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Greg Siskind on Immigration Law and Policy

AFL-CIO Misleads On Wage Argument

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AFL-CIO Chairman Richard Trumka would have you believe that when an employer pays a Level 1 wage, they are only paying 25% of the market rate for the worker. According to Bloomberg:



Under the AFL-CIO's proposal, the Labor Department would
determine what that level should be. The Chamber of Commerce
wants wages to be set under a four-tiered system based on
workers' experience and skills.


The first level of that system would be equivalent to 25
percent of the market rate, or poverty-level wages, Trumka said.
"It relegates those newcomers to a life of poverty," he said.
"The second thing it could do is drag down wages for American
workers and benefits. Nobody wants that."




If this were true, I'd probably be complaining right along with the AFL-CIO. But it is a complete lie. The OES Levels are based on the average wage paid to comparable workers based on four tiers of experience. A Level 1 wage is based on what entry level workers are paid on average in a given field. If the job doesn't require an American to have anything more than entry level skills, then the prevailing wage SHOULD be Level 1. Level 1 does not mean a worker is paid 25% of the market rate. If the job requires more experience or more skills, then it moves up the chain and a higher OES wage level is appropriate.


For certain types of jobs, particularly the ones at the lowest end of the spectrum, there is not much difference to an employer whether someone with a lot of experience or a little experience is doing the work. So the difference between Level 1 and Level 4 for those types of jobs will probably be minimal (though if there's a union representing the workers, the collective bargaining agreement may make the difference fairly extreme - interesting, right?). As the occupation goes up the skill ladder, employers are usually pickier in terms of what kind of education, skills and experience a worker has so a higher skill level is required. So, for example, if I was hiring an associate and I wanted that person to have two or three years of experience working on a particular kind of case, I'd likely have to pay based on skill Level 2, not Level 1. Maybe I wanted a senior attorney with enough experience to supervise a team of lawyers and paralegals and manage client relationships. Perhaps someone with 10 to 20 years experience. I'd probably have to pay a Level 3 or 4.


By the way, there's a good explanation of the system provided by the Department of Labor on page 7 of the document located here. As you can see, the wage levels are based on what the average wage is for comparably employed workers at a particular experience level. Paying a Level 1 wage does not mean you're paying 25% of the market rate or even in the bottom quartile of people in the field.


The AFL-CIO is essentially telling employers that they should be paying that entry level worker at the same rate as the worker with 10 to 20 years experience. Does that sound reasonable? In many fields, the difference between Level 1 and Level 4 can be enormous - as much as 68% according to at least one analysis I've seen in the last few days. You can look for yourself at www.flcdatacenter.com.


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Comments

  1. George Chell's Avatar
    And none of them will discuss the impact of oursourcing on wages and employment. If Trumka is right, the UK would be booming and Australia would be down in the dumps!
  2. George Chell's Avatar
    And we have competition for skills...

    http://latino.foxnews.com/latino/news/2013/03/26/now-wanted-in-brazil-six-million-skilled-immigrants/
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