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NJ Prevailing Wage Law

What Is It And Why It Matters . . .

Since 1913, New Jersey law has required that contractors pay construction trades workers employed on state and local public works projects not less than the compensation that is paid on similar projects in the same geographical area of the state.

This requirement for the payment of prevailing wage is intended to ensure that the construction of public works projects does not erode the standard of living in the locality in which the project is located. New Jersey is one of 31 states with a prevailing wage law. The prevailingwage law is designed to ensure that workers building public works projects get the pay to which they are entitled. The payment of prevailing wages also benefits New Jersey's entire economy and helps to maintain our standard of living

Why Payment Of Prevailing Wages is Good For NJ . . .

Prevailing wage provisions are good for workers who build and repair our public facilities as well as the general public, too.

The payment of prevailing wages on public construction projects almost always results in workers receiving compensation consisting of both wages and benefits. If not for the prevailing wage act, many construction workers and their families might not have health insurance.

Also, the prevailing wage statute is a prime factor in the provision of retirement benefits to construction workers, who typically go from working on one building project to another, usually in a different location and for a different employer.

Thus, the prevailing wage law makes it possible for someone to have a successful career doing construction work in New Jersey. The availability of skilled construction workers within the state is a key factor in facilitating major building projects in New Jersey, to the benefit of everyone. Also, the more New Jersey citizens who receive health insurance and pension benefits through their employers, the less public funds are needed to provide hospital charity care and safety net assistance.

Beyond this, payment of prevailing wages is good for New Jersey's economy. A research report complete by Rutgers University economists calculated the economic impacts of total compliance with the prevailing wage law versus partial compliance. The results were striking: compared to partial compliance, full compliance with the prevailing wage law produces more spin-off jobs, higher aggregate personal income in the state, a larger New Jersey gross state product, and increased state and local government tax revenues. These are powerful benefits for the New Jersey economy and our citizens.

The Law . . .

In the 98 years since New Jersey first adopted a prevailing wage statute, the law has been modified to keep it contemporary with developments in the construction industry. The prevailing wage law applies to public construction projects with a cost above a specific threshold at all levels of state and local government, including school districts and public institutions of higher education. The law is enforced by the New Jersey Department of Labor, and contractors who violate the law may be subject to fines and other penalties, including, for repeat offenders, debarment from bidding on future public construction projects for a specified period of time.

Compliance With The Law . . .

Unfortunately, some contractors, in an unethical attempt to undercut their competition to win bids to build public projects, cheat their workers and don't pay prevailing wages.

These unethical contractors make a mockery of the public bidding process by not complying with the prevailing wage law.

There are many forms of cheating, such as:
  • Filing false reports with the Department of Labor of wages paid
  • Not providing workers with health and pension benefits
  • Requiring workers to cash their paychecks with the employer at less than 100 cents on  the dollar
  • Requiring workers to rent tools from the employer at inflated prices
  • Other "company store" schemes, such as requiring workers to pay the employer for transportation to the jobsite or for lodging
  • Paying workers off the books at very low wage rates
  • Deliberately misclassifying workers into lower paying trades.
Not only do these schemes undermine the law, they undermine the fairness of the competitive bidding process used to select contractors to build public works projects, and they weaken New Jersey's economy.

The History . .

Prevailing wage legislation was initially enacted in New Jersey in the early part of the last century, at a time when significant construction projects in the United States were often built by itinerant work crews, some of which were paid at substantially lower wage rates than prevailed in New Jersey. The impact of the migratory work crews was to drive down wages in the more prosperous areas of the country. The construction of public works projects should help, not damage, the local economy, prevailing wage legislation was enacted to combat the problem. 
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