Prevailing wage survey: Right now, at long last

The Saipan Chamber of Commerce has announced that it will commission a prevailing wage survey for the CNMI through the Guam Employers Council, which has conducted these kinds of surveys in the past. We have heard rumors of prevailing wage surveys that may be conducted by either private companies or government agencies and, for a number of reasons, we welcome as many surveys, using the proper methodology, as may be done. But the Chamber of Commerce has taken the first concrete step toward actually getting the job done, and getting it done for as many job categories as possible, across the board.

A valid prevailing wage survey is critical for the CNMI, and for employees as well as employers. Here’s why.

[B]Workforce Preservation[/B]

It’s a no-brainer that you can’t get work done without people to do the work, at all levels. In the CNMI that has always meant importing alien guest workers and, even after the demise of the garment industry, it still does. The suggestion made by a U.S. Department of Labor functionary, in a Chamber of Commerce-sponsored “stakeholders teleconference” a year ago, that the CNMI could fill in its workforce gaps with “seasonal chambermaids” and “seasonal agricultural workers,” only demonstrates how far removed these bureaucrats are from reality in the CNMI.

Anyone who is not alarmed after reading the Government Accountability Office report on CNMI jobs and wages, issued at the end of last week, is living in a different universe. (A summary of the report, with links to more a more detailed summary and to the report itself, is available at http://tinyurl.com/6zjck8e.) Jobs have disappeared at a drastic rate in the past five years, and the resulting drop in business has left many employers (including the CNMI government) struggling to make payroll. We certainly wish we could pay our own staff more, and they certainly deserve it, but we can’t. It doesn’t matter what the reason is—and we’ve heard plenty of reasons, from the departure of the garment factories, to the decline of tourism in the face of terrorism and natural disasters, even Article 12—the fact is that to keep our businesses running and to preserve what’s left of the CNMI economy, we must be able to hire employees at wages that are not only agreeable to employer and employee, but are also within an affordable range.

Fortunately, the CNMI still has a trained and capable workforce. Those who are U.S. citizens and U.S. permanent residents, or are citizens of the Freely Associated States, can live and work here freely For now, so can CNMI permanent residents and their immediate relatives, and the immediate relatives of FAS citizens, thanks to the generous grant of humanitarian parole (aka parole-in-place) by USCIS. Unfortunately, much of that workforce is composed of aliens who do not qualify for any U.S. visa except the long-awaited CW-1 category. Although CW-1 was designed to help maintain the CNMI workforce by providing a temporary U.S. immigration status for the bulk of alien guest workers, it remains to be seen whether the final regulations will be published in time to beat the Nov. 28, 2011 deadline, and whether the status will be extended beyond the end of 2014. Most CW-1 employees will be minimum wage workers, as they are now.

But what about the large number of aliens working in the CNMI as professional or skilled workers? These are the workers who will not qualify for CW-1, because there are U.S. employment visa categories such as H-1B available for them as accountants, engineers, tech specialists, and the like.

[B]What is a Prevailing Wage?[/B]

Most U.S. employment visa categories require that the salary offered to the worker, in whatever category, must be at least the “prevailing wage,” which is the average wage paid to workers in the same job category, in the same state or territory. The policy justification for this requirement is to prevent employers from paying low wages to foreign workers, which, in turn, would depress wages for American workers. In other words, if an employer wants to hire a foreign worker, he must pay that worker the same salary as an American worker would reasonably expect. In order to employ workers in certain categories, such as H-1B, the employer must obtain certification from US DOL, by filing a labor condition application, or LCA, for each employee. US DOL makes the determination using the following standard:

[W]hether there are not sufficient United States workers who are able, willing, qualified and available; whether the employment of the foreign worker will have an adverse effect on the wages and working conditions of United States workers similarly employed; and whether the employer has met the procedural requirements of the regulations.

All other things being equal, the wage will be approved, and the employer can proceed with the application to USCIS or Department of State, if the offered wage is equal to, or greater than, the prevailing wage for that job category.

[B]What is a Prevailing Wage Survey?[/B]

The LCA is done online. The form asks what wage is offered, and then asks the basis on which the wage was determined. For a minimum wage job, or a union job with wages governed by contract, that’s all that’s needed. For a professional position, however, the basis should include the established wage in the region. For example, the Guam Department of Labor has established prevailing wages for most skilled and professional job categories. This is based on prevailing wage surveys done in the past; note that prevailing wage surveys, to be considered valid, must be kept updated every two years or so.

The prevailing wage survey is just that: a survey of the wages paid in each job category by the largest number of responding employers. The methodology is specialized, and must meet standards acceptable to US DOL, but at its heart a prevailing wage survey attempts to get the largest amount of data for each job category, and then boil it down to a set of usable numbers.

What is a Prevailing Wage Determination and Who Makes It? Or, Why We Need a Prevailing Wage Survey

As part of the LCA process the employer can ask for a prevailing wage determination, or PWD. The PWD is supposed to reflect the prevailing wages in the place where the worker will be employed, and US DOL has said that it will accept CNMI prevailing wages for CNMI-based workers.

[B]-Guam Wages Rule[/B]

And that’s where the problem starts. There is no prevailing wage survey for the CNMI, and US DOL has made it clear that it has no intention of doing one. Therefore, when a CNMI employer request a PWD, US DOL uses the Guam scale. The outcome most often is that the required wage is more than the employer can pay, and more than the employee expects, often by 100-200 percent. As we said earlier in this column, we are all for improved wages when they are affordable; however, with our economy in tatters, the PWDs coming out of US DOL these days are simply unrealistic for the CMNI labor market..

If you are interested in specifics, take a look at the Guam DOL prevailing wage web pages for non-professionals, starting at http://tinyurl.com/6gmqx4n. In March, the federal government published current and proposed prevailing wages for Guam in the Federal Register, available at http://tinyurl.com/68xoly5. If you think those wages are high—roughly double current CNMI wages for the same jobs—than take a look at the comparison chart with Hawaii rates put together by the Guam Chamber of Commerce, at http://tinyurl.com/5ts4wzd. The Hawaii rates are roughly three times those in Guam; more, if benefits are factored in.

In this column we do not intend to discuss how to determine job category, or the detailed application process. US DOL has some excellent online references; a good starting place is the prevailing wage FAQ page for the Office of Foreign Labor Certification, at http://tinyurl.com/63lwtsa, which has very useful links to a wide range of information. For our discussion, visit the database that USDOL uses for determining prevailing wages, the Occupational Employment Statistics (OES) wage library; the Guam data is available at http://tinyurl.com/6aqhdj6.

[B]-Choose Your Job Level? Not.[/B]

For example, we recently had to deal with the category of “construction managers,” which is a professional category; at OES http://tinyurl.com/65zpnvl. Each OES category has four levels. The Guam prevailing wage for level 1 construction manager is $29,474, and goes up to level 4, at $58,344.

Fair enough, but the form requesting a prevailing wage determination does not allow the applicant to specify which level job is being offered. In our case, the employer was offering a level 2 or level 3 job—but the PWD came back for level 4—a difference of between $10,000 to $20,000 per year.

And every PWD we’ve gotten so far has been “level 4.” Who figures that out for the government?

[B]-Stuck with the PWD[/B]

The good thing about a PWD is that it provides a safe harbor for the employer. The government cannot come back later and tell an employer who has followed the PWD that the employees’ wages are not sufficient. That can happen, however, to the employer who simply offers a wage on the LCA, and has it accepted without getting a PWD—if the federal government later investigates and determines that the wages are below the prevailing wage, the government can go after the employer for the difference, which is then paid to the worker(s). The penalty for ignoring the prevailing wage is severe.

So the wise employer gets a PWD, right? Sure, but once the PWD is issued, the employer is stuck with it. That’s the downside. If the CNMI had its own prevailing wage survey and OES wage levels, we would agree this is fair. But we don’t, and the effect of unfair PWDs is crippling. No one wins if the employer cannot afford to continue in business—the employer folds, the jobs disappear and the workers are on the beach.

[B]The Proposed Prevailing Wage Survey: A Bargain for the CNMI[/B]

The Chamber of Commerce will roll out its prevailing wage survey plans at the regular July 6 Chamber meeting, which this month will be at the Grand Hotel at 11:30am. Andy Andrus, who will conduct the survey, will describe the survey process.

But there’s more: Immediately after the Chamber’s lunch meeting, at 1:30pm., Mr. Andrus will give an approximately one-hour presentation at the Pedro P. Tenorio Multi-Purpose Center in Susupe, with a more technical discussion of the survey and its benefits, and a Q&A session.

There is no charge for the July 6 session at the Multi-Purpose Center. Better, employers who decide to participate in the prevailing wage survey will receive the survey report at no charge, when it is issued to the Chamber. They will be able to use it in making LCA applications, and in requesting PWDs. Nonparticipants will be allowed access to the survey later. For those reluctant to reveal what might be considered confidential information, the Chamber has promised 100 percent confidentiality to participants in the survey.

So mark your calendars. Be there. It’s important.

[I]The information contained in this column is intended as general information only, and not as individual legal advice. Readers should obtain professional legal advice before taking action with respect to their individual situations. Readers may submit questions regarding federalization or immigration issues to the authors by email to lexmarianas@pticom.com. Readers may also e-mail written questions through the Saipan Tribune at editor@saipantribune.com.[/I]