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News for DE Government Contractors and DE Prevailing Wage Workers

The existence of a Delaware prevailing wage for blue-collar employees working on public works projects became a hot topic recently, when Republicans commented over the 2017 budget.

Prevailing wage is the set compensation of a laborer based on the wage of similar workers in the area. It accounts for skills, occupation, cost of living and related factors. The imposition of a prevailing wage was originally set to ensure fairness in government contracts and to protect prevailing wage workers.

Concerns over the DE Prevailing Wage

Many concerns relating to the continuation of prevailing wage in Delaware include how it affects the $354 million deficit in the budget, how removing prevailing wage could lower public construction costs significantly, and also how prevailing wage is anti-market.

However, these concerns are largely unfounded. For example, prevailing wage has nothing to do with the budget deficit, as public works projects are funded separately by the capital budget. The operating deficit in the state budget are due to other factors at play, such as the rising costs of special education and national health care prices.

In fact, DE prevailing wage has actually been proven to be good for the state. Yet these concerns and the debate surrounding DE prevailing wage can impact policy in the future. As an employer of prevailing wage workers, here are three reasons why prevailing wage is good for Delaware. 

Reasons Why Prevailing Wage is Good for Delaware

Reason #1: DE Prevailing Wage Keeps Projects Cost-Efficient

The numbers show that states that reduce public works wages actually don’t get to save any money. In fact, these states end up worse-off, with middle class wages going down and the economy taking a downturn.

Prevailing wage influences productivity, which should be accounted for when maximizing output and costs. This wage compensation assures quality in public works projects, keeping standards reputable and workers experienced. At the end of the day, the state’s bottom line is better off with prevailing wage.

Reason #2: Prevailing Wage Benefits and Protects the Workers

DE prevailing wage benefits both union and non-union workers, by giving them just compensation and indirectly improving the skills in the workforce. Prevailing wage also helps specific sectors, such as the veteran community that accounts for 12% of the construction workforce.

Lastly, it also ensures the protection of prevailing wage workers. Public works projects often involves dangerous occupations that necessitate just compensation. Even accounting for total compensation and benefits, prevailing wage workers receive an amount that is still aligned with what other middle class earners receive in similar occupations.

Reason #3: Prevailing Wage Keeps the Market Healthy

Imagine a world without prevailing wage for public works project workers. The costs and flow of money associated with public works in an unregulated system could destabilize the entire private construction industry. This is because public operations are simply bigger in volume and scope; private projects can’t compete with the state’s economies of scale.

Prevailing wage keeps the market healthy by addressing the scope of the public market. It also incentivizes competition. Firms have to compete not in terms of lowered costs due to reduced wages, but in terms of other standards such as safety, efficiency, productivity, reputation and cost-minimization.

Learn more about State Prevailing Wage Laws with ARCHER JORDAN

Prevailing wage law is one of the key regulations in government contracting that protects and benefits both employees and employers. As a government contractor, you need to provide prevailing wage and fringe benefits to your workers.

Our team at ARCHER JORDAN can help you comply with these regulations, giving you more time and energy to work on the public works project. Contact us today!