Davis-Bacon and Prevailing Wage Requirements
Federal rules that require construction workers on many federally funded or assisted projects, including some affordable housing, to be paid at least the local prevailing wages and fringe benefits set by the U.S. Department of Labor.
What Are Davis-Bacon Requirements?
The Davis-Bacon Act, enacted in 1931, requires contractors on federal construction contracts over $2,000 to pay laborers and mechanics at least the prevailing wage: the local wage and fringe benefit rates the U.S. Department of Labor determines for each trade. Later laws, known as the Related Acts, apply the same wage rules to construction the federal government assists through grants, loans, loan guarantees, and insurance.
In housing, “Davis-Bacon” usually means these Related Acts, because most affordable housing is privately built with federal help rather than built by the government itself.
How It Works
Coverage turns on which federal money is in the project, and often on how many units it assists:
| Funding source | When prevailing wages apply |
|---|---|
| HOME Investment Partnerships | Construction of housing with 12 or more HOME-assisted units |
| Community Development Block Grant | Construction work it finances; residential rehabilitation only with 8 or more units |
| Public housing and project-based Section 8 | Development of public housing, and Section 8 projects with 9 or more units when the agreement is signed before construction |
Section 42 of the Internal Revenue Code, which governs the Low-Income Housing Tax Credit, contains no prevailing wage requirement. A project financed only with tax credits and private loans is therefore not covered by federal Davis-Bacon rules. It can become covered when it adds a federal source like those above.
On covered jobs, the wage determination and a Davis-Bacon poster must be displayed at the site. Workers must be paid at least weekly, and contractors must submit certified payrolls each week. The Department of Labor updated its regulations in a final rule effective October 23, 2023. In June 2024, a federal court in Texas blocked three provisions of that rule nationwide. The Department of Labor says the rest of the rule remains in effect.
Some states and cities have their own prevailing wage laws, which can apply even when federal rules do not.
Criticisms and Limitations
The requirements are debated. Supporters say they keep public money from undercutting local wage standards. Critics argue they raise construction and paperwork costs. Because thresholds differ by program, the same project can be covered or not depending on its funding mix and unit count. Planning the full capital stack early helps avoid surprises. See why housing costs so much to build for the wider cost picture.
Sources
- 40 U.S. Code § 3142 — Rate of wages for laborers and mechanics (Cornell LII) (opens in a new tab)
- U.S. Department of Labor, Wage and Hour Division — Davis-Bacon and Related Acts (opens in a new tab)
- 29 CFR § 5.5 — Contract provisions and related matters (Cornell LII) (opens in a new tab)
- 42 U.S. Code § 12836 — Labor (HOME Investment Partnerships) (Cornell LII) (opens in a new tab)
- 42 U.S. Code § 5310 — Labor standards (Community Development Block Grant) (Cornell LII) (opens in a new tab)
- 42 U.S. Code § 1437j — Labor standards (public housing and Section 8) (Cornell LII) (opens in a new tab)
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