Prevailing Wage

Prevailing wage is the hourly rate, plus benefits, required by law to be paid for each trade or occupation while performing work on state-funded construction projects.

These projects can be highways, roads, wastewater treatment plants, JOBZ projects, public utilities, schools, parks and recreation improvements, or any other construction project funded in part or whole by state funds.

Minnesota's prevailing wage law (Minnesota Statutes 177.41 through 177.44) requires employees working on state-funded construction projects or other projects covered by law be paid wage rates comparable to wages paid for similar work in the area where the project is located.

Prevailing wage -- definitions of construction types

For purposes of wage rate determinations, the following definitions apply.

Commercial construction

"Commercial construction" means all building construction projects exclusive of residential construction.

Examples include: building construction for schools and universities; prisons, correctional facilities; office buildings; churches; warehouses; stores and shopping centers; restaurants; gas stations; etc.

Site work and parking/paving is considered commercial construction, for the purpose of prevailing wage, if included with the building contract. Parking ramps or parking lots for bus or light rail, in conjunction with terminals, is considered commercial construction.

Highway and heavy construction

"Highway and heavy construction" means all construction projects which are similar in nature to those projects based upon bids as provided under Minnesota Statutes, section 161.32 for the construction or maintenance of highways or other public works and includes roads, highways, streets, airport runways, bridges, power plants, dams, and utilities.

Examples include: waste water treatment plants; communication towers; solar or wind farms; wind towers; transmission towers; radio towers; coal, electric, gas, or other energy plants; athletic stadiums and fields; park shelters, playgrounds, and trails; parking lots and ramps (when not in conjunction with a commercial building contract). Site work for future or unplanned development is considered Highway/Heavy construction.

Residential construction or agricultural construction

"Residential construction or agricultural construction" means all construction, remodeling, or repairing of single or two family homes and structures appurtenant thereto including agricultural or farming buildings appurtenant to private farm residences when utilized to carry on primary farming operations.

For more information

Minnesota Department of Labor and Industry

Prevailing Wage unit
443 Lafayette Road N.
St. Paul, MN 55155

Phone: (651) 284-5091

A total of 31 states and the District of Columbia have prevailing wage laws. Such laws go back as far as 1891. The federal Davis-Bacon Act, on which many state laws are patterned, was signed into law in 1931.

A total of 31 states and the District of Columbia have prevailing wage laws. Such laws go back as far as 1891. The federal Davis-Bacon Act, on which many state laws are patterned, was signed into law in 1931.

Prevailing wage laws are based on the principle that taxpayer money should not be used to undercut the standard of living in a local community.

The Davis-Bacon Act, in fact, was drafted by a Republican Congressman and Republican senator, and signed by a Republican president, specifically for that purpose. It is designed to prevent unscrupulous contractors from winning bids by importing low-wage labor from outside the community.

Minnesota's law dates back only to 1973. The last major evaluation of its effectiveness was conducted in 1998 by the Department of Labor and Industry. That study, during the administration of Republican governor Arne Carlson, concluded: "…Not only is the prevailing wage legislation doing what it was intended to do, but absent such a provision, the effects are harmful to the industry and local economy."

Reprinted from an article by Michael Kuchta

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