Impact of Prevailing Wages

Broadband providers have been complaining that the Broadband Equity, Access, and Deployment (BEAD) Program rules are adding a lot of cost to building broadband networks. One of the issues adding the most cost to BEAD-funded networks is the requirement that all construction be done using prevailing wages. That means wages that are paid at Davis-Bacon wage levels—to include benefits. The Davis-Bacon Act was passed in 1931 and requires workers used for federal public work projects to be paid a prevailing wage rate. Since the calculations are done regionally, and since most federal projects are done in or near cities, the prevailing wages tend to reflect the wages and benefits paid in urban areas. Davis-Bacon's prevailing wages are almost always higher than the labor rates paid by the contractors that construct rural fiber networks. The contractors that build fiber in rural areas typically specialize in rural work. Since the cost of living is lower in most rural areas, the wages tend to be lower than the Davis-Bacon prevailing wages. One of the problems with driving up the cost of the project is that it might make the project unfeasible. There is not much margin in rural grant projects even if paying market wage rates, and the extra matching funds might be enough to make a provider decide not to pursue the grant or the project. Another issue that might compound problems is that some rural contractors aren’t interested in projects at the prevailing wages. They are uncomfortable having some crews being prevailing wages and others making market wages. That is an uncomfortable position for an employer.