He’s been a Capitol Hill construction industry representative for over three decades. But SMACNA’s Stan Kolbe never thought he’d see this day, let alone the masterfully written “beyond a home run” outcome of a long legislative battle.
On Aug. 23, the Department of Labor (DOL) issued a final rule to restore the New Deal Davis-Bacon Act prevailing wage law. In the 1980s, it was stripped of its original intent to set minimum labor standards for workers on federal construction job sites.
Now, with the updated, SMACNA-supported rule — a level-setting move that closes wage gaps between private and union contractors — members can more effectively compete for a pipeline of billions of federal dollars flooding into infrastructural and clean energy projects.
“Thousands of letters, thousands of meetings, visiting not only every state capital but city halls and, obviously, Congress,” Kolbe recounts a career-long effort as SMACNA’s executive director of government and political affairs. His involvement in Davis-Bacon reform began even before joining SMACNA in the mid-1980s while serving at the American Institute of Architects.
“It became a huge issue because of the changes, especially with prevailing wage, that made SMACNA members and other union contractors victims,” Kolbe says of the federal bid table.
When Davis-Bacon was put into play in 1931 under the Hoover Administration, its purpose was to prevent falling wages and unfair labor conditions on federally funded contracts in excess of $2,000. But over the years, it was amended and essentially hacked, depending on which side of the party line you ask.
“The history of the act and its regulations was to have a fair impact when the federal government built in an area as opposed to the idea that, ‘We are the biggest project you’ll ever have and we want to pay you half,’” Kolbe says, breaking down the longtime prevailing wage dispute.
The long-needed reforms updating and modernizing the Davis-Bacon Act benefit every contractor and worker. “It’s a contractor law,” Kolbe emphasizes. “It deals with a wide range of upgrades that are long overdue and that we have supported.”
Ultimately, the prevailing wage laws within Davis-Bacon will prevent low bidders from undercutting skilled labor contractors, a practice the act had not adequately enforced that was causing SMACNA members and other quality-driven contractors from competing for public works projects.
The final rule will also boost registered apprenticeship and skilled industry recruitment in an environment of labor shortages. “The prevailing wage is critical for the growth of the industry,” says Jason Watson, SMACNA’s executive director of labor relations.
If the final rule and Davis-Bacon’s history of edits seem convoluted, you’re not alone. The act is complex. The final rule is more than 700 pages long. Let’s break it down. Here’s what you really need to know.
Davis-Bacon, Before & After
There are a few predominant components of the Davis-Bacon final rule, which went into effect officially on Oct. 23 — 60 days after the DOL’s August adoption.
• A modern, fair update to the formula used to determine prevailing wages.
• Enforcement options to penalize employers for retaliation.
• Area boundaries for surveying to figure out the prevailing wage.
There is a heavy stack of additional upgrades, but let’s explain the primary changes before — or as the existing Davis-Bacon Act works — and after Oct. 23, when the final rule became effective.
Prevailing Wage Determination — The Price They Pay
Before: A two-step process involves identifying if there is a single wage rate paid to more than 50 percent of workers in a classification. If not, the wage is based on a weighted average of all wage rates paid in the classification. The problem with this system for SMACNA members and quality-driven contractors is wage surveys were performed, and if more than half of contractors in the area paid a lower amount than, say, union contractors, those signatory trades professionals would have to accept a lesser rate.
“Say we go into an area and surveys are done, and the union rate is $60 per hour, but the non-union rate is $30 per hour — but more non-union contractors turn out for the survey,” Watson explains. “Then, that lower rate becomes the prevailing wage.”
Basically, apprentice-registered and signatory contractors are at a disadvantage, having to either accept a much lower wage for workers if they want to pursue a high-dollar public works project—or lose the opportunity to an area competitor whose operating costs might be much less because of below-standard wages, benefits and training.
After: Now, there’s a three-step process for prevailing wage determination, and SMACNA members will benefit. The final rule reverts to the pre-1982 method, honoring the original pro-labor protection of fair wages and opportunity. If more than 50 percent of wage rates in a classification are the same, that is the prevailing wage. If not, the wage rate earned by the most workers — as long as at least 30 percent earn the rate — is the prevailing wage. If no wage rate is earned by at least 30 percent of workers, a weighted average will determine the rate.
What does this really mean?
“The restoration of the 30 percent rule for determining prevailing wage if there is no majority wage rate helps contractors be more competitive,” Watson says. “SMACNA believes that by returning to the 30 percent rule, more union contractors will be able to bid on federal contracts, and it will help correct the wage rates on federal work.”
Wage Transparency — Show Us the Numbers
Before: If a skilled worker discovered an employer was working the system, claiming to pay a given prevailing wage rate while undercutting the worker, there were no Davis-Bacon retaliation provisions to back the laborer.
“We have had cases where a worker finds out later that he was supposed to get $27 per hour; the employer billed the government for $27 per hour but paid the worker $15,” Kolbe says. “When some cases across the country had wire taps in major cities, they picked up, ‘The easiest way to make money is to cheat on Davis-Bacon.”
After: The final rule adds anti-retaliation provisions, including whole relief and remedial actions. If workers claim they have been cheated out of an appropriate wage, then he or she can now retaliate effectively for fairness. “Now, we want those wage rates posted,” Kolbe says.
No more cheating.
Covering More Area — Geographic Fairness
Before: Unions aren’t necessarily strong in rural areas, so in the existing act, data from metropolitan and rural data could not be combined to determine the prevailing wage rate. “It would be harder to prevail with the union wage,” Watson says.
After: The final rule adds alternatives for defining “area.” Specifically, if a project will span multiple counties, all of those counties’ data is combined into a single wage rate per classification. “With the new rule, there is broader authority provided to adopt state or local wage determinations when certain criteria are not met,” Watson says.
A Construction Law
At its heart, the Davis-Bacon Act is not union legislation, despite what critics of the labor law believe. It supports employers with registered apprenticeship tradespeople, upholds higher standards for workmanship by ensuring fair pay, and attracts quality-driven contractors to essential federal infrastructure projects.
“The issue we brought up to the government is if you want skilled workers to build federal projects and not do more lucrative, higher-paying private projects, you have to at least meet them with the average skilled labor wage, or they will not bid the work,” Kolbe says. “And if not, what kind of skillset are you getting on those federal projects? Or the projects will be delayed.”
As Kolbe says, it’s commonsense contractor law that benefits ethical employers of skilled labor.
Now, prevailing wage is “simpler and enforceable,” Kolbe says. “Those are two things we really like.”
SMACNA contractors and executives have been strong, outspoken advocates for Davis-Bacon reform. It will support contractors who pay prevailing wages and boost registered apprenticeship investments. It will support quality-driven contractors, union or not, who value trades craftsmanship and should not have to sacrifice the health of their businesses to compete for federal contracts. And it will elevate the outcomes of public works projects by attracting reputable contractors like SMACNA members to the bidding table.
“The DOL took most of our recommendations and common-sense suggestions,” Kolbe says. “We commented on the draft rule — and it is beyond a home run. It regulates contractors. They have to verify the apprenticeship training program credentials of the workforce. They have to prove they are meeting the restrictions and guidelines of the prevailing wage law. And contractors are selected on how Davis-Bacon is implemented. There are regulations that protect contractors related to surveying and change orders.”
Overall, the final rule is more responsive and relevant, promoting the growth of an in-demand skilled workforce to fulfill the upcoming years’ federal investments amounting in billions (and counting).
“This is a monumental shift and potentially a game-changer for SMACNA members, for those already doing federal work,” Watson says. “And for those who are not, it’s an opportunity to jump into the market.”