What prevailing wage means
Prevailing wage is a wage set by a government body rather than by what you and a worker agree to. On federal construction work the rule comes from the Davis-Bacon Act, and the Department of Labor states it in one sentence: "Davis-Bacon Act and Related Act contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area" [1].
Read that sentence slowly, because every clause in it does work.
- "Laborers and mechanics." The obligation follows the people doing the physical work on the contract, not everyone on your payroll [1].
- "No less than." It is a floor, not a fixed price. Paying above it is your business; paying below it is a breach.
- "Wages and fringe benefits." Two separate obligations, both of them named [1]. Missing the fringe is still a shortfall even if the hourly wage looks right.
- "Corresponding work on similar projects in the area." The figure is local and it is tied to the kind of work, which is why there is no single national prevailing wage and why this page carries no rate.
The Department of Labor is "responsible for determining prevailing wages, issuing regulations and standards to be observed by federal agencies" [1]. You do not negotiate the number, and you do not calculate it. You read it off a document.
This guide is about construction. A large share of searches for this phrase concern the prevailing wage used in immigration filings, which is a different system with different rules and is not covered here.
Which jobs are covered
Coverage is a property of the contract, not of the trade. The Department of Labor states the federal test: "The Davis-Bacon and Related Acts apply to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works" [1].
Three things follow from that sentence. The money has to be federal: directly funded or federally assisted. The work has to be construction, alteration or repair. And the contract has to be in excess of $2,000 [1].
The reach is wider than direct federal contracts, because of the Related Acts: "The Davis-Bacon Act prevailing wage provisions apply to the 'Related Acts,' under which federal agencies assist construction projects through grants, loans, loan guarantees, and insurance" [1]. A project owned by a city or a housing authority can carry Davis-Bacon clauses because federal money reached it through one of those channels. The clause in the contract is what tells you.
Location matters as well as money. Where the question is which of your workers are covered, the Department of Labor points at "the appropriate classification of the non-delivery construction work being performed on the site of the work" [1].
This site does not decide coverage
Whether a particular project is covered, and which of your workers are covered on it, is decided by the contract and the contracting agency, not by a web page and not by what a trade association says about similar jobs. Read the labor standards clauses in your own contract, and confirm with the contracting agency before you price the work.
Where the rate comes from: the wage determination
The rate arrives as a document. SAM.gov, where federal wage determinations are published, defines it: "A wage determination (WD) is a set of wages, fringe benefits, and work rules that the U.S. Department of Labor has ruled to be prevailing for a given labor category in a given locality" [2].
That definition contains the whole structure. A determination is a ruling by the Department of Labor [2]. It covers a labor category (a classification of work). It covers a locality. And it carries three kinds of content: wages, fringe benefits and work rules [2].
The determination that governs your job is the one incorporated into your contract. It is not the one you find by searching for your county today and it is not the one your last job used. On SAM.gov you can search by the determination number when you already know it, or start from a category when you do not, and the search offers an active-only filter [2]. The site also lets you follow a determination and save a search [2], and publishes a list of Davis-Bacon determinations to be revised [2]. That list is the clearest signal that these documents change. A determination can be superseded while your project is being bid.
So the practical rule is simple to state and easy to get wrong: work from the determination attached to your contract, in the revision your contract incorporates. If you cannot find it in the bid package, ask the contracting agency for it in writing before you price the job.
How to read a determination
A determination is a lookup table, and you enter it from two directions at once: the locality and the classification of the work.
Locality. Determinations are issued for a given locality [2]. A rate that applies in one county does not automatically apply in the next one.
Classification. The rate attaches to the work, not to a job title you invent. The federal obligation is framed against "corresponding work on similar projects in the area" [1], and the determination is issued for "a given labor category" [2]. In California the same principle is written as a determination made "according to the type of work and location of the project" [3].
The two pay figures. A determination sets wages and fringe benefits separately [2], and the Davis-Bacon obligation is to pay no less than both [1]. Call them B for the basic hourly rate and F for the fringe. The hourly obligation for that classification is B + F. Deliver the wage but not the fringe and you have underpaid, even though the pay stub shows the right hourly rate.
Work rules. The third kind of content in a determination [2]. Read them; they are part of the document and not a footnote.
A classification that is not there. If the work your crew is doing does not match any classification on the determination, the answer is not to pick the closest one and move on. There is a conformance process for adding a classification, and SAM.gov's Davis-Bacon resources describe how a conformance request is submitted and which standard form is used [2]. Start that conversation with the contracting agency, not with your estimator.
This guide gives no example rates on purpose. Every figure on a determination is specific to a locality, a classification and a revision, so a sample number here would be wrong for your job by construction. The letters above are the shape; your contract supplies the values.
Fringe benefits and the burden
The fringe figure is the part of a prevailing-wage job that most often breaks a bid, because it is a second hourly obligation sitting behind the one everybody quotes. On a covered job the determination gives you B and F for each classification [2], and you owe both [1].
For costing, that means a prevailing-wage hour is not your normal hour with a different wage in it. The wage line changes, the fringe line appears, and your own burden (payroll taxes, insurance and the benefits you already provide) still has to be layered on top of whatever the determination requires. Our labor burden calculator takes those inputs, but the wage and fringe figures you type into it must come from the determination attached to your own contract.
How a particular fringe payment is treated on your payroll and in your tax filings is not something this page decides. That treatment depends on how the obligation is met and on rules none of the sources cited here state. Take it to your payroll provider and to the contracting agency, and get the answer before the first certified payroll is due. Reporting the result is a separate process with its own weekly form, which our guide to certified payroll and Form WH-347 covers.
Where this varies by state
Federal coverage is not the whole picture. States run their own public-works wage laws for projects paid from state and local funds, with their own thresholds, their own determinations and their own enforcement. A job can fall under a state scheme, a federal one, or both at once.
California is the clearest worked example. The Department of Industrial Relations states that "all workers employed on public works projects must be paid the prevailing wage determined by the Director of the Department of Industrial Relations, according to the type of work and location of the project" [3], and puts it more bluntly elsewhere: "Anyone working on a public works project must be paid prevailing wages as determined by DIR" [4]. California defines public works as "construction, alteration, demolition, installation, or repair work done under contract and paid in whole or in part out of public funds" [4]. That definition names demolition and installation, and a project only partly funded from public money still counts [4].
California publishes its determinations on its own index rather than on the federal site [5]. That index separates general determinations for journeyworkers from apprentice determinations, keeps residential determinations apart from the general ones, and maintains a superseded set for determinations no longer current [5]. The state's prevailing wage page also routes contractors to apprentice rates, certified payroll reporting and enforcement of public works law as separate topics [3].
Two practical consequences. First, a determination from the wrong index is the wrong document: a California state-funded job does not run on a federal determination, and a federal job in California does not run on a DIR determination. Second, the categories inside a state index matter. A residential determination and a general determination are different documents for different work [5].
Other states operate their own schemes on their own terms. This site does not publish a national table of state prevailing-wage thresholds, and one state's rule does not describe another's. Confirm with your state labor agency and with the awarding body on the specific project.
Frequently asked questions
What is prevailing wage?
It is the locally prevailing wage and fringe benefits that a government body sets for a classification of work, and that a contractor must pay at minimum on a covered public contract. On federal work the Department of Labor determines it and publishes it as a wage determination; the determination attached to your contract is the one that governs.
What does prevailing wage mean?
It means the pay floor for a job is set by a published determination rather than by the market or by agreement. The obligation has two parts, a wage and a fringe benefit amount, and both are owed for the classification of work actually performed at the project's locality.
How does prevailing wage work?
The contracting agency incorporates a wage determination into the contract. You match each worker's work to a classification on that determination, pay at least the basic rate and the fringe listed for it, and report what you paid. Where no classification fits the work, a conformance process adds one. Ask the contracting agency rather than choosing the nearest classification yourself.
What is prevailing wage in california?
California requires prevailing wages on public works, which it defines as construction, alteration, demolition, installation, or repair work done under contract and paid in whole or in part out of public funds. The rate is determined by the Director of the Department of Industrial Relations according to the type of work and the location of the project, and DIR publishes its own determinations separately from the federal ones.
Related
- Labor burden calculator: enter the wage and fringe from your own determination and see what an hour costs once taxes and insurance are added.