Biden’s H-1B Conundrum

“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.””

Entrepreneurship Is on the Rise, Despite COVID-19

“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.”

From the Great Resignation to Lying Flat, Workers Are Opting Out

https://www.bloomberg.com/news/features/2021-12-07/why-people-are-quitting-jobs-and-protesting-work-life-from-the-u-s-to-china?utm_content=business&utm_campaign=socialflow-organic&utm_source=facebook&utm_medium=social&cmpid=socialflow-facebook-business&fbclid=IwAR3Bh5Siln-ciUcON3KGA2G9p0CSxvdhEwfoWtpB4xaw3GESDydZv7jB9Mc

‘Expect additional long-term damage’: U.S. labor shortage exacerbated by immigration slowdown

“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,””

These Asylum Seekers Are Losing Jobs Because Bureaucrats Won’t Do Theirs

“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.”

Hating work is having a moment

“Many had expected people to return to the workforce en masse after federal unemployment benefits expired in September. While that’s happened to some degree — the economy added more than half a million jobs last month — there are still many more Americans holding out, thanks to a variety of reasons, from savings to lack of child care to the ongoing risks of the pandemic.

Importantly, the pandemic — as well as government social safety nets like extended unemployment benefits — gave people the time, distance, and perspective to reevaluate the place of work in their lives.”

“There are still more than 4 million fewer people in the workforce than there would be if labor force participation were at pre-pandemic levels. There are 10.4 million open jobs and just 7.4 million unemployed, according to the latest data. Of course, many of these open jobs are bad: They have bad pay, dangerous working conditions, or just aren’t remote (remote positions on LinkedIn get 2.5 times more applications than non-remote, according to the company).

The result is a situation where many employers — especially those in industries with notoriously bad pay and conditions — are having difficulty finding and retaining workers. To counter it, they’re raising wages, offering better benefits, and even altering the nature of their work. Depending on their strength and duration, these various actions could have long-lasting impacts on the future of work for all Americans.”

“In September, a high of 4.4 million people quit their jobs, according to the latest data from the Bureau of Labor Statistics, which has been tracking this data since 2000. That’s 3 percent of all employment and follows a summer of record quit numbers. Quitting has been especially prevalent in lower-paying, lower-status jobs like those in leisure, hospitality, and retail.”

“In 2021, approval of labor unions grew to 68 percent of Americans, its highest rate in more than 50 years. This is happening as many American workers are attempting to unionize their workplaces. Recent unionization efforts include Starbucks, Amazon, and meal-kit delivery service HelloFresh. Last month was dubbed “Striketober,” as more than 100,000 workers across industries, including workers at John Deere and in film and TV crews, participated in various labor actions. This is one of the many worker trends bulwarked by social media, which is rampant with support for unions.”

Immigrants could fix the US labor shortage

“Companies across the United States can’t find enough employees. One immediate solution is simple: Bring in more foreign workers.

The US needs roughly 10 million people, including low-wage and high-skilled workers, to fill job openings nationwide — and only 8.4 million Americans are actively seeking work.

And despite job openings hitting historic highs in July and extended unemployment benefits ending in September, Americans aren’t returning to work, especially in low-wage industries. At the same time, workers are resigning in record numbers. And though consumer spending has surged this year, businesses don’t have the people to meet demand — to cope, some companies are raising their prices. Supply chain bottlenecks are even threatening to ruin Christmas.

When the economy is fragile, there’s an instinct to shut borders to protect American workers. And indeed, that’s what the US has done during the pandemic, practically bringing legal immigration to a halt and closing the southern border to migrants and asylum seekers. In a normal year, the US welcomes roughly 1 million immigrants, and roughly three-quarters of them end up participating in the labor force. In 2020, that number dropped to about 263,000.

Generally, economic research has shown that the arrival of low-wage foreign workers has little to no negative impact on native-born workers’ wages or employment. And under the current circumstances, welcoming more low-wage foreign workers could address acute labor shortages in certain industries, helping hard-hit areas of the country recover while staving off higher inflation.

The industries currently facing the worst labor shortages include construction; transportation and warehousing; accommodation and hospitality; and personal services businesses like salons, dry cleaners, repair services, and undertakers. All four industries had increases in job postings of more than 65 percent when comparing the months of May to July 2019 to the same time period in 2021, according to an analysis conducted for Vox by the pro-immigration New American Economy think tank. Immigrants make up at least 20 percent of the workforce in those industries.”

Service workers are getting paid more than ever. It’s not enough.

“Employers in almost every industry say they’re struggling to find workers, but the situation is especially severe in the leisure and hospitality sector. While workers in these industries are getting paid more than ever, it still doesn’t seem like enough. Bars, restaurants, and hotels across the country are posting signs advertising open jobs — or asking customers to be patient since they don’t have enough staff. In August, the latest available month for openings and turnover data from the Bureau of Labor Statistics (BLS), there were a near-record 1.7 million open jobs in leisure and hospitality — 10 percent of all jobs in the sector — and a record of nearly a million people quitting.”

“when individual states rescinded their unemployment benefits this summer, it didn’t have a meaningful impact on the worker shortage in many industries, including leisure and hospitality. Data from September, when the benefits were cut on a federal level, show a similar story, suggesting there are reasons beyond financial keeping people from taking these jobs.”

Why everybody’s hiring but nobody’s getting hired

“Essentially anywhere you go in the United States right now, you’re going to encounter “help wanted” signs. But just because a bar or restaurant or gas station wants a worker doesn’t mean a worker wants to work for them. The millions of jobs available aren’t necessarily millions of jobs people want.

“A lot of what people are seeing are low-paying jobs with unpredictable or not-worker-friendly scheduling practices, that don’t come with benefits, don’t come with long-term stability,” Shelly Steward, director of the Future of Work Initiative at the Aspen Institute, told Recode. “And those are not the types of jobs that any worker is eager to take on.””

“Tim Brackney, president and COO of management consulting firm RGP, refers to the current situation as the “great mismatch.” That mismatch refers to a number of things, including desires, experience, and skills. And part of the reason is that the skills necessary for a given job are changing faster than ever, as companies more frequently adopt new software.”