Prevailing wage laws were first adopted during the Great Depression, at a time when the national unemployment rate was already about 14 percent and rising, while economic output was dropping.1 The turmoil brought about by such large numbers of unemployed workers gave rise to various arguments and theories about how government could solve America's economic woes.

One popular argument for prevailing wage laws was advanced by some in the Hoover administration. They (and later others in the Roosevelt administration) argued that by mandating higher wages for workers than what they might otherwise be paid according to market forces, workers would make higher incomes and therefore spend more. High wages would help America spend its way out of the Great Depression. This "high wage doctrine" was also advanced by many business leaders, and it formed the basis for many other pieces of legislation during both the Hoover and Roosevelt administrations (e.g., the National Industrial Recovery Act, National Labor Relations Act, etc.).

Another "argument" for the original Davis-Bacon legislation and no doubt many of the state prevailing wage laws was Northern union contractors' desire to be protected from competition from lower-wage, Southern, non-union workers. In fact, Rep. Robert Bacon was prompted to introduce his bill in 1931 after witnessing one contractor's use of black Alabama laborers to construct a government hospital in Rep. Bacon's Long Island district. A review of the legislative history of the Davis-Bacon Act makes it clear that the idea behind "prevailing wages" was seen by some congressmen as a way to reduce out-of-state competition and discourage the use of non-white labor. One congressman who supported Davis-Bacon actually made reference to the "problem" of "cheap colored labor" on the floor of the U. S. House. As such, the legislation was both anti-competitive and racist in origin.2

A third argument used to support prevailing wage laws—still advanced today—is that they reduce poverty, by insuring that construction or other affected workers earn enough income to stay above the poverty line. Finally, some pro-prevailing wage advocates have said that paying high wages insures quality work or, alternatively, that high wages lead to greater labor morale thereby promoting efficiency, and thus these laws cost little or nothing.