The twenty-percent majority: Pro-union bias in prevailing rate determinations

Abstract

Each individual wage rate set by Davis-Bacon or by any similar state or local prevailing wage determination petrifies the outcome of competing views of how construction work should be staffed and paid on public works projects. Although presented with great precision (to tenths of a cent for both wages and fringe benefits), the level of wages themselves are of surprisingly little consequence: Those set at union levels soon rise, being automatically updated to new contracts and conditions; the rest fast become obsolete in any rising market, because surveys to update them are rare. But in addition to setting wage levels, determinations also delineate which jobs get to have rates set for them, and perhaps most critically, whether those delineated are identified as union or notunion. Whatever pattern is found may remain in effect for years or even decades, influencing which journeymen and laborers own what job tasks and who may perform what. Also, if a particular job happens to be set as union, it may bring with it dozens or even hundreds of related special job categories, grades of sub-groups, fine distinctions of fringe benefits, and complex divisions of geographic applicability based on local union jurisdictional areas. This study uses determinations recently made in Pennsylvania as an example to examine the mechanics of the wage-setting process. I find that, in addition to the endemic problems one might expect associated with a complex and partly judgmental process, every step of finding and setting prevailing rates includes overwhelming deference on the part of government towards union views and methods. It shows why unions representing less than 20 percent of the private construction work force consistently set the parameters controlling most of public construction. It ends with some suggestions on how better surveys and determinations could be made.