Grossly simplified: Fed contractors must pay their workers the “prevailing wage” to have their bid accepted. Without a rule like this, a contractor can easily under-bid the competition – especially union competition – by reducing costs by paying their workers less than the prevailing wage.
The rule change being rolled back was made by Regan back in the 80s. They used to determine prevailing wages by saying any wage at least 30% of workers in a region are making is prevailing (which at the time amounted to something like a 70th percentile wage), but Reagan changed it to be a majority. If there was no clear wage that was paid to this large a number of workers, you would instead determine an average wage, which after the rule change tended to be used most of the time. This meant one shady contractor underpaying their workers directly reduced the wages of these federal contract workers, since averages are now being used.
Before the rule change, you would typically find a wage that at least a third of workers were earning in a region and that would be the minimum prevailing wage. It only took a few good employers (edit: or one decent trade union) to push that prevailing wage up. After the change, large and powerful employers could easily suppress the wage for their whole region by pushing down the average.
Many states have their own prevailing wages for state-funded contracts, and if you live somewhere that actually gives a shit about its citizens, it’s very high.
It makes for great investment in things like infrastructure when the government provides grants and low-interest loans, essentially free money, to local municipalities. They get the infrastructure, as well as all the local, well-paying jobs that the work brings.
ELI5 for a non-American, please?
Grossly simplified: Fed contractors must pay their workers the “prevailing wage” to have their bid accepted. Without a rule like this, a contractor can easily under-bid the competition – especially union competition – by reducing costs by paying their workers less than the prevailing wage.
The rule change being rolled back was made by Regan back in the 80s. They used to determine prevailing wages by saying any wage at least 30% of workers in a region are making is prevailing (which at the time amounted to something like a 70th percentile wage), but Reagan changed it to be a majority. If there was no clear wage that was paid to this large a number of workers, you would instead determine an average wage, which after the rule change tended to be used most of the time. This meant one shady contractor underpaying their workers directly reduced the wages of these federal contract workers, since averages are now being used.
Before the rule change, you would typically find a wage that at least a third of workers were earning in a region and that would be the minimum prevailing wage. It only took a few good employers (edit: or one decent trade union) to push that prevailing wage up. After the change, large and powerful employers could easily suppress the wage for their whole region by pushing down the average.
Many states have their own prevailing wages for state-funded contracts, and if you live somewhere that actually gives a shit about its citizens, it’s very high.
It makes for great investment in things like infrastructure when the government provides grants and low-interest loans, essentially free money, to local municipalities. They get the infrastructure, as well as all the local, well-paying jobs that the work brings.