Duncan, K; Case, A and Manzo IV, F (2024) Prevailing wages, school construction costs, and bids by out-of-state contractors: evidence from the Minneapolis–Saint Paul metropolitan area. Construction Management and Economics, 42(8), pp. 695-713. ISSN 01446193
Abstract
In the United States, prevailing wage laws authorize minimum remuneration by locality and occupation for public construction. The policy’s goal of leveling the playing field between local and lower wage, nonlocal builders is shared by fair wage policies in Canada and posted worker rules in the European Union. This is the first paper to test if the wage policy reduces bid disparities between these two types of contractors. The statistical analysis of over 600 subcontractor bids for schools built within the Minnesota’s largest metropolitan area examines differences in low, winning bids between Minnesota-based contractors and those from neighboring states with lower average construction wages. Findings indicate that prevailing wage requirements substantially reduce bid disparity between in- and out-of-state subcontractors. Additional results illustrate estimation issues related to measuring the influence of prevailing wage laws and unionized construction labor on construction costs.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | bidding; construction costs; prevailing wage laws; unions |
| Index terms: | evidence, bidding, subcontractor, educational building construction, wages, United States, builder, occupation, construction labour, public construction, disparity, Canada, estimation, European Union, statistical analysis, construction cost |
| Subjects: | practitioner, evaluation and assessment methods, financial and cost management, data science, bidding, Geography, physical geography and landforms, management, social justice, sociology, building construction, business economics |
| Topics: | Roles and Professions, Procurement, Cost Management, Research Practice, Geographical Context, Engineering Principles, Site Management, Design Practice, Ethics, Human Resources |
| Descriptive scope: | 3 PCA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here