Prevailing Wage and Fringe Benefits

51 views

Can someone please explain what prevailing wage is and what fringe benefits are. I am so lost. Thank you

In: 1

The prevailing wage is how much a company must pay it’s workers (in terms of both money and benefits that come with the job) if they want to get government contracts. Basically the government is trying to prevent companies from giving them low ball offers for government contracts that are only so cheap because they’re underpaying workers to save costs. For example, construction companies A and B are competing for the contract to build a bridge. A says they can do it for $10 million, but B says they can build the bridge to the exact same standard for $9 million, so B seems to be the best choice for the taxpayer. But this is only because B is massively underpaying their workers one way or another. The prevailing wage takes that factor out of the equation.

Fringe benefits are anything a company gives an employee for working there that isn’t the worker’s actual money wage. Examples are things like health insurance, company cars, discounts on things the company sells, etc.