Report: ‘Scant’ Evidence Of Labor Shortage To Justify More Guest Worker Visas

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Will Racke Immigration and Foreign Policy Reporter
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When Homeland Security Secretary John Kelly raised the cap on temporary worker visas Monday, he claimed that authorizing 15,000 additional visas would give relief to American businesses at risk of “significant harm” from a nationwide labor shortage.

A report from the Economic Policy Institute (EPI), a liberal-leaning think tank, suggests that Kelly’s justification for more H-2B visas was not based in actual labor market conditions.

Daniel Costa, EPI’s director of immigration law and policy research, analyzed wage and unemployment data from job fields often filled by foreign workers in the H-2B program. He found that stagnant wages and persistently high unemployment rates in those occupations cast doubt on the government’s claim that American businesses are facing a labor shortage.

First, Costa looked at wage data from the Bureau of Labor Statistics for the top 10 H-2B occupational fields. For each category, he compared average pay in 2004 to the average inflation-adjusted wage in 2016.

There was little wage growth for all workers in all occupations — only 5.5 percent from 2004 to 2012 — but wage growth was even worse for workers in nearly every H-2B occupation, according to the report. Hourly earnings either stagnated or declined in all but one category, “Waiters and Waitresses,” which rose by about 20 percent over the 12-year period from 2004 to 2016.

Costa argued that a true labor shortage would force businesses to offer higher pay as they compete for workers. While there was more robust wage growth in the H-2B occupations in 2015 and 2016, he said, the rise in inflation-adjusted worker pay in those years was the product of declining inflation, not a tight labor market.

“Determining whether a labor shortage exists in a particular occupation can be a difficult and inexact science, but those claiming shortages exist should at least provide the most rudimentary data consistent with such a claim,” Costa wrote. “For example, if an occupation has seen flat or declining wages coupled with consistently high unemployment rates over a prolonged period of time, those are strong indicators that the occupation is not experiencing a shortage.”

The Center for Immigration Studies (CIS), a conservative research organization that favors lower levels of immigration, made the same point in a study published earlier in July. CIS research directer Steven Camarota looked at wage data from the Census Bureau’s American Community Survey and found that real wages across the H-2B categories were 1.3 percent lower in 2015 than they were in 2007, before the Great Recession. (RELATED: Wage Data Undercuts Claims Of Worker Shortage In Seasonal Jobs)

“In economics, the price of anything — steel, wheat, or workers — rises if demand outstrips supply and, of course, the price of workers is primarily wages,” he wrote last week in a blog post. “However, wage data shows in both the long and short term there have been little to no wage increases in many of the most common H-2B occupations, and in many cases wages show an outright decline.”

Unemployment rates in the H-2B job fields in 2015 and 2016 also undermine claims of a labor shortage, according to the EPI report. Seven of the 10 occupations had “very high” unemployment rates of between of 7.8 percent and 10.6 percent, well above the national average unemployment rate of 4.9 percent in 2016.

Costa conceded that businesses in certain locations might be struggling to find seasonal workers, but economic data paints a much different picture than local stories about resort towns that can’t find Americans to work in their hotels and restaurants.

“Other than anecdotes of shortages — many of which have been reported by the media — very little labor market data or metrics have been offered to prove the existence of labor shortages in H-2B jobs,” he wrote.

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