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Calculating The ‘Prevailing Wage’ Costs Of A Bad Immigration Compromise

Department of Labor calculator shows hard costs of AFL-CIO, Chamber deal

Richard Trumka fingerpointing 2

On Friday (as noted here), AFL-CIO boss Richard Trumka and U.S. Chamber head Thomas Donahue (with the “assistance” of Sen. Charles Schumer) reached a “compromise” that would allow up to 200,000 immigrant workers (the numbers dependent on the industry) work visas, so long as a government-imposed wage rate is applied:

Workers would earn actual wages paid to American workers or the prevailing wages for the industry they’re working in, whichever is higher. The Labor Department would determine prevailing wage based on customary rates in specific localities, so that it would vary from city to city. [Emphasis added.]

Aside from the basic problem of the government dictating artificially high wage (and benefit) rates–known as prevailing wages–the problem is that most do not know what constitutes a “prevailing wage rate.”

To demonstrate how stupid this deal is, all one needs to do is look at the Department of Labor’s Wage Determinations website that provides prevailing wage rates by state, county and occupation.

Wage Determination Online Homepage

On this page the user can go to the center section, which covers prevailing wages under the Davis Bacon Act, click on “Select DBA WDs” and will be taken to a page that allows the user to select the state, county, as well as occupation.

Now, as noted previously, since the Davis Bacon Act is primarily used in federally-funded construction projects. However, as most private-sector residential construction classifications would be subject to the “prevailing wage” rate one can see the rate DOL determines is the prevailing wage.

For example, according to the DOL’s determination, a backhoe operator in Miami-Dade County, Florida would be entitled to $27.57 per hour, plus another $8.78 per hour in what the DOL calls “fringes” (those monies that are paid in lieu of going into a union’s pension and health and welfare funds).

This means that for bidding the costs of a backhoe operator for a residential project, the general contractor (or his subcontractors), instead of calculating what may be a lower market rates for (immigrant) labor, would be required to pay $36.35 per hour.

Beside the obvious effect of dissuading contractors from using immigrant labor, this will also cause wage inflation to spike in certain industries which will have a spill over effect everywhere.

Moreoever, since the DOL’s Davis Bacon provisions currently apply to (mostly) the construction industry, the Department of Labor will be required to develop hundreds (if not thousands) of new wage determinations to apply to other industries like the hospitality. restaurant, nursing home and other industries.

Guess who gets to pay for that?
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“Truth isn’t mean. It’s truth.”
Andrew Breitbart (1969-2012)

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