The Effect of Prevailing Wage Regulations on Contractor Bid Participation and Behavior: A Comparison of Palo Alto, California with Four Nearby Prevailing Wage Municipalities



This sample of bids by union and nonunion contractors on and off municipal prevailing wage projects in the San Francisco Bay area of California provides the first empirical evidence examining the effects of prevailing wage regulations on contractor participation and bidding behavior. The data show that the presence of prevailing wage regulations does not decrease the number of bidders nor alter the bidding behavior of contractors relative to the engineer's estimate of the value of the project. Furthermore, in this heavily unionized area during an upswing in the business cycle, the presence of prevailing wage regulations did not discourage the participation of nonunion contractors nor reduce their chances of winning work.