dome, construction, berlin

The CHIPs Act and Davis-Bacon Compliance: Semiconductor Industry

In the aftermath of a global semiconductor shortage, the United States Congress embarked on a mission to bolster domestic semiconductor production through the enactment of the Creating Helpful Incentives to Produce Semiconductors (CHIPs) Act. While the central focus of the CHIPs Act is to enhance technological independence and national security, it places significant importance on ensuring fair labor practices within the industry. A key facet of this commitment is Davis-Bacon Act compliance, which ensures that workers engaged in semiconductor manufacturing receive prevailing wages and benefits. In this article, we delve into the confluence of the CHIPs Act, Davis-Bacon compliance, and the crucial concept of prevailing wages within the semiconductor sector.

The CHIPs Act: Strengthening the Nation’s Technological Resilience

The CHIPs Act is a proactive response to the vulnerabilities exposed by the global semiconductor shortage. With geopolitical tensions and supply chain disruptions amplifying the urgency, the Act focuses on incentivizing domestic semiconductor production and stimulating research and development. By doing so, the Act aims to reinforce the United States’ technological leadership and reduce its reliance on overseas suppliers. With a primary emphasis on safeguarding critical technologies and enhancing national security, the CHIPs Act assumes a pivotal role in shaping the future trajectory of the nation.

A Closer Look at the CHIPs Act’s Economic Impact

By incentivizing companies to build or expand chip manufacturing plants, the CHIPs Act supports the growth of a critical sector. This growth, in turn, has a positive ripple effect on the economy. More jobs are created not only directly within chip manufacturing but also in supporting industries. According to ConstructionDive, “manufacturing activity skyrockets on the heels of 2022’s CHIPS Act.”

Davis-Bacon Compliance: Ensuring Equitable Labor Practices

Integral to the CHIPs Act’s framework is the commitment to fair labor practices through Davis-Bacon Act compliance. Enacted in 1931, the Davis-Bacon Act mandates that laborers and mechanics employed on federally funded construction projects receive wages and benefits that align with prevailing rates in the local area. This legislation serves as a safeguard against exploitation and substandard wages, ensuring that workers engaged in such projects are treated fairly and equitably.

Understanding Prevailing Wages: A Cornerstone of Fair Compensation

Prevailing wages, as determined by the U.S. Department of Labor, are the wage rates paid to the majority of workers engaged in a particular occupation within a given region. These rates reflect the local labor market and are aimed at preventing contractors from lowering wages to gain competitive advantage. The concept of prevailing wages forms the bedrock of Davis-Bacon compliance, ensuring that workers are compensated at levels that reflect the region’s economic realities and promote a just labor environment.

The Symbiotic Relationship Between CHIPs Act, Davis-Bacon Compliance, and Prevailing Wages

As the CHIPs Act encourages the establishment and expansion of semiconductor manufacturing facilities on U.S. soil, ensuring the growth is grounded in ethical labor practices becomes paramount. Davis-Bacon compliance, bolstered by prevailing wage standards, guarantees that those involved in the construction and operation of semiconductor plants receive wages that align with local economic conditions. This alignment fosters a workforce that is both fairly compensated and motivated to contribute to the industry’s growth and stability.

Furthermore, adherence to prevailing wage standards contributes to the resilience and sustainability of the semiconductor workforce. Fair wages attract skilled workers, reduce turnover, and elevate overall job satisfaction, thus building a strong, stable, and competent workforce that is essential for the longevity of the industry.


The collaborative efforts of the CHIPs Act, Davis-Bacon compliance, and prevailing wages lay the groundwork for a resilient and progressive semiconductor industry. By fostering technological independence, national security, and ethical labor practices, this unified approach establishes a framework for a sustainable and equitable future. The confluence of these components represents not only a legislative endeavor but a holistic vision for the semiconductor sector—a vision that prioritizes fairness, stability, and progress as the pillars of a thriving industry in the face of global challenges.

How HCM TradeSeal can help:

HCM TradeSeal solves prevailing wage compliance. For non-union employers, it is essential to pay prevailing wages and fringe benefits to employees who work on certified jobs. We help you fully automate calculation of prevailing wages and preparation of certified payroll reports, even for employees with employer-paid benefits. Get your own free demo today!