Guest Worker Visas and Their Impact on Industry: An Argument Against Their Limitations and for Stricter Controls on Employers

Part I: Setting the Stage

Buy American, Hire American

On July 26, 2017 President Trump signed his Buy American, Hire American (“BAHA”) Executive Order.^[1] BAHA not only compels government agencies to purchase American made goods, it also places a focus on nonimmigrant worker visas directly in its language.^[2] While BAHA singled out H1-B visas, it also gave broad commands to review and revise guidance on the administration of United States immigration policy as a whole.^[3] This includes a particular focus on the prevention of fraud and abuse.^[4] Certainly, accountability to the process is an important piece of any regulation. The abuses of the H-series visas, though, are likely less a symptom of regulatory policy enforcement failures via executive agencies and point more towards evidence that the entire program needs to be Congressionally reassessed.

The Guest Worker Program.

While there are many forms of foreign worker visas, this series chooses to focus on the three largest programs granting nonimmigrants the right to work in the United States on a temporary basis. This includes the H-1B, H-2A, and H-2B visas.^[5],[6],[7] Title 8 of the United States Code governs the admission of aliens seeking to enter the country for the performance of both skilled and unskilled labor.^[8] This portion of the immigration code establishes the criteria that must first be met before guest worker visas will be issued. Essentially, enough American workers must not be available in the location of the position hired for, and the employment of aliens must not adversely affect American workers.^[9] The Guest Worker Program (“GWP”) was introduced as an amendment to the Immigration and Nationality Act (“INA”) in 1990. There have been multiple amendments over the nearly twenty-eight year period.^[10] This trend continues. Presently, there is an amendment tied to the Department of Homeland Security’s appropriations bill for 2019 that effectively triples the number of H-2B visas available.^[11] This is a policy that has been implemented in previous years by Congress to help alleviate pressures on availability demands.^[12] H-1B and H-2A series visas, though, have a statutorily set hard cap.^[13],[14] The Trump administration’s decision to stick to hard caps has been economically disastrous for employers that rely on foreign labor. Too few visas for unskilled labor and a purposeful reduction in the speed of processing skilled labor applications have served as an economic drag and left positions unfilled.^[15]

The Argument Against

Critics of these visas argue that they displace American workers while deflating industry wages. This is accomplished despite wage protections statutorily mandated under the INA.^[16] Detractors make the argument that the Department of Labor (“DOL”) takes minimal steps to inform temporary workers of their rights, and they do even less to ensure employers are meeting their requirements.

To inform nonimmigrant temporary workers of their rights, the American consulate where the nonimmigrant worker obtains their visa simply issues all visa holders an informational pamphlet and has them watch a video.^[17] The assumption that they can read the flyer and interpret the video, or they will be able to contact someone that can, is explicitly made.^[18] While the consulate is supposed to take several steps to inform nonimmigrants of their rights and make sure they understand them, the word of the consulate officer is all that is needed to confirm that this has been done.^[19] This creates a situation ripe for exploitation.

Additionally, there is an argument that these programs artificially depress wages for American citizens looking to work in similar prevailing wage jobs. During the application process, the employer defines the job and its responsibilities when it submits a Labor Condition Application to the Department of Labor.^[20] This is true for all three nonimmigrant visas. For example, in the case of the H-1B visa, employers are exempt from the requirement that they do not replace American employees if they establish a salary floor of at least $60,000. In a significant number of cases, the salary for nonimmigrants working on these visas is at or just above that floor and significantly below what an American would be paid in the same position.^[21] Critics point to the ridiculously low number of sanctioned employers as evidence that the DOL is not effectively policing the practices of employers. Within the last 5 years, less than thirty employers have been deemed willful violators of the H1-B requirements.^[22] Currently, only ten employers are barred from participating.^[23] This low number is likely due to the limited circumstances under which the DOL may investigate an H-1B employer.^[24] Similarly, the H-2A visa—despite its multiple protections for workers—has only seen fifty-two employers debarred over the last three years.^[25] The H-2B visas appear even more suspicious, only having four companies that are presently disbarred.^[26] These numbers suggest that investigation and repercussions are unlikely.

The depression of wages argument can be summed up as follows: Nonimmigrant workers likely have limited understanding of their rights, and there are significantly limited resources available to protect them from unscrupulous employers. Employers, likely aware that the potential of being investigated is minimal, take advantage of their labor working on nonimmigrant visas. They pay lower wages, withhold overtime pay, and get away with exploiting temporary labor for a fraction of the cost a U.S. citizen would demand. This creates a disincentive for the employer to raise wages significantly enough to attract American labor and keeps wages low.

Finally, detractors make the argument that this results in the displacement of American workers. Employers, again knowing that they have a very small chance of being investigated, only meet the minimal requirements to attempt to hire Americans.^{[27],[28],[29]} By manipulating the descriptions of the jobs the employers are hiring for, they can advertise a wage that discourages American labor from applying. Employers then pay visa holders the deflated wage, which keeps the prevailing wage low. Often, many of the visa holders have entered a form of indentured servitude with brokers in their home country to give them the opportunity to work in the United States.^[30] Withholding payment from these creditors is not a viable option, so they continue working to pay off their obligation, regardless of the conditions. As Linda Levine points out in her study on the effects of the previous (and longest running) nonimmigrant agricultural worker program in the United States, “Although the magnitudes might differ today depending upon how much the U.S. farm labor and product markets have changed over time, the direction of the wage and employment effects likely would remain the same.”^[31]

The Argument in Favor

Those that argue the nonimmigrant temporary worker programs offer favorable outcomes for the United States economy often point to the better opportunities created for American workers because of the temporary labor supply. For H-1B visas, this occurs through innovation and productivity increases fostered by inviting the world’s best and brightest to work for American firms.^[32] While some argue that the United States produces more than enough college graduates to fill the positions being taken by H-1B visa applicants, there is evidence that there are shortages of American workers available in certain pockets, especially in STEM related fields.^[33] Some research also discounts the argument that H-1B nonimmigrants depress wages. ^[34] Even if there may be some depression of wages, the net effect of having more highly skilled individuals in the country results in offsetting economic realities.^[35] Additionally, the H-1B process costs employers thousands of dollars, which suggests they may be factoring this into nonimmigrant workers’ salaries.^[36]

Similar arguments are made justifying the H-2A and H-2B visa programs. Wages paid to temporary laborers are spent locally, which helps create jobs in the retail sector and pumps money into the economy.^[37] In fact, it is estimated that in some cases the temporary labor force spends up to 80 percent of its earnings in the local economy.^[38] In some areas, there is evidence that this additional spending helps to create nearly three local jobs for every four temporary laborers employed.^[39] This multiplier effect helps offset any negative effects the programs may create, and often create a net positive effect.^[40] Research has indicated that H visas have the potential to create around 1.3 million jobs and increase the United States GDP by $150 billion by 2045.^[41]

A shortage of labor is also forecast as baby boomers, who account for 25% of the workforce, continue to age out of maintaining full-time employment.^[42] For example, in 2016 H-1B holders were able to fill 10,500 physician jobs. If those levels remain the same, there is a projected shortfall of 95,000 physicians by 2025.^[43] These programs could serve as a solution to that pending labor crisis. It is unlikely American laborers are able, or even want, to fill many of the positions that these nonimmigrant workers occupy. In 2010, 68 percent of United States workers that were offered farm labor positions through state employment agencies flatly rejected the position.^[44] The fact is that nine out of ten positions filled mostly by foreign labor are manual-labor intensive.^[45] The percentage of Americans that rejected farm positions suggests these labor-intensive types of positions will become more reliant on foreign temporary labor. This has already shown to be true with farm labor. In 1996 only 11,000 H-2A visas were issued; that number increased 12-fold by 2016 to 134,000.^[46] This is only a problem that will continue to grow and affect more industries as time goes on. Small businesses are already having to rely on the H visa programs to fill many of their unskilled and semi-skilled positions as thirty percent of companies with between three and five visa holders had fewer than fifty employees.^[47]

Essentially, proponents of these types of visas argue that these are necessary programs to fill positions American laborers are unable or unwilling to fill. They create positions for American workers upstream, either through an increase in local spending and production or an increase in innovation. Any negative effects of the program are offset by these factors, and should be discounted.

Analysis

While each position offers important points to consider, it’s likely any solution will need to evaluate points raised by both sides. Simply increasing the scrutiny of the visa applicants as proposed by the Trump Administration will do nothing to solve the abuses being reported by the actual workers. There is likely a need to create some type of accountability among employers to ensure they are meeting their obligations under the program while increasing what provisions are already there. This would probably result in an increase of investigators and an expansion of random investigations from companies deemed at-will violators to all companies utilizing these visas. It should also be mandated that repetitive violators are indefinitely barred from using any of these programs. While the USCIS has publicly stated it seeks to double the number of site visits for H-1B visas, they should also place a focus on the H-2 program.

Many of these solutions will likely require Congressional action to change existing law. Some policy can be changed by the agencies charged with overseeing the program, but issues like hard caps and the requirements to participate will require the intervention of lawmakers. In drafting this policy, it is important that consideration is given to the economic impact these visa holders have.

In the subsequent segments of this series, a closer examination of the economic consequences of these programs will be examined more in-depth to ultimately put forward specific changes that should be made in the laws regulating the H-1B, H-2A, and H-2B visa programs.

1. 1. See Exec. Order 13788 (2017). ↑

1. 1. See §2(b) Exec. Order 13788 (2017); §5 Exec. Order 13788 (2017). ↑

1. 1. See §5(a) Exec. Order 13788 (2017); §5(b) Exec. Order 13788 (2017), compelling the Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security to review and propose new guidance on how to administer current immigration law/issuance of H1-B visas. ↑

1. 1. §5(a) Exec. Order 13788 (2017). ↑

1. 1. See 8 U.S.C. § 1101(a)(15)(H)(i)(b), H-1B workers are foreign nationals who may either return to their home country or apply for citizenship, but are temporarily employed in the United States to perform specialty occupations; see also 8 U.S.C. §1184(i), specialty occupations and their requirements are specifically defined in the issuance of visas. ↑

1. 1. See 8 U.S.C. § 1101(a)(15)(H)(ii)(a) (2018), H-2A workers are foreign nationals who intend to return to their home country, but are temporarily employed in the United States in response to demand in the agricultural sector; see also 26 U.S.C. § 3121(g) (2018); and 29 U.S.C. § 29(f) (2018), Agricultural work is defined in very specific terms for visa purposes. ↑

1. 1. See 8 U.S.C. § 1101(a)(15)(H)(ii)(b), H-2B workers are foreign nationals who intend to return to their home country, but are temporarily employed in the United States in response to a lack of available U.S. citizen labor. ↑

1. 1. See 8 U.S.C.A. §1182(5)(A)(i). ↑

1. 1. Id. ↑

1. 1. See INA Legislative History, Westlaw, https://1.next.westlaw.com/RelatedInformation/N14F496E04A4611E8A5B28E56703F7D3C/riVersions.html?docSource=bff0330df4bd415998045582c3018673&originationContext=relatedinfoversions&transitionType=Versions&contextData=%28sc.History*oc.DocLink%29 (last visited Oct. 10, 2018). There have been 37 amendments to the INA of 1990 since originally passed by Congress. ↑

1. 1. See Committee on Appropriations subcommittee on Homeland Security, Amendment to Homeland Security Appropriations Bill FY 2019 18 (Comm. Print 2018). https://docs.house.gov/meetings/AP/AP00/20180725/108623/HMKP-115-AP00-20180725-SD022.pdf. Authorizes the readmission of H2-B visa recipients for the preceding two years without counting toward the present years cap of 66,000. ↑

1. 1. Most recently for fiscal year 2016. This exemption expired Sept. 30, 2016 and was not renewed. See Consolidated Appropriations Act of 2016, 2015 Cong. U.S. H.R. 2029, Pub. Law 114-113. ↑

1. 1. U.S.C.I.S., H-1B Fiscal Year 2019 Cap Season, FY 2019 H-1B Cap Count, https://www.uscis.gov/working-united-states/temporary-workers/h-1b-specialty-occupations-and-fashion-models/h-1b-fiscal-year-fy-2019-cap-season (last accessed Oct. 10, 2018). H-1B is capped at 85,000 visas. ↑

1. 1. U.S.C.I.S., H-2B Fiscal Year 2019 Cap Season, FY 2019 H-2B Cap Count, https://www.uscis.gov/working-united-states/temporary-workers/h-2b-non-agricultural-workers/cap-count-h-2b-nonimmigrants (Last accessed Oct. 10, 2018). H-2B visas are capped at 66,00, but that number is split between two periods in the year. ↑

1. 1. New H-1B visa rules lead to fewer applications by Indian IT firms, Business Today, https://www.businesstoday.in/current/economy-politics/new-h1b-visa-rules-lead-fewer-applications-indian-it-firms-us-daily/story/274011.html (Last accessed Oct. 10, 2018), “Envoy Global, a technology-oriented immigration services provider, reported that 26 per cent of the employers it surveyed have had to delay projects, and 22 per cent of them have relocated work overseas as a result of the current uncertainties in the US immigration system.” ↑

1. 1. See INA Legislative History, supra 10. ↑

1. 1. See 8 U.S.C.A. §1375b(a) (2013). ↑

1. 1. While social workers and legal professionals are available to answer questions, they are often available in too small a number to truly be effective. ↑

1. 1. See 8 U.S.C.A. §1375b(e) (2013). ↑

1. 1. See 20 CFR §655.700-760. ↑

1. 1. Haeyoun Park, How Outsourcing Companies Are Gaming the Visa System, N. Y. Times, Nov. 10, 2015 https://www.nytimes.com/interactive/2015/11/06/us/outsourcing-companies-dominate-h1b-visas.html (last accessed Oct. 10, 2018). ↑

1. 1. United States Department of Labor Wage and Hour Division, H-1B Willful Violator List of Employers, https://www.dol.gov/whd/immigration/H1BWillfulViolator.htm (Sept. 2018). ↑

1. 1. United States Department of Labor Wage and Hour Division, H-1B debarred/disqualified Employers, https://www.dol.gov/whd/immigration/H1BDebarment.htm, (Sept. 2018). ↑

1. 1. See DOL Wage and Hour Field Operations Handbook, (FOH) 71b01; 8 U.S.C. § 1182(n)(2)(A); 20 C.F.R. § 655.806); (FOH 71b02; 8 U.S.C. § 1182(n)(2)(G)(ii); 20 C.F.R. § 655.807); (FOH 71b02; 8 U.S.C. § 1182(n)(2)(G)(i); 20 C.F.R. § 655.807(h).); (FOH 71b03; 8 U.S.C. § 1182(n)(2)(F); 20 C.F.R. § 655.808. The DOL may only investigate employers four ways: As a result of an aggrieved party complaint, credible source investigations, secretary-certified investigations, and random investigations of willful violators. ↑

1. 1. U.S. Department of Labor, Employment and Training Administration, Program Debarments, https://www.foreignlaborcert.doleta.gov/pdf/Debarment_List_Revisions.pdf (Last Accessed Oct. 10, 2018). ↑

1. 1. Id. ↑

1. 1. See Department of Labor, H-2A Frequently Asked Questions, https://www.foreignlaborcert.doleta.gov/faqsanswers.cfm#gotoh2 (Last accessed Oct. 10, 2018). ↑

1. 1. See Department of Labor, H-2B Frequently Asked Questions, https://www.foreignlaborcert.doleta.gov/pdf/H-2B_2015_IFR_FAQs_Round11.pdf (Last accessed Oct. 10, 2018). ↑

1. 1. See Department of Labor, H-1B Frequently Asked Questions, https://www.foreignlaborcert.doleta.gov/faqsanswers.cfm#h1b_programs (Last accessed Oct. 10, 208). ↑

1. 1. Bryce Ashby, Indentured Guests—How the H-2A and H-2B Temporary Guest Worker Programs Create the Conditions for Indentured Servitude and Why Upfront Reimbursement for Guest Workers’ Transportation, Visa, and Recruitment Costs is the Solution, 38 U. Mem. L. Rev. 893 ↑

1. 1. Linda Levine, “Immigration: The Labor Market Effects of a Guest Worker Program for U.S. Farmers,” Feb. 2004, 6, https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1200&context=key_workplace (Last accessed Oct. 10, 2018). ↑

1. 1. See Nicole Torres, The H-1B Visa Debate Explained, Harv. Bus. Rev. https://hbr.org/2017/05/the-h-1b-visa-debate-explained (Last accessed Oct. 10, 2018). ↑

1. 1. A blueprint for getting more women into information technology, The Economist, https://www.economist.com/news/science-and-technology/21711632-blueprint-getting-more-women-information-technology-high-techs-missing-xx-factor (Last accessed Oct. 10, 2018). ↑

1. 1. See The National Bureau of Economic Research, Immigrants Play a Key Role in STEM Fields, http://www.nber.org/digest/nov16/w22623.html (Last accessed Oct. 10, 2018), immigrants that have been in the country less than five years earn 5.7% less than their native born counterparts, but those that have been in the country more then 6 years tend to make more than similarly situated native-born Americans. ↑

1. 1. Torres, supra 35. ↑

1. 1. Id. ↑

1. 1. Trupo et. al., The Economic Impact of Migrant, Seasonal, and H-2A Farmworkers on the Virginia Economy, 4, https://ageconsearch.umn.edu/bitstream/14836/1/rr980036.pdf (Last Accessed Oct. 10, 2018). ↑

1. 1. Id. ↑

1. 1. Id. at 11. ↑

1. 1. Id. at 11. ↑

1. 1. Nydia Velazquez, House Committee on Small Business, Economic Impact of Visas: Spotlight on Small Business, 5, https://democrats-smallbusiness.house.gov/sites/democrats.smallbusiness.house.gov/files/documents/Visa%20report%20FINAL.pdf, June 2018 (Last accessed Oct. 10, 2018). ↑

1. 1. Id. ↑

1. 1. Id. ↑

1. 1. Id. at 6. ↑

1. 1. Id. ↑

1. 1. Id. ↑

1. Id. at 7. ↑