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OLR Research Report


December 23, 2010

 

2010-R-0526

PREVAILING WAGE CONTRACT THRESHOLDS IN OTHER STATES

By: Lee R. Hansen, Legislative Analyst II

You asked about the threshold amounts that trigger prevailing wage contract laws in other states, how states have changed their thresholds since 2006, and which states do not have prevailing wage laws. You also asked for details on any New England states that do not have prevailing wage laws. This report updates OLR Report 2006-R-0391.

SUMMARY

Thirty-two states have prevailing wage laws that require contractors on state funded construction projects to pay their workers at least the same wages customarily paid for similar private sector work. These states use various thresholds to determine when their laws apply and since 2006, four states have increased the contract value threshold at which prevailing wages must be paid.

Eighteen states currently have no prevailing wage laws for state funded projects, although a federal law, the Davis-Bacon Act, applies to federally funded projects in all states. Eight of the states without state prevailing wage laws never enacted such a law. Nine others repealed their laws between 1979 and 1988, and a court invalidated the law in a 10th state in 1995. Except for New Hampshire, all of the non-prevailing wage states are located in the country's South or Midwest regions.

PREVAILING WAGE CONTRACT THRESHOLDS

Thirty-two states, including Connecticut, have prevailing wage laws for state funded construction projects. Generally, these laws apply when the project's contract value meets or exceeds a pre-determined threshold amount. Projects valued below that amount are not required to pay the prevailing wage. Connecticut's threshold has been $400,000 for new construction and $100,000 for remodeling projects since 1991. For further details regarding the prevailing wage rates paid to Connecticut workers, please see OLR Report 2010-R-0432.

States use a variety of thresholds to determine when prevailing wages must be paid. Among them, only Maryland has a higher threshold than Connecticut for new construction projects. Four states (Indiana, Kentucky, Maryland, and Vermont) have higher thresholds for remodeling projects, although these states use the same threshold for both new construction and remodeling projects. Nine states (Illinois, Massachusetts, Michigan, Missouri, Nebraska, New York, Texas, Washington, and West Virginia) have no threshold and generally apply prevailing wage laws to all of their public projects. Most of the prevailing wage states set one threshold amount for all of their public projects. Table 1 shows the threshold amounts in all 32 prevailing wage states as of January 1, 2010.

Table 1: Dollar Threshold Amount for Contract Coverage under State Prevailing Wage Laws

State

Threshold Amount

State

Threshold Amount

Alaska

$2,000

Nebraska

None

Arkansas

$75,000

Nevada

$100,000

California

$1,000

New Jersey

$2,000

$14,187 if the work is done for municipality

Connecticut

$400,000 for new construction

$100,000 for remodeling

New Mexico

$60,000

Delaware

$100,000 for new construction

$15,000 for remodeling

New York

None

Hawaii

$ 2,000

Ohio 1

$78,258 for new construction

$23,447 for remodeling

Illinois

None

Oregon

$25,000

Indiana

$150,000

Pennsylvania

$25,000

Kentucky

$250,000

Rhode Island

$1,000

Maine

$50,000

Tennessee

$50,000

Maryland

$500,000

Texas

None

Massachusetts

None

Vermont

$250,000

Michigan

None

Washington 2

None

Minnesota

$25,000 where more than one trade is involved

$2,500 where a single trade is involved

West Virginia 3

None

Missouri

None

Wisconsin 4

$25,000

Montana

$25,000

Wyoming

$25,000

Source: U.S. Department of Labor (as of January 1, 2010)

Notes:

1 Ohio adjusts threshold amounts every two years, according to the change in the US Dept. of Commerce, Bureau of the Census Implicit Price Deflator for Construction, but no increase or decrease may exceed 6% for the two-year period.

2 Washington — A separate law for State college or university construction sets a $25,000 threshold.

3 West Virginia — A $50,000 threshold applies for West Virginia Infrastructure and Jobs Development Council projects.

4 Wisconsin – Prevailing wage rates also apply to private enterprise dominated projects if local governments are responsible for at least $1 million of the project's funding.

Five states have changed their prevailing wage thresholds since 2006. Four have increased the contract amount necessary before prevailing wage laws become effective, while Wisconsin lowered its threshold. Table 2 compares the thresholds in these five states in 2006 and 2010.

Table 2: State Changes to Threshold Amounts, Comparison of 2006 and 2010

State

2006 Threshold Amount

2010 Threshold Amount

New Jersey

$2,000

$10,743 if the work is done for municipality

$2,000

$14,187 if the work is done for municipality

Ohio 1

$67,853 for new construction

$20,955 for remodeling

$78,258 for new construction

$23,447 for remodeling

Oregon

$25,000

$50,000

Vermont

$100,000

$250,000

Wisconsin

State and Municipal Contracts

$209,000 where more than one trade is involved; $43,000 where a single trade is involved

State highway Contracts

None

$25,000

Prevailing wage rates also apply to private enterprise dominated projects if local governments are responsible for at least $1 million of the project's funding

Source: OLR Report 2006-R-0391 and U.S. Department of Labor

Notes:

1 Ohio adjusts threshold amounts every two years, according to the change in the US Dept. of Commerce, Bureau of the Census Implicit Price Deflator for Construction, but no increase or decrease may exceed 6% for the two-year period.

NON-PREVAILING WAGE STATES

Eighteen states do not have prevailing wage laws for state funded construction projects. Eight of these states have never enacted such laws (Georgia, Iowa, Mississippi, North Carolina, North Dakota, South Carolina, South Dakota, and Virginia), nine repealed their prevailing wage laws between 1979 and 1988 (Alabama, Arizona, Colorado, Florida, Idaho, Kansas, Louisiana, New Hampshire, and Utah), and one (Oklahoma) had its law invalidated by a court decision in 1995.

New Hampshire, which repealed its law in 1985, is the only northeastern state without a prevailing wage law. According to Armand J. Thieblot, Jr., attempts to repeal New Hampshire's law succeeded after reports indicated that prevailing rates had significantly inflated one school project's costs and caused local contractors to withdraw from bidding on another project. The repeal passed and became effective without the governor's signature (Thieblot, Jr., Prevailing Wage Legislation: The Davis-Bacon Act, State 'Little Davis-Bacon Acts,' the Walsh-Healy Act, and the Service Contract Act. Philadelphia: The Wharton School, 1986, p. 184).

Table 3 shows the states that do not have prevailing wage laws.

Table 3: Non-Prevailing Wage States

State

Prevailing Wage Law History

Alabama

Originally enacted in 1941, the law required a wage ceiling (rather than a floor), with rates no higher than the lowest of collectively bargained rates. It was repealed in 1981.

Arizona

In 1980, the Arizona Court of Appeals invalidated the procedure used to determine wage rates. The law was repealed through a referendum in 1984.

Colorado

Originally enacted in 1933, the law did not require pre-determining prevailing rates, leaving the director of the division of labor to determine rates when a dispute arose. It was repealed in 1985.

Florida

In 1979 Florida became the first state to repeal its prevailing wage law, which had been enacted in 1933.

Georgia

Prevailing wage law never enacted.

Idaho

Repealed in 1985.

Iowa

Prevailing wage law never enacted.

Kansas

The original law did not empower any agency to pre-determine prevailing rates and a 1978 state supreme court decision allowed each agency to adopt its own wage rates. The law was repealed in 1987.

Louisiana

Enacted in 1968 and repealed in 1988.

Mississippi

Prevailing wage law never enacted.

New Hampshire

Originally enacted in 1941, the law was repealed in 1985.

North Carolina

Prevailing wage law never enacted.

North Dakota

Prevailing wage law never enacted.

Oklahoma

Invalidated by 1995 court decision for violating the state's constitution by impermissibly delegating authority to federal officials. It has not been formally repealed, but is no longer enforced.

South Carolina

Prevailing wage law never enacted.

South Dakota

Prevailing wage law never enacted.

Utah

Originally enacted in 1933, the law was repealed in 1981.

Virginia

Prevailing wage law never enacted.

Sources: George C. Leef, “Prevailing Wage Laws: Public Interest or Special Interest Legislation?” Cato Journal, Vol. 30, No. 1 (Winter 2010); Philips, Mangum, Waitzman, and Yeagle, “Losing Ground: Lessons from the Repeal of Nine 'Little Davis-Bacon' Acts,” Working Paper, University of Utah Economics, 1995; and Armand J. Thieblot, Jr., Prevailing Wage Legislation: The Davis-Bacon Act, State 'Little Davis-Bacon Acts,' the Walsh-Healy Act, and the Service Contract Act. Philadelphia: The Wharton School, 1986.

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