Prevailing wages establish minimum wages for different types of work on government contracts that are based on hourly wages and fringe benefits customarily paid for similar work in the local market. The main purpose of prevailing wages is to protect market standards in the competitive bidding process because public bodies are usually required to award contracts to the lowest bidder. This low-bid model of public procurement gives businesses that want to win a large government contract a financial incentive to lower their bid however possible, including through cutthroat reductions in worker wages, benefits, and training. Prevailing wage laws level the playing field, requiring all businesses competing for government contracts to reflect and maintain area standards of compensation and safety and incentivizing competition based on core competencies. Other goals are to prevent the exploitation of contract and contingent workers, ensuring that they are compensated at commensurate levels for performing the same job. Full report.
UNIVERSITY OF ILLINOIS URBANA-CHAMPAIGN