Column: Prevailing wage in construction next target for Hoosier lawmakers?


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A prevailing wage is a legal arrangement to set minimum compensation (wages and benefits) in public-sector construction at rates above where market participants (demand and supply) would otherwise reach equilibrium.

As always, the basic choice is between markets and government; we either allow people to do what they want, or not. And as always, there are both ethical and practical considerations. Ethically, one should ask how this could be a role for government. Practically, how will the law work in practice?

Prevailing wages (or “common wages”) are state and local versions of the 1931 federal Davis-Bacon Act. They exist in 32 states, including Indiana and all surrounding states. They are imposed on a minimum project size of $350,000 in Indiana. (The Davis-Bacon threshold is only $2,000.) Typically, prevailing wages are set at or near the “prevailing” union compensation.

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