Prevailing wage data complicates immigration debate

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Opinion pieces and speeches by EPI staff and associates.

[ THIS OP-ED ORIGINALLY APPEARED IN THE ALLENTOWN (PA) MORNING CALL ON AUGUST 2, 2006. ]

Prevailing wage data complicates immigration debate

By  Monique Morrissey

When Sens. John McCain and Edward Kennedy introduced a bill to provide a path to citizenship for undocumented immigrants and to expand temporary work visa programs, most of the initial opposition came from people who want to hang a ‘Keep Out’ sign on the nation’s border with Mexico.

But this time the opposition isn’t coming from the ‘Keep Out’ crowd — it’s coming from business people who are shortchanging U.S. workers and want to post signs that say ‘Help Wanted — As Cheap as Possible.’

That’s the message from the Senate Republican Policy Committee and the U.S. Chamber of Commerce, which are objecting to provisions in the McCain-Kennedy bill requiring that immigrants receiving temporary work visas be paid the prevailing wages for American workers. These provisions ensure that employers only hire guest workers when labor markets are tight, and don’t undercut U.S. wages.

The Republican Policy Committee published a report criticizing the wage protections, arguing that the methodology used by the Department of Labor to measure wage rates in the construction industry resulted in inflated wage estimates, which could lead to foreign workers receiving higher wages than their American counterparts.

The claim that prevailing wage measures are inflated relies on a selective reading of the evidence. The RPC report says the wage survey is flawed because participation is voluntary, and ‘there is no incentive (and perhaps there is a disincentive) for private-sector employers to provide wage information that may aid their competitors.’ In other words, low-wage employers may not participate in the survey if they don’t want their employees poached by competitors offering higher wages.

There’s a problem with this theory. The company-specific wage data collected by the Department of Labor are confidential. What’s more, the Senate Republican Policy Committee itself says the data tend to be out of date, which would bias the measure upward only when wages are falling, which is precisely when it makes sense to restrict employers from recruiting temporary workers from other countries.

More important, even if it’s true that the wage data aren’t perfect (a government report cited by the RPC found they were off by an average of 76 cents), this wouldn’t result in foreign workers receiving higher wages than U.S. workers for the simple reason that the law requires employers to first offer the job — at the prevailing wage — to U.S. workers.

So even accepting the premise that the wage data may be slightly off, the effect of the prevailing wage protections is to require companies that want to hire foreign temporary workers to first offer the jobs to U.S. workers for 76 cents above last year’s wage, which seems reasonable. For most jobs, this barely keeps pace with inflation and productivity increases. More to the point, for the purpose of ensuring that temporary workers are recruited only when labor markets are genuinely tight — and not just when the Chamber of Commerce deems there to be a ‘labor shortage’ — the higher the prevailing wage, the better.

The truth is that employers want to be free to recruit foreign temporary workers even when wages are falling — and they want to be able to hire them at lower wages.

While the Senate Republican Policy Committee claims to speak on behalf of U.S. workers, the construction trades unions are squarely behind the prevailing wage provisions, which are modeled on similar protections included in previous immigration laws.

It’s fine for the RPC to disown a bill that the Senate’s top Republican leaders supported: that’s politics. But if these critics have their way, legislation that was meant to protect the jobs and wages of American workers will have to be renamed the U.S. Chamber of Commerce Cheap Labor bill.

Monique Morrissey is a policy analyst with the Economic Policy Institute, in Washington, D.C.

[POSTED TO VIEWPOINTS ON AUGUST 3, 2006. ]