Health Care and Pension Benefits for Construction Workers: The Role of Prevailing Wage Laws

This article examines the affect of state prevailing wage laws (PWLs) on the amount and mix of wages and benefits paid to construction workers. PWLs require contractors who win bids on state-financed construction projects to pay compensation rates equivalent to those prevailing in local construction markets. During 1982-1992, 6 states repealed their PWLs, 9 states who never had a PWL did not enact one, and 32 states kept their PWLs. Data from the Form 5500 series, the Census of Construction Industries, the Current Employment Statistics, and the Current Population Survey are combined to evaluate the effects of PWL repeals on compensation. When comparing the experiences of different states, PWLs enhance both wages and benefits, with the largest percentage increase going toward employer pension contributions. PWLs appear to create an incentive for both employers to pay and workers to accept a larger percentage of their total compensation in the form of benefits.