chapter  5
26 Pages

Prevailing Wage Laws and Construction Costs: Evidence from British Columbia's Skills Development and Fair Wage Policy

Prevailing wage laws have been a part of public policy toward labor in North America for over a century. Prevailing wage laws at the state and federal level in the United States, as well as at the provincial and federal level in Canada remain controversial because of the belief, supported by several empirical studies, that the costs of these policies exceed the benefits. For example, in March of 1992 the Province of British Columbia introduced the Skills Development and Fair Wage Act (SDFW) which mandated that prevailing wages be paid on provincially funded construction projects.2 One goal of this policy was to arrest the decline in apprenticeship participation in the B.C. construction industry with additional benefits related to larger local economic impacts from public construction and an award process based on expertise, efficiency and quality instead of wage costs.3 However, the Quantity Surveyors Society of British Columbia (1993) estimated that the SDFW cost taxpayers $100 million (CAN) annually. Concern over the cost of this policy resulted in the Skills Development and Fair Wage Repeal Act of 2001.