Wednesday, April 3, 2013

Senate immigration deal’s Davis-Bacon poison pill?

Various media outlets breathlessly announced that there has been an immigration reform deal between the U.S. Chamber of Commerce and the AFL-CIO which establishes something called “prevailing wage” into the parts of the private sector of the economy that rely on immigrant labor.

But what is this thing called “prevailing wage”?

Prevailing wage (also known as Davis-Bacon) has been one of the hot button union issues since its inception as it demands that the U.S. Department of Labor set the cost for labor for federal government construction contractors rather than having the taxpayers get the benefit of competitive labor cost bidding.

In fact, the impact of Davis-Bacon on increasing the cost of government is so extreme that the 2012 Republican National Committee’s official platform calls for its repeal.

James Sherk from the Heritage Foundation writes in his article, “Repealing Davis-Bacon Act would save taxpayers $10.9 billion” that the Act requires taxpayers to pay wages that are, “22 percent above market rate.”

Sherk also notes that the Labor Department’s rate setting criteria has come under fire internally from the Inspector General’s office resulting in wide variance between the actual wages being paid for similar labor in a community than what taxpayers end up paying instead.

Suddenly, the term prevailing wage and all of its intricacies may be coming to private sector businesses who have nothing to do with government contracting as the U.S. Chamber and the AFL-CIO which both support immigration reform, came together to agree that the byzantine rules governing the determination of what the prevailing wage is should be foisted upon select non-government employers.

If the prevailing wage expansion goes into effect, and you own one of the major hotel chains that relies on immigrant labor, you probably will need to plan on hiring more people in human resources to try to keep you out of trouble.  But if you are hiring people to clean the motel you bought for your retirement, chances are you don’t have a Human Resources Department, and you now will face a whole new set of burdens to determine the wages you pay your workers.

No longer would the wages be set by mutual agreement between two consenting parties, but instead, the government will be setting the wage, and figuring out what that wage should be for different job categories is not often easy.

For construction companies it can get even more messy, as the wage for each classification of work at one construction site can differ from that at another depending upon locale.  For small to medium sized firms with job sites spread across a region, the combination of the increased costs of compliance along with the artificially increased labor costs are guaranteed to impact both the employer and the consumer in the wallet.

Bill Wilson, president of Americans for Limited Government puts it into perspective saying, “Prevailing wage laws have virtually forced small construction companies out of the government contracting bid process due to the complexity of following them.  Now, if media reports are to be believed, Big Labor may be attempting to open the door to imposing prevailing wages on Main Street businesses through the immigration legislation.  This would be a dream come true for Big Labor and labor attorneys, but a disaster for consumers and the hopes of small business people who will get ensnared in a web of unintelligible government regulations.”

It is anticipated that any prevailing wage provisions agreed to by third party groups included in the immigration legislation will be subject to rigorous debate in both the Senate and House of Representatives and some political observers are privately wondering if their inclusion will serve as a “poison pill” preventing passage of the underlying immigration law.

While it is unclear whether the House of Representatives would take up a Senate passed bill, the inclusion of a prevailing wage provision would likely throw attempts by the House to pass the legislation with majority of Republicans in support into disarray.

The Senate is anticipated to take up the legislation as early as May.


Checking Amnesty Applications Would Cost $20 Billion

Homeland Security Secretary Janet Napolitano pledged last week that if Congress were to approve an amnesty, the illegal immigrants applying for legalization would bear the administrative costs. She told RealClearPolitics, "I can tell you that [in] advising the White House, there were ways to deal with [the costs] without getting a big number that CBO would have to score."

A new report by the Center for Immigration Studies estimates the administrative cost of properly vetting each amnesty applicant, and thus the necessary fee level. Although no bill has yet been introduced, looking at earlier amnesty proposals and existing screening systems suggests what would be involved.

Among the findings:

* The average cost to the government of processing an amnesty application would be about $2,000 per person.

* This is an average; assessing some applications would be more complex, and costly, than others.

* If 10 million illegal immigrants were to apply for amnesty, that would mean the government would need to recoup $20 billion in fees.

* This does not include any back taxes or fines that might also be required.

A fee of $2,000 per application would represent more than 20 percent of the annual per capita median income of illegal immigrant households. Any fee below that level, or any fee waivers (which are widely granted by US Citizenship and Immigration Services), would mean that taxpayers would bear at least part of the cost of processing amnesty applicants.

The complete report, by CIS Fellow David North, is online  here.

The above is a press release from from Center for Immigration Studies. 1522 K St. NW, Suite 820,  Washington, DC 20005, (202) 466-8185 fax: (202) 466-8076.  Email: Contact: Marguerite Telford, 202-466-8185,

The Center for Immigration Studies is an independent research institution which examines the impact of immigration on the United States.  The Center for Immigration Studies is not affiliated with any other organization

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