In 1931, the federal Davis-Bacon Act mandated that wages paid to contracted workers on government construction projects be set at the prevailing level. That “prevailing wage” effectively ended competition on salaries for businesses bidding for federal government construction jobs.

The most likely reason for the initial “prevailing wage” laws is that the legislation favored local unions and prevented low-cost bids from newer businesses. The great migration of African Americans to the North was well underway in 1931, and there was widespread fear that this increased supply of workers would suppress wages.

Michael J. Hicks, Ph.D., is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University. Contact him at

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