Prevailing wage laws and construction labor markets

Prevailing wage laws, which require that construction workers employed by private contractors on public projects be paid wages and benefits at least equal to those "prevailing" for similar work in or near the locality in which the project is located, have been the focus of an extensive policy debate. The authors, analyzing Current Population Survey data and Census data, find that the relative wages of construction workers decline slightly after the repeal of a state prevailing wage law. However, the small overall impact of law repeal masks substantial differences in outcomes for different groups of construction employees. Repeal is associated with a sizable reduction in the union wage premium and an appreciable narrowing of the black/non-black wage differential for construction workers.