The AFL-CIO wants foreign workers paid more than native-born ones. Why?

March 26, 2013

The big fight inside the immigration reform talks right now is, at first glance, a little strange. The AFL-CIO wants temporary foreign workers to be paid significantly more than their average native-born counterparts. The Chamber of Commerce wants to be able to pay them less. Why?

A worker laboring at a romaine lettuce farm outside San Luis, Arizona. (REUTERS/Eric Thayer)
A worker laboring at a romaine lettuce farm outside San Luis, Ariz. (REUTERS/Eric Thayer)

The dispute is over whether businesses should have to pay a premium to hire foreign workers through a newly created guest-worker program and, if so, what that premium should be. Business wants to be able to pay foreign workers the same as native-born workers, with the federal miniMum wage as a floor, reports the LA Times.

Union officials, by contrast, have proposed a tiered system that would ask employers to pay anywhere between 20 percent and 70 percent more to hire foreign workers, which includes both wage hikes and fees, TPM reports. "Bringing in workers below median by definition lowers median wages for everyone," says Jeff Hauser, an AFL-CIO spokesman who argues that the higher wages will benefit both native- and foreign-born workers. "The greatest problem with the economy for more than a generation has been declining rather than raising wages."

At the heart of the issue is a seemingly simple calculation: Mandating that foreign workers get higher wages means fewer foreign workers will get hired. But if wages for foreign workers are prohibitively high, it could lead employers to decide against hiring anyone new because of the costs or it could prompt businesses to hire unauthorized immigrants instead.

But part of the problem here is that setting any kind of comparison between native-born workers and foreign workers is difficult. "There isn't a single analytical obvious approach on which everyone can agree," says Madeleine Sumption, a senior policy analyst at the Migration Policy Institute.

Even if you just wanted to pay foreign workers the same as their native-born counterparts, there isn't a clear universal yardstick to use. "Should you use the median or the mean?" asks Sumption, pointing out that the mean is generally higher. Should employers pay foreign workers according to a national baseline for a given occupation, or a local one? What if they work in multiple geographic locations? And should employers be able to scale wages for foreign workers based on experience?

Such questions haven't even been completely resolved inside existing temporary worker programs. The Department of Labor, for instance, has finalized a rule prohibiting employers from paying lower wages because of less work experience under the H2-B visa program (seasonal workers in agriculture, hotels, et al), explains Sumption. The argument is that it's difficult for employers (or employees) to verify the length of work experience, making it easier for businesses to underpay foreign workers. However, Congress has held back funding for enforcing this new regulation, so businesses haven't borne the brunt of complying with it.

In practice, independent policy experts like Sumption believe that a simpler, flatter system for determining foreign workers' wages is more workable than a complex system with a ton of variation. "There's not a policy consensus on this, but the more granular you try to make the wage, the more inaccurate it tends to be," she says, explaining that it's hard to get large quantities of data needed to scale wages based on location, experience, and so forth.

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