WASHINGTON – In a nod to labor unions, President Joe Biden is moving to boost wages for construction workers on projects paid for with federal funding, a step that would appeal to a key constituency ahead of next year’s presidential election and potentially shrink the pay gap between northern and southern states.
The Biden administration said Tuesday it intends to restore a definition of the “prevailing wage” that was abandoned four decades ago by Ronald Reagan. The update would change how the prevailing wage is calculated and could put thousands of extra dollars every year in the pockets of construction crews working on federal projects.
“Many workers are paid much less than they deserve, much less than the value of their work – and not just by a little, in some cases thousands of dollars a year,” Vice President Kamala Harris, who announced the rule update, said Tuesday at an event at the Finishing Trades Institute in Philadelphia.
“That is wrong, obviously, and completely unacceptable,” Harris said.
The announcement of the rule change comes as the Biden administration is pouring billions of federal dollars into new clean energy investments through the Inflation Reduction Act, which passed Congress last year, and into roads, bridges and other public works projects through a separate infrastructure law.
Companies in red-leaning states, many with laws hostile to unions, have disproportionately received incentives for manufacturing projects in wind, solar, batteries, electric vehicles and other areas that support clean energy.
Organized labor has raised concerns that some of the green jobs created through the new law are going into parts of the country with nonunion workforces. Labor groups are in favor of updating the labor rule as a way to boost the pay for workers in those areas. The Laborers’ International Union of North America said the update would protect the wages of millions of construction workers.
Prevailing wages are the basic hourly rate of pay and benefits paid to workers in a particular area. Before Reagan changed the federal rule in the 1980s, employers were required to pay construction workers on federal projects the equivalent of wages paid to at least 30% of workers in a given trade in a specific geographical area. Reagan changed that rule so that the prevailing wage was determined by wages paid to 50% of workers.
Biden plans to restore the previous definition used under the Davis-Bacon Act, the 1931 federal law that requires the payment of prevailing wage rates to all laborers and mechanics on federal or federally assisted construction contracts. The Davis-Bacon Act and its related acts apply to more than $200 billion in federal and federally assisted projects every year.
Reverting to the previous definition means the prevailing wage on federal projects would more closely align with union scale wages. Senior administration officials who previewed the change on the condition of anonymity said the update would raise the minimum wage requirements that currently affect more than 1 million construction workers, most of whom do not have a college degree.
Analysts predicted that workers in south and southwestern states, such as Florida and Texas, would benefit most under the new rule. States in the south historically have paid lower wages and have fewer union protections.
Trade groups that oppose the change argue it will cost taxpayers more money because it would make federal projects more expensive.
“This is yet another Biden administration handout to organized labor on the backs of taxpayers, small businesses and the free market,” said Ben Brubeck, vice president of regulatory, labor and state affairs for Associated Builders and Contractors.
Brubeck said his group is considering challenging the rule change in court.
The rule update has been in the works for more than a year and will take effect 60 days after it is published in the Federal Register. A court challenge, however, could it tie up for years.
Michael Collins covers the White House. Follow him on Twitter @mcollinsNEWS.
Contributing: Joey Garrison of USA Today and Olivia Evans of The Courier Journal
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