In 1931, in the midst of the Great Depression, the U. S. Congress passed the Davis-Bacon Act, a law that requires governmental contractors to pay "prevailing wages" on projects undertaken for the federal government. This legislation led to "little Davis-Bacon Acts," or "prevailing wage" laws in over 40 states. Some states have subsequently repealed these statutes, but the majority, Michigan included, still have such Depression-inspired laws on the books regarding wages on state (and usually local) government contracts.


Typically, governments use an elaborate process to determine prevailing wages, but because of the large number of distinct geographic labor markets and numerous occupational categories, the tendency is for wages to be set equal or approximate to those determined in local collective bargaining agreements between unions and contractors. In some states, "prevailing wages" are less obviously tied to union pay scales, but Michigan, as a "strong" prevailing wage state, does use such a formulation.