DOL ’s H-1B Wage Rule Massively Understates Wage Increases by up to 26 Percent

David J. BierThe Department of Labor ’s (DOL)new rule changes how it calculates the mandatory minimum wage —called the prevailing wage—for employers of H-1B and permanent foreign workers. DOL adopts a fundamentally flawed methodology as its basis to inflate the prevailing wage. But a bigger issue is that DOL itself failed to understand how much its methodological changes would artificially raise th e required wages. DOL estimated the wage effects of its rule using completely erroneous assumptions, and so it understates to the public the wage increases by, in many cases, as much as 26 percent.The prevailing wage is supposed to approximate the wages of similarly skilled U.S. workers. DOL currently uses the Bureau of Labor Statistics ’ (BLS)Occupational Employment Statistics (OES) survey to create a  prevailing wage for four skill levels within each occupation in every area of the country. The creation of the skill levels—which is the focus of this rule—is contentious because the OES doesn’t directly record skills. Instead, BLS creates these skill levels mathematically based on the reaso nable assumption that higher wages within an occupational category within a specific area generally reflect higher skills.Table 1  compares the new and old prevailing wage methodologies. Previously, DOL had assumed that the bottom third of the wage distribution represented entry level wages, while the top third was not entry level. After averaging the wages in the bottom third...

Source: Cato-at-liberty - October 9, 2020 Category: American Health Authors: David J. Bier Source Type: blogs