in benefits, that’s $35, so each laborer hour costs $14.60 more on this job before burden. On 6,000 laborer hours, that’s $87,600 that has to be in the estimate.
Common mistakes
- Using the wrong wage determination (wrong county or construction type).
- Forgetting that overtime is calculated on the base rate, not on base plus fringe.
- Not flowing prevailing wage requirements down to subcontractors.
How os.construction handles it
We’re planning prevailing wage support, including rates by classification feeding job cost and certified payroll, with founding contractors that do public work. It’s not built yet.