wages

Contractors Decry Amended Davis-Bacon Rule

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The U.S. Dept. of Labor’s final rule, issued August 8th, revamps its Davis-Bacon Act procedures for determining prevailing wage levels – in favor of workers – on federally funded construction projects.

Expected to go into effect in approximately 60 days, the rule is being hailed by construction unions yet criticized by contractors and their associations. The revised rule reverts to pre-1983 methodology for determining whether a wage rate is prevailing, also referred to as the “30 percent rule.” Under the 30 percent rule, contractors must use the wage rate paid to a majority of the workers; if no such majority rate exists, they must use the wage paid to the largest number of workers on the job, as long as it was paid to at least 30 percent of that workforce.

The wage rule solidifies as $1.2 trillion in Infrastructure Investment and Jobs Act funding is propelling the start of a deluge of federal construction projects as well as projects that are stemming from the Chips and Science and Inflation Reduction Acts.

AGC of America CEO Stephen Sandherr says the more than 800-page ruling lowers the threshold of reporting required from the Dept. of Labor.

“This final rule appears to make it easier on the Dept. of Labor itself to set prevailing wages with less of the data it already collects, or lack thereof,” says Sandherr.

The Associated Builders and Contractors says this regulatory notice will annually affect an estimated $217 billion in federal and federally assisted construction spending for about 1.2 million construction workers.

“Unfortunately, the DOL’s final rule disregards the feedback of ABC contractors, construction industry stakeholders and thousands of small businesses urging the withdrawal of this unnecessary, costly and burdensome regulation,” says ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “Instead, the DOL is moving forward with dramatic changes to prevailing wage regulations, reversing much-needed reforms that were established nearly 40 years ago, and unlawfully increasing the regulatory burden on small businesses, new industries and public works projects.”

For more information about the ruling, see www.dol.gov/agencies/whd/government-contracts/construction/rulemaking-davis-bacon.

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Industry Pay Premiums Rise Nearly 19 Percent As Firms Continuing Recruiting

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Construction firms nationwide provided a wage premium of nearly 19 percent compared to the average hourly earnings for all private-sector employees as contractors continue chasing bodies to staff the still-robust construction activity in many states.

The Associated General Contractors of America said June 2 that the industry is still struggling to hire and retain enough people.

“Demand for construction workers remains strong, outside of homebuilding,” said Ken Simonson, chief economist for the AGC of America. “Contractors continue to report their primary challenge is finding qualified workers, not finding projects or most materials.”

The unemployment rate among jobseekers with construction experience declined from 3.8 percent last May to 3.5 percent in May 2023, the second-lowest May rate in the 23-year history of the data. A separate government report released in late May reported that new hires in construction at the end of April totaled 460,000, growing 3 percent from one year earlier. The new hires figure, according to Simonson, does not account for the number of workers who left the industry during the same timeframe.

Average hourly earnings for production and nonsupervisory employees in construction – covering more onsite craft workers as well as many office workers – jumped by 6 percent over the year to $34.07 per hour.

Association officials say firms are boosting pay and taking other steps to recruit construction workers.

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Construction Industry Investment Declines, Hiring Slows Due to Talent Scarcity

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

For 10 of the past 12 calendar quarters, investment in nonresidential construction has declined.

According to an analysis released in early November by the Associated Builders and Contractors, investment in nonresidential structures fell at an annual rate of 15.3 percent in the third quarter of 2022. ABC Chief Economist Anirban Basu says it’s the steepest decline since Q2 2020.

Investment in residential projects nationwide declined by a whopping 26.4 percent over the same time period.

Despite this decrease in investment, contractors building commercial and industrial projects expect their sales to rise over the next six months, according to the ABC’s Construction Confidence Index.

The association’s Construction Backlog Indicator – an index that reflects the amount of nonresidential construction work expected to be performed in the months ahead – shows that U.S. commercial and industrial contractors’ work backlog today averages nine months, 1.4 months longer than a year ago. Contractors attribute increased backlog to a hefty increase in heavy industrial projects, including a 21.5 percent increase in manufacturing-related construction spending.

As far as construction talent is concerned, the Associated General Contractors of America reports that last month the industry added only 1,000 employees nationwide. The industry continues boosting wages for hourly workers as firms battle to locate and hire qualified workers from a still-shrunken labor pool.

Hourly earnings rose from $33.41 in October 2021 to $35.27 in October 2022.

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