How Does Prevailing Wages Affect Your Business?

Operating or managing your very own construction, landscaping, or any kind of company that tends to provide services for the government can cause a lot of headaches. The main reason behind this is the Davis Bacon Act which was passed and approved by Congress back during the years of the Great Depression. This act protects all workers involved in the project against low pay because of the competitive nature of public works.

As part of the Davis Bacon Act, all contractors who accept projects worth $2,000 or more that are federally-funded must pay all employed laborers the prevailing wage plus their fringe benefits, the amount of which is based on local requirements.

What Is This So-Called Prevailing Wage?

In essence, the prevailing wage is the agreed upon hourly rate, benefits, and any overtime paid to the local workers and labors within a certain area. Each state has its own rate which ensures that local contractors do not get outbid by companies from a different state or country.

The purpose of the prevailing wage is to prevent big companies from taking advantage of local laborers and they get paid a fair amount for their work.

How Does This Affect Your Business?

Those who are new to the construction business tend to forget that the list of requirements needed for a federal project is more extensive when compared to a private project. Forgetting to use the Davis Bacon compliance software to compute the cost of a project can result in losing a lot of money.

Not only is your business at risk of losing money because your accounting department forgot to factor in the prevailing wages, but you can also get in trouble with the government for failing to comply.

Accurate Computations

Failure to compute for the local privilege wage can result in underbidding for a federal project. Since a contractor must pay the agreed upon amount for labor, it is most likely that your business will pay workers out of pocket resulting in lost income.

There are also instances where the project can last for years and the current wage loss are most likely to change as the project moves forward. Failing to compute for inflation and other expenses the project will incur over the years will also lead to possible bankruptcy or the company’s inability to complete the work. All these instances and miscalculations will have a drastic and negative effect on your company, and may even lead to bankruptcy in the near future. This is a risk no business should take.

The Davis Bacon Compliance Software

All of the headache and potential loss of money can be avoided by using the software specifically meant to ensure your company complies with the Davis Bacon Act. This software uses updated sources to compute the local living wages in the area where the project is located.

Important information such as local wage laws and ordinances, any areas of non-compliance, and the updated predicted rates throughout the project are highlighted for easy review. There are very little chances of missing out on the key privilege wage details when your company uses the software.


David Rosenberg: A seasoned political journalist, David's blog posts provide insightful commentary on national politics and policy. His extensive knowledge and unbiased reporting make him a valuable contributor to any news outlet.