How to use a 10 pin dip switch on a 8x3 Encoder (IC 74LS148)?
Since the the inputs to the 74LS148 are active low, you actually want the common lead of all the switches to go to ground, instead of VCC. 

This is why the outputs of the encoder are always high -- if the switches are off, the floating inputs act as high inputs, and when a switch is on it is also driving the input high.  So there is no way to drive any of the inputs low.

Besides tying the common lead of the switches to ground, I would also connect 4.7K pull-up resistors between each of the inputs of the encoder to VCC, rather than leaving them floating.  It's just better practice for TTL (74LS series), and required for CMOS (74HC or 74HCT series).  This way it will work for both types of chips.