[Federal Register Volume 75, Number 192 (Tuesday, October 5, 2010)]
[Proposed Rules]
[Pages 61578-61588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25142]
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Part II
Department of Labor
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Employment and Training Administration
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20 CFR Part 655
Wage Methodology for the Temporary Non[dash]Agricultural Employment H-
2B Program; Proposed Rule
Federal Register / Vol. 75 , No. 192 / Tuesday, October 5, 2010 /
Proposed Rules
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DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Part 655
RIN 1205-AB61
Wage Methodology for the Temporary Non-Agricultural Employment H-
2B Program
AGENCY: Employment and Training Administration, Labor.
ACTION: Proposed rule; request for comments.
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SUMMARY: The Department of Labor (the Department or DOL) proposes to
amend its regulations governing the certification of the employment of
nonimmigrant workers in temporary or seasonal non-agricultural
employment and the enforcement of the obligations applicable to
employers of such nonimmigrant workers. This Notice of Proposed
Rulemaking (NPRM or proposed rule) proposes to revise and solicits
comments on the methodology by which the Department calculates the
prevailing wages to be paid to H-2B workers and U.S. workers recruited
in connection with a temporary labor certification for use in
petitioning the Department of Homeland Security (DHS) to employ a
nonimmigrant worker in H-2B status.
DATES: Interested persons are invited to submit written comments on the
proposed rule on or before November 4, 2010.
ADDRESSES: You may submit comments, identified by Regulatory
Information Number (RIN) 1205-AB61, by any one of the following
methods:
Federal e-Rulemaking Portal www.regulations.gov. Follow
the Web site instructions for submitting comments.
Mail or Hand Delivery/Courier: Please submit all written
comments (including disk and CD-ROM submissions) to Thomas Dowd,
Administrator, Office of Policy Development and Research, Employment
and Training Administration, U.S. Department of Labor, 200 Constitution
Avenue, NW., Room N-5641, Washington, DC 20210.
Please submit your comments by only one method. Comments received
by means other than those listed above or that are received after the
comment period has closed will not be reviewed. The Department will
post all comments received on http://www.regulations.gov without making
any change to the comments, including any personal information
provided. The http://www.regulations.gov Web site is the Federal e-
rulemaking portal and all comments posted there are available and
accessible to the public. The Department cautions commenters not to
include their personal information such as Social Security Numbers,
personal addresses, telephone numbers, and e-mail addresses in their
comments as such submitted information will become viewable by the
public on the http://www.regulations.gov Web site. It is the
commenter's responsibility to safeguard his or her information.
Comments submitted through http://www.regulations.gov will not include
the commenter's e-mail address unless the commenter chooses to include
that information as part of his or her comment.
Postal delivery in Washington, DC, may be delayed due to security
concerns. Therefore, the Department encourages the public to submit
comments through the http://www.regulations.gov Web site.
Docket: For access to the docket to read background documents or
comments received, go the Federal eRulemaking portal at http://www.regulations.gov. The Department will also make all the comments it
receives available for public inspection during normal business hours
at the Employment and Training Administration (ETA) Office of Policy
Development and Research at the above address. If you need assistance
to review the comments, the Department will provide you with
appropriate aids such as readers or print magnifiers. The Department
will make copies of the rule available, upon request, in large print
and as an electronic file on computer disk. The Department will
consider providing the proposed rule in other formats upon request. To
schedule an appointment to review the comments and/or obtain the rule
in an alternate format, contact the Office of Policy Development and
Research at (202) 693-3700 (VOICE) (this is not a toll-free number) or
1-877-889-5627 (TTY/TDD).
FOR FURTHER INFORMATION CONTACT: William L. Carlson, PhD,
Administrator, Office of Foreign Labor Certification, ETA, U.S.
Department of Labor, 200 Constitution Avenue, NW., Room C-4312,
Washington, DC 20210; Telephone (202) 693-3010 (this is not a toll-free
number). Individuals with hearing or speech impairments may access the
telephone number above via TTY by calling the toll-free Federal
Information Relay Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
I. Revisions to 20 CFR 655.10
A. Statutory Standard With Respect to Prevailing Wages and Current
Department of Labor Regulations
As provided by section 101(a)(15)(H)(ii)(b) of the Immigration and
Nationality Act (INA or Act) (8 U.S.C. 1101(a)(15)(H)(ii)(b)), the H-2B
visa classification for non-agricultural temporary workers is available
to a foreign worker ``having a residence in a foreign country which he
has no intention of abandoning who is coming temporarily to the United
States to perform other [than agricultural] temporary service or labor
if unemployed persons capable of performing such service or labor
cannot be found in this country.'' There is an annual cap of 66,000 H-
2B nonimmigrant visa approvals per fiscal year, divided into two
biannual allocations of 33,000 each.
Section 214(c)(1) of the INA requires DHS to consult with
appropriate agencies before approving an H-2B visa petition. 8 U.S.C.
1184(c)(1). The regulations for U.S. Citizenship and Immigration
Services (USCIS), the agency within DHS which adjudicates requests for
H-2B status, require that an intending employer first apply for a
temporary labor certification from the Secretary of Labor (the
Secretary). 8 CFR 214.2(h)(6). That certification informs USCIS that
U.S. workers capable of performing the services or labor are not
available, and that the employment of the foreign worker(s) will not
adversely affect the wages and working conditions of similarly employed
U.S. workers. A certification from the Secretary is currently not
required for H-2B employment on Guam, for which certification from the
Governor of Guam is required. 8 CFR 214.2(h)(6)(iii).
The Department's regulations at 20 CFR part 655, Subpart A, ``Labor
Certification Process for Temporary Employment in Occupations other
than Agriculture or Registered Nursing in the United States (H-2B
Workers),'' govern the H-2B labor certification process, as well as the
enforcement process to ensure U.S and H-2B workers are employed in
compliance with H-2B labor certification requirements. Applications for
labor certification are processed by the Office of Foreign Labor
Certification (OFLC) in ETA, the agency to which the Secretary has
delegated her responsibilities described in the USCIS H-2B regulations.
Enforcement of the attestations made by employers in H-2B applications
for labor certification is conducted by the Wage and Hour
[[Page 61579]]
Division (WHD) within DOL, to which DHS on January 16, 2009 delegated
enforcement authority granted to it by the INA. 8 U.S.C.
1184(c)(14)(B).
As a part of the process of applying to employ H-2B workers, an
employer must ensure that it will pay the workers hired in connection
with that application a wage that will not adversely affect the wages
of U.S. workers similarly employed. To ensure that this requirement is
met, the Department has established a process for providing to an
employer a prevailing wage for the job opportunity, below which an
employer may not pay its H-2B workers. Until 2005, the process of
determining prevailing wages was governed by General Administration
Letter (GAL) No. 2-98 (1998). The process required by the 1998 GAL made
use of wage rates determined under the Davis-Bacon Act (DBA), 40 U.S.C.
276a et seq., 29 CFR part 1, or the McNamara-O'Hara Service Contract
Act (SCA), 41 U.S.C. 351 et seq., wage rates mandatory for H-2B
occupations for which such wage determinations existed. In the absence
of DBA or SCA wage rates, prevailing wage determinations were based on
the Occupational Employment Statistics wage survey (OES), compiled by
the Bureau of Labor Statistics (BLS). In May 2005, as a result of
legislation enacting section 212(p)(4) of the INA, 8 U.S.C. 1182(p)(4),
relating to the H-1B visa program, the Department issued guidance on
prevailing wage determinations. The Department applied that guidance to
H-2B labor certification applications as well as the H-1B temporary
specialty worker and permanent labor certification programs. Under that
guidance, prevailing wage determinations in these three visa programs
were set based on four tiers tied to skill levels using the OES wage
survey, while the use of DBA or SCA wage rates was at the option of the
employer seeking the determination. The Department did not use notice
and comment rulemaking when issuing that guidance. See ETA Prevailing
Wage Determination Policy Guidance, Non-agricultural Immigration
Programs (the Prevailing Wage Guidance), http://www.foreignlaborcert.doleta.gov/pdf/NPWHC_Guidance_Revised_11_2009.pdf.
In 2008, the Department proposed and finalized regulations that
currently govern the H-2B temporary worker program. 73 FR 29942, May
22, 2008; 73 FR 78020, Dec. 19, 2008 (the 2008 Final Rule). The 2008
Final Rule essentially codified various aspects of the 2005 prevailing
wage guidance, including that the prevailing wage for labor
certification purposes shall be the arithmetic mean of the wages of
workers similarly employed at the skill level in the area of
employment. 20 CFR 655.10(b)(2). Additionally, the 2008 Final Rule, in
accordance with the 2005 prevailing wage guidance, continued to require
the use of the OES Survey in setting the prevailing wage, in the
absence of a collective bargaining agreement, an employer-provided
survey acceptable under 20 CFR 655.10(f), or a request from the
employer to use the DBA or SCA wage determinations. The 2008 Final Rule
also transferred the process of determining prevailing wages from the
State Workforce Agencies (SWAs) to OFLC but did not change the method
for calculating the wages for H-2B workers and U.S. workers. The
activity of calculating and issuing prevailing wage determinations
(PWDs) based upon requests from employers seeking to use them in
connection with a foreign labor certification program is now conducted
by OFLC's National Prevailing Wage Center (NPWC), previously named the
National Prevailing Wage and Helpdesk Center, in Washington, DC; it is
designated in the regulation by the generic National Processing Center,
or NPC.
B. The Need for New Rulemaking
Because the 2008 Final Rule did not make any changes in the method
by which wages for H-2B workers and U.S. workers are calculated and
continued the four-tiered skill system, the Department did not seek
comment in the rulemaking process on the sources of data used to set
wage rates. Since the 2008 Final Rule took effect, however, the
Department has grown increasingly concerned that the current
calculation method does not adequately reflect the appropriate wage
necessary to ensure U.S. workers are not adversely affected by the
employment of H-2B workers. Additionally, the prevailing wage
calculation methodology became the subject of litigation. On August 30,
2010, the U.S. District Court in the Eastern District of Pennsylvania
in Comit[eacute] de Apoyo a los Trabajadores Agricolas (CATA) v. Solis,
Civil No. 2:09-cv-240-LP, 2010 WL 3431761 (E.D. Pa. Aug. 30, 2010),
ordered the Department to ``promulgate new rules concerning the
calculation of the prevailing wage rate in the H-2B program that are in
compliance with the Administrative Procedure Act no later than 120 days
from the date of this order.'' The plaintiffs in CATA had challenged
the Department's use of skill levels in establishing prevailing wages
and the Department's reliance upon OES data in lieu of DBA and SCA
rates. The court ruled that the Department had violated the
Administrative Procedure Act when it did not adequately explain its
reasoning for using skill levels as part of the H-2B prevailing wage
determinations, and that it failed to consider comments relating to the
choice of appropriate data sets in deciding to rely on OES data rather
than DBA and SCA in setting the prevailing wage rates.
Accordingly, in order to comply with the Court's order and to
appropriately establish a wage methodology that adequately protects
U.S. and H-2B workers, the Department is engaging in this new
rulemaking to provide the public with notice and opportunity to comment
on a new proposed methodology to determine prevailing wages under the
H-2B program. The Department anticipates further rulemaking that will
address other aspects of the H-2B temporary worker program.
C. Sec. 655.10 Prevailing Wage
The proposed rule would establish that the prevailing wage will be
the highest of the following: Wages established under an agreed-upon
collective bargaining agreement (CBA); a wage rate established under
the DBA or SCA for that occupation in the area of intended employment;
and the arithmetic mean wage rate established by the OES for that
occupation in the area of intended employment. The employer would be
required to pay the workers at least the highest of the prevailing wage
as determined by the NPC, the Federal minimum wage, the State minimum
wage and the local minimum wage.
The NPRM proposes to include consideration of the use of DBA wages
and SCA wages for those occupations for which wages have been
determined under either of the two Acts for the area of intended
employment. The WHD's DBA survey program has undergone a significant
re-engineering effort in the last 7 years, resulting in a greatly
improved and timely prevailing wage rate determination process. The
wage determinations are maintained by type of public construction
project (e.g., residential, building, highway, and heavy), and they are
issued on a county-by-county basis. In addition, they include more
detail for crafts (e.g., they distinguish between rates paid to a
pipefitter who performs HVAC work and one who does not). Presently, SCA
wage determinations are based upon BLS' National Compensation Survey
and OES survey data, and in some cases Federal employee data is also
used. SCA
[[Page 61580]]
wage determinations now are reviewed yearly. Therefore, the Department
has revisited the issue of whether to require the consideration of
these alternative prevailing wage rate sources and has concluded that
process improvements have made these wage surveys appropriate for use
in this program. During its long practice of making wage determinations
under these statutes, the Department has invested significant time and
resources in developing appropriate calculation methodologies and
making decisions about appropriate sources of wage data which it must
consider in order to preserve wage integrity for U.S. workers.
The Department has concluded that the mandatory consideration of
the DBA and/or SCA wages for purposes of PWDs will address several
important policy objectives, including protecting U.S. worker wages.
First, it will ensure that each PWD reflects the highest wage from the
most accurate and diverse pool of government wage data available with
respect to a job classification and area of intended employment.
Second, it will ensure compliance with mandatory wage standards for
certain occupations. In addition, many of the H-2B job classifications
already have DBA or SCA wages associated with the occupations;
therefore, reinstating the explicit use of these wages can prevent the
undercutting of wages in the local market when they more accurately
reflect local market wages.
Furthermore, the proposed rule would eliminate the use of the four-
tiered wage structure. The Department currently implements this four-
tiered system in accordance with the 2005 Prevailing Wage Guidance.
This guidance differentiates the wage tiers by the level of experience,
education, and supervision required to perform the job duties, as
required for H-1B wages by section 212(p)(4) of the INA, from which the
four-tiered wage system is derived. For the reasons stated below, the
Department proposes to amend the current four-tier practice for the H-
2B program and proposes instead a single OES wage level for H-2B job
opportunities based on the arithmetic mean of the OES wage data for the
job opportunities in the area of intended employment.
The Department has re-examined section 212(p)(4) of the INA and has
concluded that the use of the skill levels mandated in that provision
is not legally required in the H-2B program. Section 212(p)(4) of the
INA was enacted in the context of H-1B reform in the Consolidated
Appropriations Act of 2005, and while it is the only paragraph in
section 212(p) that does not reference any specific immigration
programs to which it applies, it is embedded in the provisions dealing
with prevailing wages for positions in the H-1B and permanent foreign
labor categories. There is no legislative history indicating that it
was or was not meant to apply only to the H-1B program. However, the
other provisions of section 212(p), which were all added to the INA by
Congress at the same time, all are specific in their application to H-
1B, to the permanent program, or to both. None applies to the H-2B
program.\1\ Thus, the Department no longer believes that it is bound by
section 212(p)(4) to offer four-tiered wage levels in the H-2B program.
The Department has already eliminated the four-tiered wage levels in
the H-2A program in its Final Rule on that program. 75 FR 6884 (Feb.
12, 2010).
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\1\ Additionally, the decision issued by the court in
Comit[eacute] de Apoyo a los Trabajadores Agricolas (CATA) v. Solis,
2010 WL 3431761, at *19 n.22, which invalidated the application of
the four-tier wage skill levels to the H-2B program, found that
section 212(p)(4) of the INA is limited to the H-1B context (if the
Department argued that it was ``using skill levels because of the
statute, that explanation would be irrational'').
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The wage-setting procedures no longer require a single wage
determining methodology as a matter of administrative efficiency, which
was a concern at the time of issuance of the 2005 Prevailing Wage
Guidance. The Department, which had used a two-tiered wage system in
its foreign labor certification programs before the enactment of
section 212(p), implemented the four tiers in H-2B for administrative
efficiency when it implemented them in the H-1B and permanent labor
certification programs. At that time, the SWAs were responsible for
providing all wage determinations. Training diverse State workforce
staff around the country on multiple wage methodologies for different
wage determination processes in foreign labor certification programs
would have been difficult and would have inevitably resulted in
inconsistent application and confusion, which is counterproductive to
the Department's mandate to ensure that H-2B employers do not offer
wages that will adversely impact the wages of U.S. workers. However,
the Department completed consolidation of its wage determination
activities for its foreign labor programs in the NPWC in January 2010.
The use of a single Center to issue wage determinations ensures that
wage calculations are applied consistently throughout a single program,
thereby eliminating the need to use a single method of calculation for
all programs for administrative efficiency. Indeed, as noted above, the
Department already has stopped using the four-tiered system in the H-2A
program as of the effective date of the H-2A Final Rule. 75 FR 6884
(Feb. 12, 2010).
The types of jobs found in the H-2B program involve few if any
skill differentials necessitating tiered wage levels. The Department
has an obligation to require H-2B employers to offer wages that do not
adversely affect the wages of their U.S. workforce. By their very
existence, however, multiple wage rates, particularly in a program in
which most job opportunities have few or no skill requirements,
stratify wages and inappropriately allow employers to force much of the
wage-earning workforce into a lower wage. H-2B workers, most of whom
fill jobs with low skill levels, are more likely to be classified at
the low end of the wage tiers, ultimately adversely affecting the wages
of U.S. workers in those same jobs. In addition, even if skill-based
wage tiers were desirable as a theoretical matter, neither the OES nor
any other comprehensive data series that we are aware of attempts to
capture such variations. While the Department has, since 1998, created
tiered wages by mathematically manipulating OES data in accordance with
the statute, the actual OES survey instrument does not solicit data
concerning the skill level of the workers whose wages are being
reported. While the assumption that lower wages reflect lower skills
(the basis for the current methodology) may have some validity in
higher skilled occupations, there is no support for that assumption in
the case of the lower-skilled occupations that predominate in the H-2B
program.
H-2B disclosure data from the last 10 years demonstrates that many
jobs for which employers seek H-2B workers--housekeepers, landscape
workers, etc.--clearly require minimal skill to perform, have few
special skill or experience requirements, and do not generally have
career ladders. These jobs have typically resulted in a Level 1 (the
lowest wage level) determination for the H-2B employer, because the
jobs themselves do not require the employer to seek workers with higher
skill levels. The result is a wage determination that is in fact lower
than the average wage paid for many jobs that are of the same
classification as those jobs filled under the H-2B program.\2\ By
allowing jobs to be filled by H-2B workers at these lower wages, a
tiered wage system can have a
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depressive effect on wages of similar domestic workers, ultimately
adversely affecting the wages of U.S. workers in those same jobs.\3\
The Department cannot continue to allow such wage depression where its
mandate is to ensure that the wages of U.S. workers suffer no adverse
impact.
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\2\ DOL analysis shows that, in about 96 percent of the cases,
the H-2B wage is lower than the mean of the OES wage rates for the
same occupation. See footnote 6.
\3\ Absent an increase in the number of workers under the H-2B
program to fill the temporary labor shortage, wages for these
temporary jobs would rise in order to dispel the shortage, until
sufficient additional domestic labor is attracted into the market.
These wage increases are avoided, however, under the prevailing wage
requirements of the H-2B program as currently configured. Moreover,
when H-2B wages are set lower than wages paid to U.S. workers in
similar jobs, as they generally are under the tiered wage system,
the H-2B wages may not actually reflect the economic value of the
work, impeding any upward pressure on wages that would otherwise
result from the labor shortage.
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The Department, accordingly, proposes to require that the
arithmetic mean of the OES wage rates be the basis for determining the
OES component of the prevailing wage rate in the H-2B program as it is
the most effective available method for preventing adverse effect on
wages. The Department welcomes comment on specific alternatives for
wage calculations to meet its mandate for avoiding adverse effect on
wages while ensuring that wages reflect economic realities in the
marketplace for such jobs.
Finally, the H-2B regulations currently allow the use of an
employer-provided survey to determine the prevailing wage when that
survey meets certain methodological requirements, even if the survey
produces a lower wage than the OES wage. The NPRM proposes to eliminate
the use of private wage surveys in the H-2B program. After more than 10
years of successful experience with the OES, the Department has
concluded that the review of such surveys is an inefficient and
unnecessary expenditure of government resources. While private surveys
can provide useful information, the cost of reviewing the surveys
outweighs their utility.
By eliminating the use of such employer-provided surveys, the
proposed rule also eliminates the need for the 2008 Final Rule
provision allowing employers to file supplemental information regarding
the use of a survey, rendering current section 655.10(g) at least
partially moot. The section also references the submission of
supplemental information when there is a disagreement with a wage
level, which has also been rendered moot. As any other issue (such as
the application of a DBA or SCA wage) can be appealed through the
review of a PWD by the Certifying Officer or by BALCA through the
procedures of section 655.11, the Department is removing paragraphs
655.10(f) and (g) of the current rule.
II. Administrative Information
A. Executive Order 12866
Under Executive Order (E.O.) 12866, the Department must determine
whether a regulatory action is economically significant and therefore
subject to the requirements of the E.O. and to review by the Office of
Management and Budget (OMB). Section 3(f) of the E.O. defines an
economically significant regulatory action as an action that is likely
to result in a rule that: (1) Has an annual effect on the economy of
$100 million or more, or adversely and materially affects a sector of
the economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or tribal governments or communities
(also referred to as economically significant); (2) creates serious
inconsistency or otherwise interferes with an action taken or planned
by another agency; (3) materially alters the budgetary impacts of
entitlement grants, user fees, or loan programs, or the rights and
obligations of recipients thereof; or (4) raises novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the E.O.
The Office of Management and Budget (OMB) has determined that this
NPRM is an economically significant regulatory action under sec.
3(f)(1) of E.O. 12866. This regulation would likely result in transfers
in excess of $100 million annually and consequently is economically
significant. Accordingly, OMB has reviewed this NPRM.
1. Need for Regulation
The Department has determined for a variety of reasons that a new
rulemaking effort is necessary for the H-2B program with respect to the
wages paid to these workers. Chief among these reasons is the United
States District Court for the Eastern District of Pennsylvania's order
and accompanying opinion in Comit[eacute] de Apoyo a los Trabajadores
Agricolas (CATA) v. Solis, Civil No. 2:09-cv-240-LP, 2010 WL 3431761
(E.D. Pa. Aug. 30, 2010), which invalidated the application of the
four-tier wage skill levels to the H-2B program and required the
Department to ``promulgate new rules concerning the calculation of the
prevailing wage rate in the H-2B program that are in compliance with
the Administrative Procedure Act no later than 120 days from the date
of this order.'' The Department is concerned that the methodology for
calculating prevailing wages at issue in the Court's order does not
adequately reflect the appropriate wage necessary to ensure U.S.
workers are not adversely affected by the employment of H-2B workers.
For these reasons, discussed in more detail above, the Department
is proposing the changes contained in the NPRM.
2. Alternatives
Given the fact that the court's order and accompanying opinion in
Comit[eacute] de Apoyo a los Trabajadores Agricolas (CATA) v. Solis,
Civil No. 2:09-cv-240-LP, requires the Department to promulgate this
NPRM, the Department has limited its consideration of alternatives of
wage calculations to the following: (1) To continue the current
calculation methodology but provide a more complete justification for
doing so, and (2) to eliminate the four tiers and use the arithmetic
mean. For use of alternative government sources, the Department
considered continuing (1) the optional use of DBA and SCA and (2)
making the use of such surveys mandatory. For alternative wage sources,
the Department considered, in addition to the continued use of CBAs,
(1) continuing the use of private employer surveys and (2) elimination
of private surveys.
The Department considered alternate data sources but given the time
constraints imposed by the court's order, we were unable to fully
analyze these alternatives. We welcome comments from the public on
alternatives for wage sources that provide adequate protections to U.S.
and H-2B workers.
The alternatives proposed in this NPRM are those that will best
achieve the Department's policy objectives of ensuring that wages of
U.S. workers are more adequately protected and, thus, that employers
are only permitted to bring H-2B workers into the country where the
wages and working conditions of U.S. workers will not be adversely
affected. We request comments from the public on alternatives for
calculating a prevailing wage that provides adequate protections to
U.S. and H-2B workers.
3. Economic Analysis
The Department's analysis below considers the expected impacts of
the proposed NPRM provisions against the baseline (i.e., the 2008 Final
Rule). The method of determining prevailing wages represents additional
compensation for both H-2B and U.S. workers hired in response to the
required recruitment.
[[Page 61582]]
The relevant benefits, costs, and transfers that may apply are
discussed.\4\
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\4\ For the purpose of this analysis, H-2B workers are
considered temporary residents of the U.S.
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The NPRM proposes to require employers to offer H-2B workers and
U.S. workers hired in response to the recruitment required as part of
the application a wage that is at least equal to the highest of the
prevailing wage, or the Federal, State or local minimum wage. The
prevailing wage is the highest of the following: (1) The wage rate set
forth in the CBA, if the job opportunity is covered by a CBA that was
negotiated at arms' length between the union and the employer; (2) the
wage rate established under the Davis-Bacon Act or the McNamara-O'Hara
Service Contract Act for the occupation in the area of intended
employment, if the job opportunity is in an occupation for which such a
wage rate has been determined; and (3) the arithmetic mean of the OES-
reported wage.
To estimate the proposed hourly change in wages, the Department
collected H-2B program participation data for fiscal year (FY) 2009. We
then matched the OES wage rates to the H-2B data for the same period by
standard occupational code (SOC). Using all certified or partially
certified applications in the H-2B program data, we calculated the
increase in wages by subtracting the average H-2B hourly wage certified
from the average OES average hourly wage, and we weighted this
differential by the number of certified workers on each certified or
partially certified application.\5\ We then summed those products and
divided the sum by the total number of certified workers of all
certified or partially certified applications.\6\ Based on this
calculation, the proposed change in the method of determining wages
will result in a $4.38 increase in the weighted average hourly wage for
H-2B workers and similarly employed U.S. workers hired in response to
the recruitment required as part of the application.\7\
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\5\ A total of 30 applications were set aside due to invalid
data.
\6\ To perform this calculation, we assume that the weighted
average wage of H-2B workers has the same distribution as the
weighted average wage of the domestic workers. This may or may not
be the case. While there is some uncertainty regarding this
approach, it is the best methodology that can be applied given the
available data. In about 4.1 percent of cases, the H-2B hourly wage
was higher than the OES wage; it is likely that, instead of
declining, those wages would not change as a result of the rule, so
in such cases, the wage differential was assumed to be zero.
\7\ The Department does not believe the imposition of these
wages will cause increases in the wage beyond that represented by
the OES arithmetic mean. A CBA wage may in fact be the highest of
the applicable wages; even under the 2008 Final Rule, if the job
opportunity were covered by a CBA, the wage rate set forth in the
CBA would be the required wage. Accordingly, including the wage rate
set forth in the CBA among the definition of prevailing wage will
not result in an increased cost to the employer. As for the
application of SCA and DBA to the PWD, in most cases, the SCA wage
should not result in an increased cost to employers because in most
cases, the SCA wage is based upon the OES mean. The application of
DBA wages, and their potential impact on the relative wage increase,
cannot be determined at this time, because the situations in which
DBA would be higher than the location-specific OES arithmetic mean
cannot be determined with sufficient accuracy to permit calculation.
As a result, this analysis assumes that the OES wage will represent
the highest of the three alternatives.
---------------------------------------------------------------------------
The Department provides an assessment of transfer payments
associated with increases in wages resulting from the change in the
wage determination method. Transfer payments, as defined by OMB
Circular A-4, are payments from one group to another that do not affect
total resources available to society. Transfer payments are associated
with a distributional effect, but do not result in additional benefits
or costs to society. The primary recipients of transfer payments
reflected in this analysis are H-2B workers and any U.S. workers hired
in response to the required recruitment under the H-2B program. The
primary payors of transfer payments reflected in this analysis will be
H-2B employers, and under the proposed higher wages in the NPRM, those
employers who choose to continue to participate are likely to be those
that have the greatest need to access the H-2B program. When
summarizing the benefits or costs of specific provisions of this
proposed rule, we present the 10-year averages to reflect the typical
annual effect.
Employment in the H-2B program represents a very small fraction of
the total employment in the U.S. economy, both overall and in the
industries represented in the program. The H-2B program is capped at
66,000 visas issued per year (33,000 of which are made available
biannually), which represents approximately 0.05 percent of total
nonfarm employment in the U.S. economy (130.9 million).\8\ According to
H-2B program data for FY 2007-2009, the average annual numbers of H-2B
workers certified in the top five industries were as follows:
Construction--30,242; Amusement, Gambling, and Recreation--14,041;
Landscaping Services--78,027; Janitorial Services--30,902; and Food
Services and Drinking Places--22,948. These employment numbers
represent the following percentages of the total employment in each of
these industries: Construction--0.4 percent (30,242/7,265,648);
Amusement, Gambling, and Recreation--0.9 percent (14,041/1,506,120);
Landscaping Services--13.2 percent (78,027/589,698); Janitorial
Services--3.3 percent (30,902/933,245); and Food Services and Drinking
Places--0.2 percent (22,948/9,617,597).\9\ These percentages decrease
further when scaled to the actual number of entries permitted each
year: Construction--0.2 percent (14,756/7,265,648); Amusement,
Gambling, and Recreation--0.5 percent (6,851/1,506,120); Landscaping
Services--6.5 percent (38,073/589,698); Janitorial Services--1.6
percent (15,079/933,245); and Food Services and Drinking Places--0.1
percent (11,197/9,617,597).\10\ As these data illustrate, the H-2B
program represents a small fraction of the total employment even in
each of the top five industries in which H-2B workers are found--less
than 1 percent in most of the categories.
---------------------------------------------------------------------------
\8\ Source for total employment: ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt.
\9\ Source for total employment by industry: 2007 Economic
Census.
\10\ The number of visas available under the H-2B program is
66,000, assuming no statutory increases in the number of visas
available for entry in a given year. We also assume that half of all
such workers (33,000) in any year stay at least one additional year,
and half of those workers (16,500) will stay a third year, for a
total of 115,500 H-2B workers in a given year. The scale factor was
derived by dividing 115,500 by the total number of workers certified
per year on average during FY2007-2009 (236,706).
---------------------------------------------------------------------------
i. Costs
In standard economic models of labor supply and demand, an increase
in the wage rate represents an increased production cost to employers
leading to a reduction in the demand for labor. Because production
costs increase with an increase in the wage rate, a resulting decrease
in profits is possible for H-2B employers that are unable to increase
prices to cover the cost increase. Some H-2B employers, however, can be
expected to offset the cost increase by increasing the price of their
products or services. In addition, workers who would have been hired at
a lower wage rate are not hired at the higher wage rate, resulting in
forgone earnings for workers. In this theoretical sense, to the extent
that the higher wages imposed by the rule result in lower employment
and lower output by firms employing those workers, the lost profits on
the foregone output and the lost net wages to the foregone workers
represent a deadweight loss because these gains from trade are not
attained. This effect will be magnified during years in which the cap
is not reached.\11\
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\11\ The output reduction impact of reducing labor demand may be
partially offset by capital substitution and organizational
substitution productivity effects. When substitution occurs, the
deadweight loss will be reduced. Substitution may also involve
outsourcing of production elements, which may entail a net welfare
loss to the U.S. if outsourcing to a supplier overseas, but only a
transfer if outsourcing to a supplier in the U.S.
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[[Page 61583]]
In a practical sense, because the total employment under the H-2B
program is capped at 66,000 visas, the macroeconomic effect of
reductions in H-2B employment and therefore reductions in output is
expected to be minimal. There has generally been excess demand for H-2B
workers well beyond the 66,000 limit, and DOL believes that the
increased wages resulting from the proposed rule will not result in
fewer than 66,000 visas for H-2B workers because, even if some
employers decide not to participate in the H-2B program, other
employers who previously had unfilled positions will participate.
For example, for the years FY2007 through 2009, employers applied
for an average of 236,706 certified H-2B positions per year. This
number reflects the number of positions certified, rather than the
number of actual workers who entered to take up those positions, which
is capped at 66,000 per year. Using this number of certified workers to
represent the quantity of labor demanded, and assuming an elasticity of
labor demand of -0.3,\12\ a $4.38 (51 percent) increase in wages would
result in a 15 percent decline in the number of H-2B workers requested
by employers, for a remaining total of 201,200 H-2B certified positions
requested by employers, which still far exceeds the 66,000 maximum
visas allowed under the H-2B program. Therefore, any loss of production
resulting from some employers dropping out of the program will be
offset by production by other employers that would then be able to
employ H-2B workers. Thus, DOL believes that for years in which the
number of applications exceeds the number available under the cap,
there will be no deadweight loss in the market for H-2B workers even if
some employers do not participate in the program as a result of the
higher H-2B wages.\13\ Indeed, the higher wages expected to result from
the proposed rule could in turn result in a more efficient distribution
of H-2B visas to employers who can less easily employ U.S. workers. DOL
believes that those employers who can more easily attract U.S. workers
will be dissuaded from attempting to participate in the H-2B program
after the proposed rule changes, so that those employers participating
in the H-2B program after the proposed rule will have a greater need
for the program, on average, than those employers participating in the
H-2B program before the proposed changes.
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\12\ See, e.g., Hamermesh, Daniel S., Labor Demand, Princeton
and Chichester, U.K.: Princeton University Press, 1993.
\13\ DOL believes that any decline in employment among employers
participating in the H-2B program will be offset by increased
employment among new employers who previously were unable to hire
workers under the H-2B program. Therefore, there would be no
appreciable decline in employment under the program.
---------------------------------------------------------------------------
In years in which the number of certified H-2B positions is less
than the 66,000 visa cap, the higher proposed wages resulting from this
NPRM could be expected to result in a reduction in employment of H-2B
workers and therefore a reduction in output by employers participating
in the H-2B program. This employment reduction would be expected to be
partially offset by increased employment of U.S. workers to the extent
that employers could attract U.S. workers (by offering higher wages,
for example) or could make other adjustments, such as substituting
capital for labor, but, in a theoretical sense, the reduction in
employment and output would not be completely offset, potentially
resulting in some deadweight loss in production among H-2B employers.
However, the history of the H-2B program suggests that this situation
is rare. In recent history, the number of H-2B visas has reached the
66,000 cap every year except 2009.
ii. Transfers
The proposed change in the method of determining wages results in
transfers from H-2B workers to U.S. workers and from U.S. employers to
both U.S. workers and H-2B workers.
A transfer from H-2B workers to U.S. workers arises because, as
recruitment wages for U.S. workers increase, a larger number of U.S.
workers may be attracted to work in jobs that would otherwise be
occupied by H-2B workers. Additionally, faced with higher H-2B wages,
some employers may find domestic workers relatively less expensive and
may choose not to participate in the H-2B program and instead employ
U.S. workers. While some of these U.S. workers may be drawn from other
employment, some of them would otherwise remain unemployed or out of
the labor force entirely, earning no salary.
The Department, however, is not able to quantify these transfer
payments with precision. Difficulty in calculating these transfer
payments arises primarily from uncertainty about the number of U.S.
workers currently collecting unemployment insurance benefits who will
become employed as a result of this rule.
To estimate the total transfer to H-2B workers via the increased
wages resulting from the new wage determination method, the Department
multiplied the total number of H-2B workers (115,500, which includes
both new entrants and an assumed portion of those who entered in each
of the two previous years),\14\ by the weighted average hourly wage
increase ($4.38), the number of hours worked per day (7), and the total
number of days worked (217).\15,16\ We estimate the total annual
average transfer incurred due to the increase in wages at $769.4
million. As a result, OMB has determined that the proposed rule is an
economically significant rule.
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\14\ See note 11, which explains that the Department assumes
that 50 percent of workers entering the H-2B program in one year
will remain in the country the following year and that 50 percent of
those will remain in the country for a third year. The Department
data with regard to certified applications cannot be used to
determine the actual number of H-2B workers in the country.
Certifications are made without regard to the cap on the number of
H-2B workers admissible each year and are not intended to indicate
whether a worker actually entered the country to fill a position.
Additionally, available DHS data rely on total entries of H-2B
workers, which may or may not equal the admissions of H-2B workers
in a given year. See http://www.dhs.gov/xlibrary/assets/statistics/yearbook/2009/table25d.xls. The Department of State keeps records of
visas issued but does not publicly break down these numbers based on
subcategories within the H category. http://travel.state.gov/visa/statistics/nivstats/nivstats_4582.html.
\15\ Our analysis focuses on the costs related to H-2B workers
because of the lack of data on U.S. workers hired in response to
recruitment conducted in connection with an H-2B application.
\16\ For the number of hours worked per day, we use 7 hours as
typical for an average. For the number of days worked, we assume
that the employer would retain the H-2B worker for the maximum time
allowed (10 months, or 304 days [10 months x 30.42 days]) and would
employ the workers for 5 days per week. Thus, total number of days
worked equals 217 [10 months x 30.42 days x (\5/7\)].
---------------------------------------------------------------------------
The increase in the wage rates induces a transfer from
participating employers not only to H-2B workers, but also to workers
hired in response to the required recruitment. The higher wages are
beneficial to U.S. workers because they enhance workers' ability to
meet the cost of living and to spend money in their local communities,
which has the secondary impact of increasing economic activity in the
community. These are important concerns to the current Administration
and a key aspect of the Department's mandate to ensure that wages of
similarly employed U.S. workers are not adversely affected.
[[Page 61584]]
B. Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act of 1980, as amended (RFA), requires
agencies to prepare regulatory flexibility analyses and make them
available for public comment when proposing regulations that will have
a significant economic impact on a substantial number of small
entities. See 5 U.S.C. 603. If the rule is not expected to have a
significant economic impact on a substantial number of small entities,
the RFA allows an agency to certify such, in lieu of preparing an
analysis. See 5 U.S.C. 605. For the reasons explained in this section,
the Department believes this NPRM is not likely to impact a substantial
number of small entities and, therefore, an initial regulatory
flexibility analysis is not required by the RFA. However, in the
interest of transparency and to provide a full opportunity for public
comment, we have prepared the following Initial Regulatory Flexibility
Analysis to assess the impact of this regulation on small entities, as
defined by the applicable Small Business Administration (SBA) size
standards. We specifically request comments on the following burden
estimates, including the number of small entities affected by the
requirements, and on alternatives that could reduce the burden on small
entities. The Chief Counsel for Advocacy of the Small Business
Administration was notified of a draft of this proposed rule upon
submission of the proposed rule to OMB under E.O. 12866, as amended,
``Regulatory Planning and Review'' 58 FR 51735, Oct. 4, 1993; 67 FR
9385, Feb. 28, 2002; 72 FR 2763, Jan. 23, 2007.
Because employers seeking to participate in the H-2B program are
derived from virtually all segments of the economy and across
industries, those participating businesses are a small portion of the
national economy overall. A Guide for Government Agencies: How to
Comply with the RFA, Small Business Administration, at 20 (``the
substantiality of the number of businesses affected should be
determined on an industry-specific basis and/or the number of small
businesses overall'').
Employment in the H-2B program represents a very small fraction of
the total employment in the U.S. economy, both overall and in the
industries represented in the H-2B program. The H-2B program is capped
at 66,000 visas issued per year, which represents approximately 0.05
percent of total nonfarm employment in the U.S. economy (130.9
million).\17\ According to H-2B program data for FY2007-2009, the
average annual numbers of H-2B workers certified in the top five
industries were as follows: Construction--30,242; Amusement, Gambling,
and Recreation--14,041; Landscaping Services--78,027; Janitorial
Services--30,902; and Food Services and Drinking Places--22,948. When
the number of workers certified is scaled to reflect the actual number
of entries permitted each year, given the H-2B visa cap of 66,000
workers, the data reflect that H-2B workers represent the following
percentages of the total employment in each of these industries:
Construction--0.2 percent (14,756/7,265,648); Amusement, Gambling, and
Recreation--0.5 percent (6,851/1,506,120); Landscaping Services--6.5
percent (38,073/589,698); Janitorial Services--1.6 percent (15,079/
933,245); and Food Services and Drinking Places--0.1 percent (11,197/
9,617,597).\18\ As these data illustrate, the H-2B program represents a
small fraction of the total employment even in each of the top five
industries in which H-2B workers are found.
---------------------------------------------------------------------------
\17\ Source: ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt.
\18\ Source for total employment by industry: 2007 Economic
Census. The number of visas available under the H-2B program is
66,000, assuming no statutory increases in the number of visas
available for entry in a given year. We also assume that half of all
such workers (33,000) in any year stay at least one additional year,
and half of those workers (16,500) will stay a third year, for a
total of 115,500 H-2B workers in a given year. The scale factor was
derived by dividing 115,500 by the total number of workers certified
per year on average during FY2007-2009 (236,706).
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1. Description of the Reasons That Action by the Agency Is Being
Considered
The Department has determined for a variety of reasons that a new
rulemaking effort is necessary for the H-2B program with respect to the
wages paid to these workers. Chief among these reasons is the United
States District Court for the Eastern District of Pennsylvania's order
and accompanying opinion in Comit[eacute] de Apoyo a los Trabajadores
Agricolas (CATA) v. Solis, Civil No. 2:09-cv-240-LP, 2010 WL 3431761
(E.D. Pa. Aug. 30, 2010), which invalidated the application of the
four-tier wage skill levels to the H-2B program and required the
Department to ``promulgate new rules concerning the calculation of the
prevailing wage rate in the H-2B program that are in compliance with
the Administrative Procedure Act no later than 120 days from the date
of this order.'' The Department is concerned that the methodology for
calculating prevailing wages at issue in the Court's order does not
adequately reflect the appropriate wage necessary to ensure U.S.
workers are not adversely affected by the employment of H-2B workers.
2. Succinct Statement of the Objectives of, and Legal Basis for, the
Proposed Rule
The Department has grown increasingly concerned that the current
prevailing wage calculation method does not adequately reflect the
appropriate wage necessary to ensure U.S. workers are not adversely
affected by the employment of H-2B workers. Accordingly, the Department
is proposing to establish a new wage methodology that adequately
protects U.S. and H-2B workers. The legal basis for the proposed rule
is the Department's authority, as delegated from DHS under its
regulations at 8 CFR 214.2(h)(6), to grant temporary labor
certifications under the H-2B program. Additionally, as discussed
earlier, the Department is subject to an order from the United States
District Court for the Eastern District of Pennsylvania to ``promulgate
new rules concerning the calculation of the prevailing wage rate in the
H-2B program that are in compliance with the Administrative Procedure
Act no later than 120 days from the date of this order.'' Comit[eacute]
de Apoyo a los Trabajadores Agricolas (CATA) v. Solis, Civil No. 2:09-
cv-240-LP, 2010 WL 3431761 (E.D. Pa. Aug. 30, 2010).
3. Description of, and Where Feasible, an Estimate of the Number of
Small Entities to Which the Proposed Rule Will Apply
Definition of a Small Business
A small entity is one that is independently owned and operated and
that is not dominant in its field of operation. The definition of small
business varies from industry to industry to properly reflect industry
size differences. An agency must either use the SBA definition for a
small entity or establish an alternative definition for the industry.
The Department has conducted a small entity impact analysis on small
businesses in the five industries with the largest number of H-2B
workers and for which data were available, as mentioned above:
Landscaping Services; Janitorial Services (includes housekeeping
services); Food Services and Drinking Places; Amusement, Gambling, and
Recreation; and Construction. These top five industries accounted for
almost 75 percent of the total number of H-2B
[[Page 61585]]
workers certified during FY2007-2009.\19\
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\19\ According to H-2B program data, the average annual number
of firms (of all sizes) and H-2B workers certified for these
industries during FY2007-2009 were as follows: Landscaping Services,
Firms--2,754, Workers--78,027; Janitorial Services, Firms--788,
Workers--30,902; Food Services and Drinking Places, Firms--851,
Workers--22,948; Amusement, Gambling, and Recreation, Firms--227,
Workers--14,041; and Construction, Firms--860, Workers--30,242.
---------------------------------------------------------------------------
One industry, Forest Services, made the initial top-five list but
is not included in this analysis because the only data available for
forestry also include various agriculture, fishing, and hunting
activities. Relevant data for Forestry only were not available. The
Department requests the public to propose possible sources of data or
information on the revenues and average number of workers of a typical
small Forestry firm.
We have adopted the SBA small business size standard for each of
the five industries, which is a firm with annual revenues equal to or
less than the following: Landscaping Services, $7 million; Janitorial
Services, $16.5 million; Food Services and Drinking Places, $7 million;
Amusement, Gambling, and Recreation, $7 million; and Construction,
$20.7 million.\20\
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\20\ The SBA small business size standards for construction
range from $7 million (land subdivision) to $33.5 million (general
building and heavy construction). However, because employers
representing all types of construction businesses may apply for
certification to employ H-2B workers, the Department used an average
of $20.7 million as the size standard for construction.
---------------------------------------------------------------------------
The Department has used representative data because actual data
regarding entity size is not uniformly collected in the H-2B program.
The Department added information collection elements surrounding entity
size, revenue, and number of all employees in early 2009, specifically
to obtain information regarding the size and status of program
participants. This would provide the Department with a little over a
year of program data regarding participants' size and status. However,
these data elements are not required to be provided in order for an
employer to submit the Application for Temporary Employment
Certification, and employers accordingly have the option of not
providing information about their size, employee complement, and
revenues without penalty in the application process. As a result, the
information on the size and status of program participants that has
been collected since 2009 is therefore not sufficient to provide to the
Department statistically valid data to use in analyzing the actual
impact on small businesses.
4. Description of the Projected Reporting, Recordkeeping and Other
Compliance Requirements of the Proposed Rule
The proposed rule does not impose any reporting or recordkeeping
requirements.
With regard to other compliance requirements, the Department has
estimated the incremental costs for small businesses from the baseline.
For this proposed rule, the baseline is the 2008 Final Rule. This
Initial Regulatory Flexibility Analysis reflects the incremental cost
of this rule as it adds to the requirements in the 2008 Final Rule.
Using available data, we have estimated the costs of the increased
wages and the time required to read and review the Final Rule.
The Department receives an average of 8,717 applications annually
(which is not necessarily the same as the number of applicants, because
one employer may file more than one application) for the H-2B program,
and the Department estimates that an average of 6,980 of those
applications result in petitions for H-2B workers that are approved by
DHS. Even if all 6,980 applications are filed by unique small entities,
the percentage of small entities authorized to employ temporary non-
agricultural workers will be less than 1 percent of the total number of
small entities in these industries.\21\ Based on this analysis, the
Department estimates that the rule will impact less than 1 percent of
the total number of small businesses. A detailed industry-by-industry
analysis is provided below.
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\21\ The total number of firms classified as small entities in
these industries is as follows: Landscaping Services, 63,210;
Janitorial Services, 45,495; Food Services and Drinking Places,
293,373; Amusement, Gambling, and Recreation, 43,726; and
Construction, 689,040.
---------------------------------------------------------------------------
To examine the impact of this proposed rule on small entities, the
Department evaluates the impact of the incremental costs on a
hypothetical small entity of average size, in terms of the total number
of both U.S. and foreign workers, in each industry if it were to fill
50 percent of its workforce with H-2B workers. There are no available
data to estimate the breakdown of the workforce into U.S. and foreign
workers. Based on Economic Census data, the total number of workers
(including both U.S. and foreign workers) for this hypothetical small
business is as follows: Landscaping Services, 2.3 workers; Janitorial
Services, 11.3 workers; Food Services and Drinking Places, 6.3 workers;
Amusement, Gambling, and Recreation, 5.0 workers; and Construction, 6.3
workers.\22\
---------------------------------------------------------------------------
\22\ Source: 2002 County Business Patterns and 2002 Economic
Census. These data do not distinguish between U.S. workers and
foreign workers.
---------------------------------------------------------------------------
Also using Economic Census data, we derived the annual revenues for
small entities in each of the top five industries by multiplying the
average number of workers by the average revenue per worker for each of
the industries. The Department estimates that small businesses in the
top five industries have the following annual revenues: Landscaping
Services, $0.181 million; Janitorial Services, $0.336 million; Food
Services and Drinking Places, $0.223 million; Amusement, Gambling, and
Recreation, $0.209 million, and Construction, $0.884 million.
a. Change in the Method of Determining Wages for H-2B Workers
The Department proposes to require employers to offer H-2B workers
and to any similarly employed U.S. worker hired in response to the
recruitment required as part of the application a wage that is at least
equal to the prevailing wage, or the Federal, State or local minimum
wage, whichever is highest. The prevailing wage is the highest of the
following: (1) The wage rate set forth in the CBA, if the job
opportunity is covered by a CBA that was negotiated at arms' length
between the union and the employer; (2) the wage rate established under
the Davis-Bacon Act or the McNamara-O'Hara Service Contract Act for the
occupation in the area of intended employment if the job opportunity is
in an occupation for which such a wage rate has been determined; and
(3) the arithmetic mean of the OES-reported wage.\23\
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\23\ The Department does not believe the imposition of these
wages will cause increases in the wage beyond that represented by
the OES arithmetic mean. A CBA wage may in fact be the highest of
the applicable wages; even under the 2008 Final Rule, if the job
opportunity were covered by a CBA, the wage rate set forth in the
CBA would be the required wage. Accordingly, including the wage rate
set forth in the CBA among the definition of prevailing wage will
not result in an increased cost to the employer. As for the
application of SCA and DBA to the PWD, in most cases, the SCA wage
is equivalent to the arithmetic mean of the OES wage, and will also
not result in an increased cost to employers beyond that represented
by the change in the OES from the four tiers to the arithmetic mean.
The application of DBA wages, and their potential impact on the
relative wage increase, cannot be determined at this time. As a
result, this analysis assumes that the OES wage will represent the
highest of the three alternatives.
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To estimate the proposed hourly change in wages, the Department
collected H-2B program participation data for FY2009. We then matched
the OES wage rates to the H-2B data for the
[[Page 61586]]
same period by SOC. Using all certified or partially certified
applications in the H-2B program data, we calculated the increase in
wages for each industry by subtracting the H-2B hourly wage certified
from the OES average hourly wage and then estimated the average of
those differences for each industry.\24\
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\24\ A total of 30 applications were set aside due to invalid
data.
---------------------------------------------------------------------------
These calculations yielded the following hourly wage increases by
industry associated with this proposed rule: Landscaping services,
$3.60; Janitorial Services, $3.72; Food Services and Drinking Places,
$1.29; Amusement, Gambling, and Recreation, $1.37; and Construction,
$10.61.\25\
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\25\ These wage increases reflect the differences between the
OES wages and the H-2B wages for the occupations most closely
associated with each industry. This estimate may slightly understate
the wage increase because cases in which the H-2B wages were higher
than OES wages would bias the estimate downward; however, this
occurred in only about 4.1 percent of all cases.
---------------------------------------------------------------------------
To estimate the total cost to the average small entity of increased
wages for H-2B workers due to the new wage determination method, the
Department multiplied the average hourly increase in wages for the top
five industries by the average total number of days worked by H-2B
workers, the number of hours worked per day, and the average number of
H-2B workers employed by small entities in each of the top five
industries.\26\ Our estimates of the total annual average cost incurred
due to the increase in wages for the average small employer in the top
five industries are as follows: Landscaping Services, $6,562 ($3.60 x
217 x 7 x 1.2); Janitorial Services, $32,209 ($3.72 x 217 x 7 x 5.7);
Food Services and Drinking Places, $6,270 ($1.29 x 217 x 7 x 3.2);
Amusement, Gambling, and Recreation, $5,203 ($1.37 x 217 x 7 x 2.5);
and Construction, $51,573 ($10.61 x 217 x 7 x 3.2).
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\26\ For the number of hours worked per day, we use 7 hours as
typical for an average. For the number of days worked, we assume
that the employer would retain the H-2B worker for the maximum time
allowed (10 months, or 304 days [10 months x 30.42 days]) and would
employ the workers for 5 days per week. Thus, total number of days
worked equals 217 [10 months x 30.42 days x (\5/7\)].
---------------------------------------------------------------------------
b. Reading and Reviewing the New Processes and Requirements
During the first year that this rule would be in effect, employers
would need to learn about the new PWD. We estimate this cost for a
hypothetical small entity which is interested in applying for H-2B
workers by multiplying the time required to read the new rule and any
educational and outreach materials that explain the wage calculation
methodology under the rule by the average compensation of a human
resources manager.\27\ In the first year of the rule, the Department
estimates that the average small business participating in the program
will spend approximately 1 hour of staff time to read and review the
new regulation, which amounts to approximately $61.42 ($61.42 x 1) in
labor costs in the first year.\28\
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\27\ The hourly compensation rate for a human resources manager
is calculated by multiplying the hourly wage of $42.95 (as published
by the Department's OES survey, O\*\NET Online) by 1.43 to account
for private-sector employee benefits (Source: Bureau of Labor
Statistics). Thus, the loaded hourly compensation rate for a human
resources manager is $61.42.
\28\ The number of small businesses that will read and review
the Final Rule is likely to include some that will not apply for the
program. There are no available data to quantify this possible
effect.
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c. Total Cost Burden for Small Entities
The Department's calculations indicate that for a hypothetical
small entity in the top five industries that applies for one worker
(representing the smallest of the small entities that hire H-2B
workers), the total average annual costs of the NPRM are as follows:
Landscaping Services, $5,794; Janitorial Services, $5,976; Food
Services and Drinking Places, $2,281; Amusement, Gambling, and
Recreation, $2,402, and Construction, $16,455. Similarly, the analogous
costs for employers in the top five industries that hire the average
number of H-2B workers for their respective industries are as follows:
Landscaping Services, $6,638; Janitorial Services, $33,004; Food
Services and Drinking Places, $6,832; Amusement, Gambling, and
Recreation, $5,760, and Construction, $51,481.
The proposed rule is expected to have a significant economic impact
on a hypothetical small entity that applied for enough workers to fill
50 percent of its workforce. While applying to hire H-2B workers is
voluntary, and any employer (small or otherwise) may entirely avoid
costs associated with the proposed changes by choosing not to apply, an
employer, whether it continues to participate in the H-2B program or
fills its workforce with U.S. workers, could face sizeable costs.
However, increased employment opportunities for U.S. workers and higher
wages for both H-2B and U.S. workers provide a broad societal benefit
that in the Department's view outweighs these costs.
The small entities that have historically applied for H-2B workers,
however, represent very small proportions of all small businesses. The
following are the percentages of firms that were certified for H-2B
workers among all small U.S. businesses in their respective industries:
Landscaping Services, 2.2 percent [(2,754 x 0.50)/63,210]; Janitorial
Services, 0.9 percent [(788 x 0.50)/45,595]; Food Services and Drinking
Places, 0.1 percent [(851 x 0.50)/293,373]; Amusement, Gambling, and
Recreation, 0.3 percent [(227 x 0.50)/43,726], and Construction, 0.1
percent [(860 x 0.50)/689,040].\29\ Due to the statutory annual cap on
available visas, the percentage of small entities receiving H-2B visas,
to which the full cost burden would apply, would be even lower.
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\29\ The source of the numerator (i.e., the number of certified
H-2B employers) is H-2B program data for FY2007-2009. The source of
the denominator (i.e., the total number of U.S. businesses meeting
the SBA small-size criteria) is the 2002 County Business Patterns
and 2002 Economic Census. http://www.census.gov/econ/susb/data/susb2002.html. We multiply the numerator by 0.50 to reflect our
assumption that 50 percent of H-2B employers are small businesses.
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Therefore, the Department estimates that this proposed rule will
have a net direct cost impact on a very limited number of small non-
agricultural employers above the baseline of the current costs incurred
by the program as it is currently implemented under the 2008 Final
Rule. Accordingly, the proposed rule is not expected to impact a
substantial number of small entities. The Department specifically
requests comments on these burden estimates, including the number of
small entities affected by this proposed change in prevailing wage
methodology, and on how the final rule can reduce burden on small
entities while meeting the statutory requirement that the employment of
H-2B workers not adversely affect the wages and working conditions of
similarly employed U.S. workers.
5. Identification of All Relevant Federal Rules That May Duplicate,
Overlap or Conflict With the Proposed Rule
The Department is not aware of any relevant Federal rules that
duplicate, overlap or conflict with the proposed rule.
6. Alternatives Considered as Options for Small Entities Businesses
While the Department believes this proposed regulation would not
impact a substantial number of small entities, we recognize the
potential impact on small businesses and have considered alternatives
to minimize such impacts. The Department's mandate under the H-2B
program is to set requirements for employers that wish to hire
temporary foreign non-agricultural workers. Those requirements are
designed to ensure that
[[Page 61587]]
foreign workers are used only if qualified domestic workers are not
available and that the hiring of H-2B workers will not adversely affect
the wages and working conditions of similarly employed domestic
workers. These regulations set those minimum standards with regard to
wages. The required wage rate is a critical aspect of the H-2B program
that determines whether U.S. workers' wages will be adversely affected
by the admission of foreign workers. To create different and likely
lower standards for one class of employers (e.g., small businesses)
would essentially sanction the very adverse effect that the Department
is compelled to prevent.
The Department considered alternate data sources to determine
prevailing wages, but given the time constraints imposed by the court's
order and the absence of available data, we were unable to fully
analyze these alternatives. The only available sources of information
that we are aware of for setting the prevailing wage are the OES, DBA/
SCA, and surveys created by private entities. The NRPM discusses the
agency's proposal about how those sources should be used. It would be
difficult, if not impossible, to cost out any alternative use of these
sources. For example, to the Department's knowledge there is no
accessible data base of acceptable private surveys that would allow us
to determine the cost implications of allowing their continued use.
While the Department has been unable to fully analyze other viable
options for the calculation of prevailing wages for small entities, the
Department invites comments on the availability, usefulness and costs
of other potential, reliable data sources.
Ultimately the decision of an employer to apply for H-2B workers is
a voluntary choice. That is, any individual employer can avoid the
costs associated with the NPRM by not applying for H-2B workers.
C. Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531) directs agencies to assess the effects of Federal regulatory
actions on State, local, and tribal governments, and the private
sector. The proposed rule has no Federal mandate, which is defined in 2
U.S.C. 658(6) to include either a ``Federal intergovernmental mandate''
or a ``Federal private sector mandate.'' A Federal mandate is any
provision in a regulation that imposes an enforceable duty upon State,
local, or tribal governments, or imposes a duty upon the private sector
which is not voluntary. A decision by a private entity to obtain an H-
2B worker is purely voluntary and is, therefore, excluded from any
reporting requirement under the Act.
D. Small Business Regulatory Enforcement Fairness Act of 1996
The Department has determined that this rulemaking does not impose
a significant impact on a substantial number of small entities under
the RFA; therefore, the Department is not required to produce any
compliance guides for small entities as mandated by the SBREFA. The
Department has, however, concluded that this proposed rule is a major
rule requiring review by the Congress under the SBREFA because it will
likely result in: (1) An annual effect on the economy of $100 million
or more; (2) a major increase in costs or prices for consumers,
individual industries, Federal, State or local Government agencies, or
geographic regions; or (3) significant adverse effects on competition,
employment, investment, productivity, innovation, or on the ability of
U.S.-based enterprises to compete with foreign-based enterprises in
domestic or export markets.
E. Executive Order 13132--Federalism
The Department has reviewed this proposed rule in accordance with
E.O. 13132 regarding federalism and has determined that it does not
have federalism implications. The proposed rule does not have
substantial direct effects on States, on the relationship between the
States, or on the distribution of power and responsibilities among the
various levels of government as described by E.O. 13132. Therefore, the
Department has determined that this proposed rule will not have a
sufficient federalism implication to warrant the preparation of a
summary impact statement.
F. Executive Order 13175--Indian Tribal Governments
This proposed rule was reviewed under the terms of E.O. 13175 and
determined not to have tribal implications. The proposed rule does not
have substantial direct effects on one or more Indian tribes, on the
relationship between the Federal Government and Indian tribes, or on
the distribution of power and responsibilities between the Federal
Government and Indian tribes. As a result, no tribal summary impact
statement has been prepared.
G. Assessment of Federal Regulations and Policies on Families
Section 654 of the Treasury and General Government Appropriations
Act, enacted as part of the Omnibus Consolidated and Emergency
Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat.
2681) requires the Department to assess the impact of this proposed
rule on family well-being. A rule that is determined to have a negative
effect on families must be supported with an adequate rationale.
The Department has assessed this proposed rule and determines that
it will not have a negative effect on families.
H. Executive Order 12630--Government Actions and Interference With
Constitutionally Protected Property Rights
The proposed rule is not subject to E.O. 12630, Governmental
Actions and Interference with Constitutionally Protected Property
Rights, because it does not involve implementation of a policy with
takings implications.
I. Executive Order 12988--Civil Justice
The proposed rule has been drafted and reviewed in accordance with
E.O. 12988, Civil Justice Reform, and will not unduly burden the
Federal court system. The Department has developed the proposed rule to
minimize litigation and provide a clear legal standard for affected
conduct, and has reviewed the proposed rule carefully to eliminate
drafting errors and ambiguities.
J. Plain Language
The Department drafted this NPRM in plain language.
K. Paperwork Reduction Act
As part of its continuing effort to reduce paperwork and respondent
burden, the Department conducts a preclearance consultation program to
provide the general public and Federal agencies with an opportunity to
comment on proposed and continuing collections of information in
accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C.
3506(c)(2)(A)). This process helps to ensure that the public
understands the Department's collection instructions; respondents
provide requested data in the desired format; reporting burden (time
and financial resources) is minimized; collection instruments are
clearly understood; and the Department properly assesses the impact of
collection requirements on respondents.
The PRA requires all Federal agencies to analyze proposed
regulations for
[[Page 61588]]
potential time burdens on the regulated community created by provisions
within the proposed regulations that require the submission of
information. These information collection (IC) requirements must be
submitted to the OMB for approval. Persons are not required to respond
to a collection of information unless it displays a currently valid OMB
control number as required in 5 CFR 1320.11(l) or it is exempt from the
PRA.
The majority of the IC requirements for the current H-2B program
are approved under OMB control number 1205-0466 (which includes ETA
Form 9141 and ETA Form 9142). There are no burden adjustments that need
to be made to the analysis. For an additional explanation of how the
Department calculated the burden hours and related costs, the PRA
package for information collection OMB control number 1205-0466 may be
obtained by contacting the PRA addressee shown below or at http://www.RegInfo.gov.
PRA Addressee: Sherril Hurd, Office of Policy Development and
Research, U.S. Department of Labor, Employment & Training
Administration, 200 Constitution Avenue, NW., Room N-5641, Washington,
DC 20210. Telephone: 202-693-3700 (this is not a toll-free number).
List of Subjects in 20 CFR Part 655
Administrative practice and procedure, Employment, Employment and
training, Enforcement, Foreign workers, Forest and forest products,
Fraud, Health professions, Immigration, Labor, Longshore and harbor
work, Migrant workers, Nonimmigrant workers, Passports and visas,
Penalties, Reporting and recordkeeping requirements, Unemployment,
Wages, Working conditions.
Accordingly, ETA proposes to amend 20 CFR part 655 as follows:
Title 20--Employees' Benefits
PART 655--TEMPORARY EMPLOYMENT OF FOREIGN WORKERS IN THE UNITED
STATES
1. Revise the authority citation for part 655 to read as follows:
Authority: Section 655.0 issued under 8 U.S.C.
1101(a)(15)(E)(iii), 1101(a)(15)(H)(i) and (ii), 1182(m), (n) and
(t), 1184(c), (g), and (j), 1188, and 1288(c) and (d); sec. 3(c)(1),
Pub. L. 101-238, 103 Stat. 2099, 2102 (8 U.S.C. 1182 note); sec.
221(a), Pub. L. 101-649, 104 Stat. 4978, 5027 (8 U.S.C. 1184 note);
sec. 303(a)(8), Pub. L. 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1101
note); sec. 323(c), Pub. L. 103-206, 107 Stat. 2428; sec. 412(e),
Pub. L. 105-277, 112 Stat. 2681 (8 U.S.C. 1182 note); sec. 2(d),
Pub. L. 106-95, 113 Stat. 1312, 1316 (8 U.S.C. 1182 note); Pub. L.
109-423, 120 Stat. 2900; and 8 CFR 214.2(h)(4)(i).
Section 655.00 issued under 8 U.S.C. 1101(a)(15)(H)(ii),
1184(c), and 1188; and 8 CFR 214.2(h).
Subparts A and C issued under 8 CFR 214.2(h).
Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(c),
and 1188; and 8 CFR 214.2(h).
Subparts D and E authority repealed.
Subparts F and G issued under 8 U.S.C. 1288(c) and (d); and sec.
323(c), Pub. L. 103-206, 107 Stat. 2428.
Subparts H and I issued under 8 U.S.C. 1101(a)(15)(H)(i)(b) and
(b)(1), 1182(n) and (t), and 1184(g) and (j); sec. 303(a)(8), Pub.
L. 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec. 412(e),
Pub. L. 105-277, 112 Stat. 2681; and 8 CFR 214.2(h).
Subparts J and K authority repealed.
Subparts L and M issued under 8 U.S.C. 1101(a)(15)(H)(i)(c) and
1182(m); sec. 2(d), Pub. L. 106-95, 113 Stat. 1312, 1316 (8 U.S.C.
1182 note); Pub. L. 109-423, 120 Stat. 2900; and 8 CFR 214.2(h).
2. Amend Sec. 655.10, by:
a. Revising paragraphs (b) introductory text, (b)(1), and (b)(2);
b. Removing paragraphs (b)(4) and (b)(5) and redesignating
paragraph (b)(3) as (b)(4) and (b)(6) as (b)(5);
c. Adding a new paragraph (b)(3); and
d. Removing paragraphs (f) and (g) and redesignating paragraphs (h)
as (f), and (i) as (g).
Sec. 655.10 Determination of prevailing wage for temporary labor
certification purposes.
* * * * *
(b) Basis for prevailing wage determinations. The prevailing wage
is the highest of the following:
(1) The wage rate set forth in the collective bargaining agreement
(CBA), if the job opportunity is covered by a CBA that was negotiated
at arms' length between the union and the employer;
(2) The wage rate established under the Davis-Bacon Act or the
McNamara-O'Hara Service Contract Act for the occupation in the area of
intended employment if the job opportunity is in an occupation for
which such a wage rate has been determined; or
(3) The arithmetic mean of the wages of workers similarly employed
in the occupation in the area of intended employment as determined by
the OES. This computation will be based on the arithmetic mean wage of
all workers in the occupation.
* * * * *
Signed in Washington this 1st day of October 2010.
Jane Oates,
Assistant Secretary, Employment and Training Administration.
[FR Doc. 2010-25142 Filed 10-4-10; 8:45 am]
BILLING CODE 4510-FP-P