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Excerpted from: David E. Bernstein, Prevailing Wage Legislation and The Continuing Significance of Race, 44 Journal of Legislation 154 (2017) (106 Footnotes) (Full Document)

DavidEBernsteinResearch on how twentieth-century government regulation of economic activity contributed to the oppression of African Americans has traditionally focused on Jim Crow legislation in the American South. More recently, scholars have documented the ways that other types of government regulation, ranging from federal and state labor laws to federal housing and mortgage policies, have harmed African Americans. The contribution of federal, state, and local regulation to racial inequality received significant mainstream attention thanks to the publication of Ta-Nehisi Coates' much discussed-essay, The Case for Reparations. It is, therefore, a propitious time to examine the largely unknown discriminatory origins and effects of prevailing wage legislation.

Since the early twentieth century, labor unions have lobbied federal and state governments to enact and enforce laws requiring government contractors to pay “prevailing wages” to employees on public works projects. These laws, currently active at the federal level and in approximately thirty states, typically in practice require that contractors pay according to the local union wage scale. The laws also require employers to adhere to union work rules. The combination of these rules makes it extremely difficult for nonunion contractors to compete for public works contracts.

Meanwhile, construction unions have been among the most persistently exclusionary institutions in American society. Not surprisingly, in many cases the history of prevailing wage legislation has been intertwined with the history of racial discrimination. Economists and others argue that prevailing wage legislation continues to have discriminatory effects on minorities today. Union advocates, not surprisingly, deny that prevailing wage laws have discriminatory effects. More surprisingly, they deny that the granddaddy of modern prevailing wage legislation, the federal Davis-Bacon Act of 1931, had discriminatory intent.

Part I of this Article discusses the discriminatory history of the most significant of all prevailing wage laws, the Davis-Bacon Act. As discussed below, Davis-Bacon was passed with the explicit intent of excluding African American workers from federal construction projects, and its discriminatory effects continued for decades.

Part II of this Article discusses the controversy over whether prevailing wage legislation continues to have discriminatory effects. The section begins with a discussion of the empirical literature on the effects of prevailing wage discrimination on minority employment. The section next presents evidence that construction unions continue to discriminate against members of minority groups, albeit much more subtly than in the past. The section concludes by recounting allegations that prevailing wage legislation serves to exclude minority contractors from obtaining government contracts.

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Historically, prevailing wage legislation has been a disaster for minority construction workers. Such laws bias the labor market in favor of labor unions, and construction labor unions have been among the most vociferously exclusionary entities in the United States. Persistent discrimination lawsuits, combined with anecdotal reports of discrimination, suggest that significant discrimination continues to exist in construction unions. Given that prevailing wage laws tend to operate to exclude nonunion labor in favor of union labor, this works to the detriment of minority workers who are subject to union discrimination.

Regardless of intentional discrimination, prevailing wage laws give an advantage to union contractors and labor unions, while people of color are much better represented in the nonunion sector of the industry. The seniority system favors older white male workers who received their jobs when discrimination was still rampant over younger, more ethnically diverse construction workers.

The economic literature on the effects of prevailing wage laws is divided between those who conclude that prevailing wage laws exclude minority workers and those who believe that such exclusion is unproven. There do not appear to be any articles addressing in any detail the effect of prevailing wage laws on minority-owned contracting companies, but given that they are overwhelmingly nonunion, such laws almost certainly serve to disproportionately exclude such companies. If so, this would contribute to the discriminatory effects of prevailing wage laws on minority workers. 

University Professor, Antonin Scalia Law School, George Mason University.