Center for American Progress Action

Raising Wages and Narrowing Pay Gaps With Service Sector Prevailing Wage Laws

Raising Wages and Narrowing Pay Gaps With Service Sector Prevailing Wage Laws

Prevailing wage laws for government service contracts can uplift wages and benefits; reduce racial pay gaps; and could have a range of positive effects on worker turnover, service quality, local budgets, and collective bargaining.

What are service sector prevailing wage laws?

Service sector prevailing wage laws require service workers on government projects to be paid wages and benefits that at least match market levels for workers who are employed in similar professions in a given area. For example, they set compensation floors for janitors on government-funded projects in Illinois and for security guards at publicly owned buildings in Montana. These laws are closely related to the better-known and more widely used prevailing wage laws that set standards for construction workers on government building projects such as bridges and highways. Prevailing wage laws also complement state and local minimum wage laws, since the wage and benefits rates they set are typically higher than minimum standards and target a specific subset of workers whose jobs are funded through government spending.

Prevailing wage laws help ensure that government dollars do not undercut market wages and benefits, bringing high-value services to the public and preventing contractors from slashing wages to generate low contract bids and undercutting employers offering good wages. They can also uplift pay and benefits while closing compensation gaps.

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Aurelia Glass

Policy Analyst, Inclusive Economy

David Madland

Senior Fellow; Senior Adviser, American Worker Project

Karla Walter

Senior Fellow, Inclusive Economy

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