The state’s Prevailing Wage law, modeled after the federal Davis-Bacon Act, should be statutorily repealed, and the Legislature should place limits on the ability of local governments to impose such rules. Prior studies have suggested that repeal of the state law could save 35 percent of the wage component of many construction projects, although significant savings in actual construction projects would be limited to those not using federal funds. Any projects using federal funds are subject to the federal Davis-Bacon Act. Savings would be most likely on local capital outlay projects using private contractors, where federal dollars are not involved, but would require local agencies to aggressively pursue savings.
In 2004, construction on local capital outlay projects alone totaled $697 million. If one assumed half was actually contracted out and not subject to Davis-Bacon, and that wages represented 20.6 percent of the costs, and the 35 percent wage savings noted above, then, potential savings are in the range of $25 million per year at a minimum.