What is Davis Bacon?
The Davis-Bacon Act which was passed into Congress in 1931, ensures that all government jobs and federally funded projects offer their workers prevailing wage on every project or job. A prevailing wage, established, by the Department of Labor & Industries, is defined as the hourly wage, usual benefits and overtime, paid to the majority of workers, laborers, and mechanics within a particular area.
The Davis-Bacon Act which came through during the Great Depression allowed local workers to maintain their level of pay no matter what the construction job was bid at. Named after James J. Davis and Robert L. Long, the Davis-Bacon Act allowed more workers in local sectors to apply for contract jobs and receive the same payment as non-contract construction projects. This ensures that no matter what the contractor bid the job at, the lower costs would not be reflected in the workers wage.
While the Davis-Bacon Act does encourage the hiring of skilled local workers, advocates emphasize that they also work to train young people to become skilled tradesmen and tradeswomen. Despite anti-union criticism, union apprenticeship programs which were once closed to African Americans, today actively recruit and train minorities.
The Davis-Bacon Act was amended in 1964 to include fringe benefits in the calculation of prevailing wages and in 1994 modified again so that the construction, renovation or repair of buildings used by Head Start programs are also subject to the requirements of the Davis–Bacon Act.
Construction companies and contract jobs need the Davis-Bacon Act in place to allow for competative jobs and wages yet there are ways to still create a lower bid and make higher profits. Davis-Bacon Pension Plans allow contractors to still bid lower on certain projects while increases profitability. By contributing the Fringe Benefit Rate into the Davis-Bacon Pension Plan & Trust you save the amount you would have paid in payroll taxes (FICA, FUTA, SUTA, Medicare), Workers Compensation and General Liability Insurance premiums on those funds.
For companies that are seasonal or consistently work less than 2000 hours a year, Davis Bacon offers a SUB plan. When an employee is on a prevailing wage job, a deposit is made to the trust in accordance with the company wage policy and the applicable prevailing wage contract.
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