Construction workers to see pay boost under wage-rule rewrite

The Biden administration on Tuesday rolled out an overhaul of pay standards for construction workers on federally funded projects — including green energy infrastructure — that could mean millions in fatter paychecks.

Vice President Kamala Harris traveled to an apprenticeship training center in Pennsylvania to announce the revamp of the so-called Davis-Bacon rules, a 1931 law that mandated the “prevailing wage” rate be applied to federal projects.

"These workers deserve our recognition and appreciation, and they deserve something more — they deserve a raise," Harris said.

Why it matters: Once implemented, the final rule will implement the most sweeping changes since the 1980s and “ensure that fair wages are paid to workers building and repairing our roads and bridges and federal buildings, critical manufacturing facilities and our energy infrastructure,” a senior administration official said to reporters.

The Labor Department has estimated that roughly 1.2 million workers in the U.S. are covered by the law across roughly $220 billion in construction projects.

Political context: President Joe Biden and his fellow Democrats fought hard to attach Davis-Bacon rules to the $1.2 trillion infrastructure law passed in 2021, overcoming opposition from recalcitrant Senate Republicans whose support was necessary to pass the package.

Labor unions are also strongly supportive of prevailing wage requirements, as they typically help ensure unionized workers are used on a given project. They have also been pushing the administration to bolster wages for burgeoning clean-energy projects.

"With massive investments in infrastructure through the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act creating hundreds of thousands of new jobs with prevailing wage rules, construction workers across the nation will benefit from the strengthened wage floor," Brent Booker, the general president of the Laborers' International Union of North America, said in a statement.

Conversely, Davis-Bacon’s critics argue that the rules raise construction costs and make them unappealing to nonunionized firms, limiting the competition to build a given project.

Former President Donald Trump — who first made his name in New York real estate — at times during his term flirted with gutting Davis-Bacon. The idea was one of several policies that raised tensions between his administration and North America’s Building Trades Unions, an influential group that collectively represents about three million blue-collar workers.

How we got here: DOL released its draft regulations nearly a year-and-a-half ago, in March 2022, though the proposal sat in limbo for much of 2023 after the agency submitted language to the White House’s regulatory clearinghouse back in December.

It is one of several major rules that the Biden administration has begun to crank out in recent weeks as DOL and a pair of independent labor agencies hustle to rack up wins for the president’s agenda as he makes his case for reelection.

What’s changing: Among the biggest changes announced Tuesday is the return to a previous definition of “prevailing wage” that had been in place between 1935 to 1983.

The senior administration official said the shift will more closely align pay rates to “actual wages paid to actual workers in the local community,” and lessen the use of DOL projections to set the local wage and benefit rate for a given area.

The final rule will likely result in increased reliance on the surveys DOL regularly conducts to generate location-specific data on construction wages. Business groups like the Associated Builders and Contractors have long railed against the process as methodologically flawed and say it results in artificially high wage floors.

ABC had urged DOL to withdraw its plan and within hours of the release of the final rule the group said it is preparing to take legal action to halt the change.

"The unions and the government uses this as a weapon to basically attack small businesses and discriminate against them and injure competition," Ben Brubeck, ABC's vice president of regulatory, labor and state affairs, said in an interview.

Brubeck said the organization is also considering whether to challenge the legitimacy of issuing these regulations in the absence of Senate-confirmed leadership, though they are still reviewing DOL's final rule and their legal options. DOL is being led by acting Secretary Julie Su and WHD by Principal Deputy Administrator Jessica Looman, both of whom have seen their nominations languish in the Senate for extended periods of time.

The final rule will also allow DOL’s Wage and Hour Division to use state and local wage determinations to set federal prevailing wage requirements in certain situations, and tweaks language to ensure that energy infrastructure is included in the types of projects covered by Davis-Bacon.

What’s next: The rule will be published in the federal register in the coming days and take effect 60 days thereafter, though it is possible that a federal court could block the policy following a legal challenge.