In the case of Perkins, Secretary of Labor, et al. v. Lukens Steel Co. et al., 1939, the U.S Supreme Court ruled that private contractors supplying goods to the federal government were not required to pay their workers a "prevailing wage" as mandated by the Walsh-Healey Public Contracts Act of 1936 unless they had explicitly agreed to do so in their contracts with the government. The court held that while Congress could regulate wages for public works projects and direct employment relationships between federal agencies and their employees, it did not have authority over indirect employment relationships such as those involving private contractors supplying goods or services to federal agencies under procurement contracts.

In the dissenting opinion for Perkins, Secretary of Labor, et al. v. Lukens Steel Co. et al., Justice McReynolds argued that the majority's decision was an overreach of executive power and a violation of constitutional principles. He contended that Congress did not grant the President or his appointees authority to impose wage standards on private contractors supplying goods to federal agencies under the Walsh-Healey Act; such powers were only granted in relation to public works projects as per Davis-Bacon Act. Furthermore, he expressed concern about potential negative economic impacts resulting from this ruling, including increased costs for taxpayers and reduced competitiveness among businesses bidding on government contracts due to imposed wage controls above market rates.