Private employers can set wage rates at whatever level they choose. The federal Davis Bacon law, however, requires the use of prevailing wages for projects funded by the federal government. Some states also follow prevailing wage laws.
Public work, or work that is contracted out by a public entity such as a county or the federal government, must be paid at the prevailing wage. Work in this context includes construction, alterations, repairs or improvements funded by a county or other public agency. There is no national prevailing wage, as the wage is determined by the average wage that employers pay to the majority of individuals in a particular job category within a specific geographic location.
Determining the Prevailing Wage
Prevailing wages can vary by state or county, and also according to the actual job. The prevailing wage for a mechanic, for example, will be be different from the prevailing wage for a nurse in the same geographic area. In the state of Washington, for example, the majority wage rate for a particular occupation in the largest city in the county becomes the prevailing wage. When the specific occupation doesn’t exist in the largest city, the average wage rate for the county is used instead. In states with a strong union presence, the prevailing wage is often the union wage, according to the Laborers International Union of North America.