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The U.S. Department of Labor (DOL) issued a final rule to raise the prevailing wage standard for approximately 1 million construction workers under the Davis-Bacon Act.

According to a fact sheet published by the White House, the rule “will raise wage standards of construction workers by updating prevailing wage regulations” under the Davis-Bacon and Related Acts. The acts require payment of locally prevailing wages and fringe benefits to more than 1 million construction workers.

The DOL’s rule update restores the definition of “prevailing wage,” making it the wage paid to at least 30% of workers, rather than 50% of workers, in a given trade in a locality. According to the DOL, lowering the threshold will make it more likely that workers are paid a true prevailing wage. The new rule also makes the process of updating the prevailing wage to account for wage growth easier.

In response to the announcement, the NAHB, the Associated Builders and Contractors (ABC), and Associated General Contractors of America (AGC) issued statements in opposition to the update.

“The Department of Labor had the opportunity to enact positive change that truly modernizes the system for determining prevailing wages on construction projects covered under the Davis-Bacon and Related Acts (DBRA),” NAHB chairman Alicia Huey said in a prepared statement. “Instead, this final rule fails to address many of the NAHB’s concerns made during the rulemaking process, including the DBRA’s overly burdensome contractor requirements and wage determinations that are misrepresentative of the real wages being paid in an area.”

Huey said the update rule will discourage builders from using covered federal programs that make rental housing affordable, will increase construction costs, and will “exacerbate” the affordability crisis.

In a statement on behalf of the AGC, CEO Stephen Sandherr said the rule-making “critically missed an opportunity to improve the wage determination process.”

“AGC holds that the DOL’s almost exclusive reliance on voluntary surveys to produce and update wage determinations has created a compensation system for Davis-Bacon covered construction that poorly reflects the construction labor market in many parts of the country,” Sandherr said.

ABC vice president of regulatory, labor, and state affairs Ben Brudeck said the new requirements “and artificial inflation of construction costs imposed by this rule” will exacerbate headwinds related to high material costs and labor shortages currently facing the industry.