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The Prevailing Wage-A Disservice to US Workers
by Gary Endelman

Gary Endelman practices immigration law at BP Amoco Corporation. The opinions expressed in this column are purely personal and do not represent the views or beliefs of BP Amoco Corporation in any way.

Biography April 11, 2000 -- If you operate in a global economy, then the basic terms, assumptions and concepts on which that economy runs must be defined in a transnational context. This is particularly true for immigration laws that regulate the movement of people across national boundaries when the reasons that prompt such transfer are international. If employment-based immigration does not serve the US economy, it should be eliminated. Likewise, if the way in which the INS administers these laws hurts the economy, then the INS must change or be removed from the equation. Now is such a time.

There is no concept more basic to US employment immigration than the notion of a prevailing wage. What does this mean? It should mean that a US employer must pay the worker from Honduras or Sweden the very same wage that it pays to the US employee standing next to him doing the same job. That is not hard to understand. However, if their US employer must compete for customers with a foreign competitor then what this competitor is paying its workforce for this exact same activity must also be factored into the equation. Otherwise, either the US employer will lose the business, or, to prevent that from happening, the US employer will relocate abroad where labor costs are lower. Indeed, at the very time that ever-increasing rigidity in the enforcement of US employment immigration laws is making intelligent business planning both more expensive, tedious and difficult, other nations are extending ever-more enticing offers to lure these same businesses to their markets. This is particularly true with reference to high-tech jobs where the wonders of modem communication make it less central to have these employees physically located in the United States. Some estimates have over 30,000 high-tech jobs exiting the US in recent years and the trend is likely to intensify in the new millennium.

The INS and DOL do a grievous injustice when they define "prevailing wage" solely with reference to the internal US economy. This is true for several reasons. First, it gives the American worker a false sense of security. Second, it makes the US employer less capable of adapting to the international challenge. Third, by adopting such an insular approach the determinations overemphasize the importance of wages and grossly underemphasize employee productivity, which is far more important to profits and much more central to the future of any growing business. Fourth, the wage findings almost always fail to distinguish between different levels of experience and are therefore wildly inflationary, thus making it more difficult to bring and retain talented foreign-born workers.

As a result, two things happen which are directly harmful to the competitive vigor of the US economy. By narrowing the foreign pipeline of intellectual capital, the INS and DOL actually make the wage gap between US and foreign employers for the same work grow larger. When this happens, the US employer is under greater pressure to regain its competitiveness by leaving the US. Beyond that, when the foreign-born scientists, systems analysts, engineers, etc. are unable to work here, they will either go to work outside their home nation for one of our competitors or stay at home where the supply of brainpower in emerging industries will reach critical mass. In either instance, international competition to the US, and international penetration of the domestic US market, the very core asset that the INS and DOL are supposed to protect, and which preservation is the raison d'etre of US government policy, becomes more effective and less capable of being deterred by our response. Finally, it is sadly ironic to note that when the reverse happens, when the INS and DOL facilitate the hiring and retention of intellectual capital with appropriate safeguards for the legitimate interests of US workers, the wage differential between the US and the sending nations shrinks. As a result, the wages in these nations go up in response to the shrinkage in talent. Hence, the US business is under less pressure to leave when the immigrant comes not when he is turned back.

For too long, the INS and DOL have been allowed to pose as the champions of US workers. Nothing is further from the truth. By insisting on overly inflated prevailing wages that lack any link to the global market, these government agencies are one of the most insistent forces for unemployment now on the economic scene. Sure, the few US workers who hang on to their jobs will earn high wages but this will be cold comfort for the thousands of other US workers who see their jobs become the prize captured by foreign competitors who understand, as do their governments, that immigration is an economic strategy not a political problem. Tell that to the steel workers and coal miners who used to be proud practitioners of their craft but saw their jobs flow out of this country to Korea and other places when irresistible wage pressures made it impossible for American employers to compete or to modernize aging plants. Did the DOL benefit US workers and their communities by insisting on such a "Made in America" adherence to prevailing wages? The question literally answers itself. The stewardship of US employment-based immigration policy should be entrusted to those who know how to answer this query or, even better, know enough not to ask it. If the INS does not, they do a disservice to our nation and its workforce and must be asked to step aside.