“And that’s the catch. In an era of strong wage growth, surging inflation, and record demand for workers, we’re still seeing an unexpectedly slow rate of workers returning to the labor market. The best and fastest solution to the problem would be to rapidly expand immigration opportunities, which have been severely curtailed by pandemic-era policies.
During the pandemic, pundits put forth three main arguments on why people weren’t returning to work: aversion to being exposed to COVID-19, insufficient child care, and overly generous relief programs. These considerations should be in the rearview mirror by now. With readily available vaccines and boosters, the risk of COVID-19 infection for the typical worker has been minimized. Most schools resumed in-person classes by last fall, primary school children have had access to vaccines since November 2021, and schooling interruptions from COVID-19 variants have faded away. Meanwhile, nearly all pandemic relief programs that would reduce a worker’s need for a paycheck have expired.
But there’s still a marginal case for each of these explanations. Around 2.7 percent of the U.S. population (up to 7 million potential workers) is immunocompromised. Because they face a higher risk of severe illness from contracting COVID-19, that threat may still inhibit them (or their household members) from reentering the workforce. Similarly, children under the age of 4 still can’t receive COVID-19 vaccines—causing some parents to keep their children away from group child care services. It’s quite possible that there is a bit of a chicken-and-egg problem, where the reduced supply of workers limits the amount of child care a nursery school can provide, thus making it harder for parents to take on a job.
And some pandemic relief programs remain in effect, which may, at the very least, be indirectly reducing the labor supply. The federal Emergency Rental Assistance (ERA) program still has almost $20 billion out of an initial $46.5 billion to spend. Applicants can receive up to 18 months of rental assistance, including payments for previous and future housing costs. Recipients can also reapply for additional assistance. March data from the Treasury Department show that the program distributed $2.2 billion to anywhere from 305,000 to 514,000 households. Assuming that no household was double dipping in the two rounds of the ERA program, this averages out to a $4,200 payment per household.
Similarly, the number of borrowers seeking loan repayment relief has significantly increased since the onset of the pandemic: The proportion of federal student loan borrowers opting for loan forbearance grew from under 10 percent to over 50 percent in 2020 and has remained there since.
Both rental assistance and loan forbearance would diminish the pressure a worker would feel to return to work, but there hasn’t yet been an estimate of these programs’ effect on labor supply. Perhaps in response to such concerns, the governors of Nebraska and Arkansas have declined most future ERA funding.
However, the larger contributors to the dramatically reduced labor supply are likely the increase in people retiring and the decrease in immigration.”
“A recent study of the program’s effects from the National Bureau of Economic Research (NBER) finds that the majority of the funds spent by the program went to business owners and shareholders rather than to workers themselves. Ultimately, “only 23 to 34 percent of the program’s funds went directly to workers who would have otherwise lost their jobs.” The jobs it did keep in place were preserved at very high cost—somewhere between $170,000 and $257,000 a year, far more than the typical earnings of affected workers, which are closer to $58,000 per year.
While the PPP was able to save some jobs, albeit, at a very high cost, the overall result of the program was precisely the opposite of what was intended. The purpose of the program was to preserve the jobs of wage workers, not to funnel money to business owners. As David Autor, a Massachusetts Institute of Technology economist and the lead researcher behind the paper, told The New York Times recently, “it turns out [the money] didn’t primarily go to workers who would have lost jobs. It went to business owners and their shareholders and their creditors.” The program, he added, was “highly regressive.””
“Immigrants frequently fill jobs that native-born Americans are reluctant to do. Unsurprisingly, the largest gaps in the labor market tend to appear where immigrants make up a larger share of the workers. According to the Bureau of Labor Statistics, in 2020 “foreign-born workers were more likely than native-born workers to be employed in service occupations; natural resources, construction, and maintenance occupations; and production, transportation, and material moving occupations.” Foreign-born workers make up roughly 17 percent of the U.S. labor force. In each of the struggling sectors mentioned above, more than 20 percent of the workers are already immigrants.
This dynamic isn’t just affecting low-wage jobs. According to Bloomberg, the U.S. is currently experiencing its worst health care labor shortage ever. An estimated 2.7 million immigrants are already working in hospitals. In October, 16 percent of American hospitals reported that they were critically short-staffed and the situation has only gotten worse. These essential jobs need to be filled so desperately that health officials are allowing staff infected with COVID to stay on the job. Many health care workers are experiencing burnout, and immigrants have already proven they can step in and get the job done.
Immigrants won’t solve every labor shortage in the U.S., but letting more people come here for an honest and well-paying job would be a great place to start. The sooner we see more immigrants allowed into the U.S., the sooner we’ll see more milk and meat at the supermarket.”
“Long-haul driving, in particular, can be grueling, with lengthy wait times that aren’t compensated and other costs to being out on a route for stretches at a time. “Why do people not want to become truck drivers? That’s the situation, or the root of the issue. And the reason for that is it’s a shitty job,” said Hanno Friedrich, associate professor of freight transportation at Kühne Logistics University.”
“The first thing to know about the truck driver shortage, experts said, is that it’s not exactly a shortage. “It’s a recruitment and retention problem,” said Michael Belzer, a trucking industry expert at Wayne State University.
In the US, “there are in fact millions of truck drivers — people who have commercial driver’s licenses — who are not driving trucks and are not using those commercial driving licenses, more than we would even need,” Belzer said. “That’s because people have gotten recruited into this job, maybe paid to get trained in this job, and realize, ‘This is not for me. This is not adequate for what I’m doing.’”
When it comes to recruitment, it’s hard to get people into the business, especially young people. There’s often a gap between when people leave school (say, age 18) and when they can legally drive a truck across state lines (typically age 21), which means those folks may have already found jobs and aren’t going to be wooed away to become truckers.
There are other barriers to entry, like schooling (the costs of which can vary) and the ability to obtain a special class of driver’s license. Around the world, training and testing for truck drivers stalled because of Covid-19 lockdowns. The industry also struggles to attract women into the workforce because of safety concerns and inadequate accommodations along routes and at rest stops.
But truck driving also isn’t the job it used to be. In the United States, for example, deregulation of the industry, which accelerated in the 1980s, alongside the decline of unions, means trucker wages have been shrinking for years. But the work itself hasn’t really changed. It involves long hours, and a lot of that can be time spent uncompensated. “You could spend all day or a day and a night waiting around to get a load at a port site offloaded and loaded up, and you’re not getting paid for any of that time,” said Matthew Hockenberry, a professor at Fordham University who studies the media of global production.
This feeds not just into the recruitment problem, but also the retention problem. Truck drivers are burned out. Long-haul drivers, especially — that is, those who are moving cargo long distances or across states — typically get paid for the trips they take, and they have to go where the cargo needs to go, with little control over when and where. “The route is the route,” as Weaver put it.”
“The toughness of being a truck driver — the long hours, the treks, the waiting at ports or warehouses to get the goods — isn’t an accident. It’s mostly a consequence of being caught up in the demands of the modern supply chain, the one that is under so much pressure now.
Experts told me that even as wages for truckers have declined, shipping and logistics companies are increasing their rates. But that hasn’t really trickled down to the truck drivers’ pockets. “The trucking companies fight over the scraps. And the drivers fight over the scraps left over after the trucking companies fight over it. All of this cascades down, and the most powerful party here is always the one to win,” Belzer said.
And, he added, when it came to truckers: “Because of where they stand in the power relations throughout the supply chain, they’re the least powerful people.”
Experts and those involved in the trucking industry said wages for truckers have ticked up because of the labor demand in this stage of the pandemic, just as they have in other parts of the labor market in the US. There may be good signing bonuses to be had, too. But truckers don’t have a say in the routes they drive, or how long it takes for their cargo to be offloaded at a port. The job remains difficult, and it might not be enough.”
“I spoke with current and former H-1B holders, U.S. workers, union reps, academics, lobbyists, recruiters and immigration lawyers on both sides of the political spectrum. While they differed on the specifics, many said that the program is used not to fill labor shortages, as corporations insist, but to cut costs. Critics say that businesses regularly game the system to pay H-1B visa holders below market wages, both exploiting foreign workers and stacking the deck against American job seekers.
As a candidate, President Joe Biden promised reform, saying “high skilled temporary visas should not be used to disincentivize recruiting workers already in the U.S. for in-demand occupations.” Now in office, his administration is considering increasing the wages companies have to pay H-1B workers, which would reduce the incentive for companies to hire foreign workers. This summer, it quietly — and unsuccessfully — defended in court a Trump-era rule that would have replaced the lottery system currently used to allocate visas with one that prioritizes the highest-paying jobs. Both Democratic senator Dick Durbin of Illinois and Republican senator Chuck Grassley of Iowa had long been calling for the change, saying in a joint letter that the “H-1B visa program is greatly in need of reform.”
But full scale reform is going to prove tricky for a president who campaigned as a champion for both workers and immigrants. Because while many pro-labor groups say the program lines the pockets of the likes of Google and Facebook at the expense of American workers, immigration advocates, along with business interests, oppose measures to rein it in, saying that doing so will hurt American competitiveness by narrowing access to a badly needed pipeline of high-skilled talent. Politically, H-1B reform is pegging two powerful Democratic constituencies against each other. Meanwhile, getting anything through a sharply divided Congress won’t be easy.”
“H-1B reform could drastically change the landscape of business and immigration in the U.S. There are roughly 600,000 H-1B visa holders in the country, the vast majority from China and India. Most of these jobs are in tech, but companies can also use the program to hire, say, Spanish-language teachers or doctors with special skills.”
“Proponents of the H1-B program say that U.S. firms need access to foreign STEM talent in order to remain competitive, an argument that hinges on the existence of a domestic labor shortage in the tech world. Unemployment in the tech sector is significantly lower than it is for the economy overall, which business groups say is evidence that domestic tech workers are doing pretty well and foreign workers are mostly filling demand above and beyond what the domestic workforce can supply.
The problem is, historically it’s not clear that there has been a labor shortage in tech. Skeptics point to the fact that median wages in the sector haven’t increased everywhere in the country, or all that dramatically. “What happens when there’s something in short supply?” said Ron Hira, an associate professor of political science at Howard University and research associate with the pro-labor Economic Policy Institute (EPI). “You have a price mechanism. In this case, it would be wages. So, anything in shortage you’d see wages going through the roof.” The fact that there haven’t been dramatic wage spikes, he says, suggests that claims of labor shortages in the U.S. are overblown.
Instead, Hira and others believe that corporations have become accustomed to paying below market wages through use of the H1-B program. Employers are required to pay H-1B workers the higher of either the actual wage paid to a worker in a comparable role at their company, or the average wage for similar workers based on occupation, geography and experience. Employers select this “prevailing wage” from four levels set by the Department of Labor.
But an analysis by EPI found that, in 2019, employers certified 60 percent of all H-1B jobs at the two lowest levels — leading to questions about whether corporations were classifying these jobs at artificially low levels to avoid paying higher wages.”
“Wages can be pushed down by other factors, too. H-1B visas are held by employers, which means there are restrictions on the free movement of labor. Foreign workers can’t simply leave the company if their wages aren’t competitive. “I felt like I had no option to negotiate whatsoever,” said a Pleasanton, Calif.-based former H-1B worker and now-green card holder who didn’t want to be identified for fear of professional repercussions. He guesses he was paid 25 to 35 percent less than his domestic counterparts as an H-1B worker.
“People who have been here for 10 years, or even some people who were born and brought up here who’ve been in good jobs making six figures, suddenly they’re losing their jobs just because [their employers] found somebody from India who would do it for $50,000,” said Choudhary.”
“Some argue that the H1-B visa program lifts all boats: There is research showing that an increase in foreign STEM workers as a share of a city’s total employment increases wages for domestic workers more broadly. But for many workers, any aggregate benefits of the program are far outweighed by the costs. In 2015, Disney famously fired over 200 U.S. workers, some of whom said they were made to train their H1-B-holder replacements.”
“One of the biggest arguments made by tech and other companies against making it harder for foreigners to come in on an H-1B visa is that it would dissuade the “best and brightest” from coming to the U.S. But several of the people I spoke with said that’s not always the case. “It’s a mixed bag,” said the Pleasanton, Calif.-based former H-1B worker about the caliber of the H-1B visa holders he worked with.
In recent years, H-1Bs have been awarded by lottery because the number of visa applicants has far exceeded the annual cap. Immigration advocates say that this shows the scope of the need for high-skilled foreign workers. But critics say that has led to a proliferation of mediocre workers.
There’s also the problem of players who want to cheat the system.”
“H-1B visas are good for three years, after which workers may apply for an additional three year extension. After his six years were up, Vikram’s employer initiated the process of applying for a green card for him, but, because of an enormous backlog for people coming from India, the processing time was expected to last at least nine years.
Vikram decided it wasn’t worth it. He still works with his former employers — but now as part of his own business, which he runs from India, charging his American clients half the cost of a U.S. salary.”
““The focus on H-1B, as if it were the way that we get skilled workers into our economy — that’s an artifact of the misuse of the H-1B visa,” said Bruce Morrison, a former Democratic congressman who wrote the legislation that created the H1-B program. “The H-1B program is a non immigrant program. And non immigrant by definition is supposed to be temporary.”
His solution is to expand the current limit of 140,000 employment-based green cards per year. “We still have the same numerical limitations that we had in 1990,” said Morrison. Biden’s immigration bill includes a provision that would increase the number of employment-based green cards to 170,000.
“People who have green cards have a right to become citizens,” says Morrison. “They get to vote, they have the same rights as citizens, they can’t be exploited in a legal sense. These are real values.””
“Data from the Kauffman Foundation indicate that the percent of new entrepreneurs who created a business by choice instead of necessity dropped from 86.86 percent in 2019 to 69.75 percent last year. Many people happy to work for somebody else were pushed into starting a business by pandemic-era chaos.
But a lot of those people seem to have discovered that they actually like working for themselves, and that may be causing a cultural shift. At the end of November, The Wall Street Journal reported that at least part of the “Great Resignation” phenomenon of Americans quitting jobs involved people starting businesses.”
“Immigration into America has slowed down tremendously, which may hurt the labor market and economic growth as the country tries to bounce back from the coronavirus pandemic, according to a new note from J.P. Morgan.
“Population slowdown threatens trend growth,” the Nov. 12 note stated, highlighting the fact that due to more aging boomers retiring from the workforce and 3 million fewer immigrants in the country, trend labor force growth is going to be limited at only 0.1% per year and risks hurting overall GDP growth.”
““Immigration is crucial to growing the labor force and for economic growth, particularly in the medium and long term,” Stuart Anderson, executive director of the National Foundation for American Policy, told Yahoo Finance.
Anderson added that the Trump administration’s policies greatly limited legal migration and the pandemic worsened the numbers overall, contributing to a shortage of available workers. “If similar policies were to resume in 2025, expect additional long-term damage to U.S. economic growth and the American labor market,” Anderson warned.
J.P. Morgan researchers noted that the Census Bureau estimated that the working age population (ages 16 to 64) peaked in 2019, and has been “falling for almost two years,””
“While the specific cases in [this] lawsuit are unfortunate, they point to broader systemic issues in the American immigration apparatus. As Reason’s Eric Boehm reported in September, “one of the major drivers of the immigration system’s mounting caseloads,” which involves “a backlog of nearly 7 million applications and petitions,” comes down to “the government’s own, recently beefed-up immigration bureaucracy.”
The Application for Employment Authorization—the document at the heart of these plaintiffs’ woes and USCIS’s processing issues—”was expanded from one page and 18 questions to seven pages and 61 questions,” writes Boehm. Immigration restrictionists often say that hopeful migrants should come here “the legal way,” but the legal way is becoming more and more difficult to navigate. Immigrants who are already here and employed legally are finding themselves unable to continue working.
Unfortunately, the plaintiffs’ struggle is a reminder that the byzantine legal immigration system doesn’t just harm the migrants tangled in red tape—it also harms the native-born Americans who could benefit from their skills and services in tough times.”