Archive for the ‘Economics’ Category

Changing the business model of seasonal business?

Friday, June 9th, 2017

The Trump administration effectively cut in half the number of temporary H-2B visas for 2017. This has caused employers to scramble to find workers for landscaping, amusement park, resort housekeepers and similar jobs. The New York Times and the Washington Post ran stories of desperate employers.

As reported by the NY Times, “Eric Haugen, who runs a landscaping company in the Denver area, regularly posts ads in newspapers, on Craigslist and on street signs for positions that pay $14 to $25 an hour, with health care and benefits. ‘We hire every single person who shows up’ for an interview, he said. We are lucky if one reports to work.’ ”

“On Mackinac, the 393-room Grand Hotel is short staff. ‘Without them, we would be looking at changing our entire business model,’ Jennifer King, general manager of the property, said.”

Daniel Costa of the Economics Priority Institute told Congress in 2016 that “Despite such claims from industry groups—other than employer anecdotes—no credible data or labor market metrics have been presented by non-employer-affiliated groups or organizations—let alone by disinterested academics—proving the existence of labor shortages in H-2B occupations that could justify a large expansion of the H-2B program.”

A labor shortage can be defined as (1) rising real wages relative to other occupations, (2) faster-than-average employment growth, and (3) relatively low and declining unemployment rates.

Wage trends: for the top 15 H-2B occupations, “there was no significant wage growth for workers; wages were stagnant (growing less than 1 percent annually) or declined for workers in all of the top 15 H-2B occupations between 2004 and 2014.”

Employment growth: “the top 15 H-2B occupations had widely varying rates of employment growth. Six experienced employment declines; seven experienced growth that was positive and above the 5.5 percent growth rate for all occupations; and two experienced growth that was lower than the percentage change for all occupations.”

Unemployment rates: The average annual unemployment rate for all workers in the United States in 2014 was 6.2 percent. During 2013–2014, none of the 15 H-2B occupations was at or below the overall U.S. unemployment rate for 2014.

Thinking of African Americans as an immigrant group not well assimilated

Monday, May 29th, 2017

A comparison is worth drawing between two populations that have not assimilated well economically in the U.S. – Mexican immigrants and post-slavery African-Americans. They had common barriers to economic assimilation: racial/ethnic prejudice, relatively low formal educational attainment, and what I call socio-economic isolation. American slavery is the extreme form of socio-economic isolation of an immigrant group.  Isolation makes it difficult to exit bad situations and enter new job opportunities.

Hispanics and Mexicans

In 1970, there were 7.8 million native born Hispanics in the United States, and 1.8 million foreign born Hispanics. Between 1970 and 2014 the percentage of the entire American population that were foreign-born Hispanics rose from 0.8% to 6%.

During this 44 year span, the educational attainment of Mexican immigrants worsened due to the sharp rise of immigrants with poor formal education. Then, after about 2000 generally Hispanic educational attainment improved both absolutely and relative to native-born Americans.

Look at Hispanic vs. white high school graduation failures. In 1970, 55% of whites and 32% of Hispanics (24% of Mexican immigrants) had finished high school. The white to Mexican gap was 31%. In 1998, the white to Mexican gap had increased to 36% (84% vs. 48%). And, the gap between whites and Mexicans for college graduation also increased. Thus, looking only at education, Mexican assimilation worsened.

After 2000, the gaps declined. Hispanics gained greatly in high school graduation rates and in college education (mainly through community college). Mexican-origin persons still have a markedly lower rate of educational attainment then other Hispanics and then whites (see table 1 here). Still, in 2013 Hispanics accounted for 40% of high school dropouts compared to 13% in 1970

Black males

Now turn to black male mobility in the United States since the late 19th Century thanks to this May, 2017 article. By mobility, the authors mean the movement of sons up or down the percentiles of the national income distribution of similarly aged men relative to the position their fathers held in the distribution of all fathers decades earlier. They report:

“For those with the lowest earning fathers, between 72% (1880-1900) and 90% (1910-1930) of whites exceeded their father’s status compared to only 51% (1880-1900) or 68% (1910-1930) of blacks. The basic pattern is similar for cohorts of men observed in 1962 and 1973 surveys. White sons exceeded black sons in upward rank mobility by about 20 to 30 percentage points at the bottom of the fathers’ rank distribution. From this perspective, there is no clear evidence that the first cohort of post-Civil Rights era black sons (measured in 1973) fared substantially better in terms of intergenerational mobility than those that preceded them.

“Our results suggest that racial differences in intergenerational mobility have been the most important proximate cause of black-white income inequality from the Civil War until today. Analyses for the early and late 20th century suggest that weaker human capital accumulation in black children, conditional on parents’ economic status, has hindered the pace of intergenerational convergence in labor market outcomes.

“Even after school desegregation in the 1960s and 1970s, residential segregation continued to limit black children’s exposure to high social capital environments and their access to high-quality educational opportunities.”

The authors stress the role of education in economic mobility. Had they been able to measure the effect of racism, they would likely have introduced that. Another approach is to look at the degree of socio-economic isolation. In the early part of the 20th Century. Black men were somewhat more likely to be geographically isolated on farms than were whites, and far more likely to have lowest status farm work. During the middle part of the Century, their numbers grew in non-farm work, mainly unskilled and semi-skilled blue-collar jobs. These jobs have languished in the past few decades.

The authors prepared a weighted ranking of fathers’ income for black and white male children. Between 1990 and 1990 the white score rose from 38 to 56, having leveled off in the last decades. The gap between white and black fathers was, in 1900 was 32; it rose to 44 in 1962; and decreased slightly in 38 in 1990. The gap widened even while the rates of high school completion for white and blacks converged in the second half of the 20th Century.

Portrait of an immigrant from Africa

Thursday, May 18th, 2017

Claude Rawagenje is one of the 1.7 million sub-Saharan Africans in the U.S. He coaches immigrants on managing household finances in Portland, Maine. He meets every year with fellow Banyamulenges, from the eastern part of the Democratic Republic of Congo. “There are five thousand of us in America,” he told me. “At our annual national meetings we talk about how to get a job and work your way up, how to be a success without losing your culture, avoiding mistakes such as touching a co-worker.”

The sub-Saharan African immigrant population roughly doubled every decade between 1980 (starting at 130,000) and 2010 and in 2015 reached 1,700.000. Over 80% come from sub-Saharan Africa.

The largest sources are Nigeria, Ethiopia, Ghana, and Kenya. Roughly half come from English-speaking countries. New York City, Washington, DC, and Atlanta metropolitan accounted for about 27% of sub-Saharan Africans in the United States.

39 percent of sub-Saharan Africans (ages 25 and over) had a bachelor’s degree or higher, compared to 29% of the total foreign-born population and 31% of the U.S.-born population. Nigerians are 57% with college degrees. They are much higher high in the labor force (75%) than the native born population (62%).

They sent $5 billion in remittances in 2003. In 2015, over $5.5 billion was sent from the U.S. to Nigeria alone. American remittances accounted for 31% of GDP in Liberia and 22% in the Gambia.

Source of data: Migration Policy Institute

Snapshot of immigration in Washington State

Sunday, May 14th, 2017

An address on immigration I made last week to a Washington audience was an opportunity to make a brief profile of immigration in that state.

Washington provides insight into the role of immigration where job growth prevails. Between 1995 and today, the total population grew from 5.3 million to 7 million. During this period, the immigrant percentage of the state’s population doubled.

From 1900, long view

Over the past 100 plus years, the state tracked the rise, fall and then rise of immigrants. Between 1900 and 1910, the state’s entire population more than doubled, while the foreign-born share already high rose to 22%. Then, the immigrant share declined to a low point of 6% in 1970. It rose again after 1990, much faster by far than in-migration from other states, to about 15% today.

(See “Where We Came From and Where We Went, State by State 1900 – 2012” for state by state profiles.)

Compare that with California, which since 1990 has had a 20%-plus foreign born share except for the middle decades in the 20th Century, and which went Democratic in the 1990s in response to an anti-immigrant push by Republicans. Compare with Tennessee, whose foreign born population was under 1% for the first half of the 20th Century and is now 5%.

In 1910, 123,890 Scandinavians accounted for 48% of the state’s 256,000 foreign born residents, which also included Germans and Asians.

Since 1990, hourglass growth

The very early 1900s was a time of very high foreign-born presence in extractive and west coast states such as Colorado, Montana, Washington and California, and in eastern states such as Massachusetts and Rhode Island (here).

Since the 1990s, immigrant workers rose in the typical hourglass way, but more so. At the top level (computer and healthcare workers, etc.), for every ten native-born college graduates moving into greater Seattle, five foreign-born college graduates move in. Compare with a 20 to 10 ratio of foreign-born college grads to native-born grads in Silicon Valley and a 2 to 10 ratio in Knoxville, Tennessee.

At the lower side of the hourglass are farm, construction, building maintenance, kitchen and other jobholders. Between 1990 and 2000, native working age people with less than a high school education declined by 3.8% while the foreign born working age persons with less than a high school education rose by 89%.

Unauthorized workers (almost entirely low formal education) in the state grew from under 50,000 to over 200,000 where it stands today.

Between 1990 and 2004, Washington was one of a few states in which working age foreign-born people increased while the native-born working age people increased, both significantly. It was one of eight states with at least a 20% growth in the native working age population, close to 100% or higher growth in the foreign-born workforce population, and an above average labor force participation rate. This means, in short, that on balance immigrants did not challenge native-born workers.

Wars for workers

The foreign-born working population with low formal education is stable to trending down, due primarily to better economic conditions in Mexico, and shrinking of the difference between Mexican wages and low paying jobs in the U.S. Farmers are engaged in a “wage war” in the wine producing counties in Washington, I was told.

And the Seattle Times reported in January of a “war for tech talent… Computer and mathematical occupations may sound like they belong to the tech world alone, but like business services they can pop up in different industries, from retail to health care. According to projections, jobs in computer and mathematical occupations in King County are expected to grow by 3.5 percent in 2017.”

The City of Seattle has an Office of Immigrant and Refugee Affairs.

The New American Economy has published a profile of the contribution of immigration to the Washington economy. The profile captures the hourglass profile of the immigrant workforce: “While foreign-born workers make up 16.8 percent of the state’s employed population, they account for 63.0 percent of the type of agricultural worker that includes those picking crops by hand. They also make up 45.1 percent of those working as software developers for applications and systems software, and 30.8 percent of dishwashers. Immigrants also play a role caring for the aging population: They made up 30.4 percent of personal care aides in 2014.”

(Thanks to Patrick Koenig, Washington Self-Employers Association)

Trump’s economic growth is dependent on immigrants

Sunday, May 7th, 2017

Economic growth simply stated comes from people who work, and work more productively.

Improving the economy implies more workers — either immigrants,  or inducing native-born workers to re-enter the workforce — and productivity gains.  Trump’s economic forecast implies almost doubling the growth in productivity from the current level of about 1.7% a year.

Assuming a doubling of productivity — starting now — fails, then its rosy forecast of 3% annual gross national product growth vs the current trend of 1.7% is utterly dependent on immigrant workers, perhaps even more than the government projects, if productivity fails to soar.  Here is why.

Between 1995 and 2005, half of the growth in the country’s workforce came from immigrants. That is far higher than in past modern decades Between 2005 and 2015, the workforce growth was 36% from off-spring of native born parents, 18% from off-spring of immigrants, and 46% from immigrants. Between 2015 and 2015, the off-spring of native-born parents will show a absolute decline in the workforce of 4.3 million, while off-spring of immigrants will grow by 5.7 million and immigrants by 3.5 million. No immigrants means a decline in total workers.

See Jason Furman and Pew Research Center.

 

Trump’s 3 Pronged Immigration strategy

Saturday, May 6th, 2017

The Trump Administration is making immigration its most important and ambitious domestic initiative. It seeks to lead in a once every 40 to 50 year cycle in the nation’s immigration policy.

As backdrop, America has long wavered between restrictive and permissive approaches to foreign migration. The nation waxed permissive from the 1880s until an explicitly racist restrictive act in 1924. Lyndon Johnson extended the civil rights movement by engineering with liberal Democrats a permissive reform in 1965. Since then, Washington has been paralyzed from expressing goals for immigration that come down to practical solutions to questions about goals, labor expectations, and enforcement.

Note below how in each of the three strategies, the administration will be leveraging and taking credit for some trends in place for years.

Prong One: changing expectations on unauthorized residency

Most published commentary, such as here, focuses on the crackdown on illegal migration and the 11 million unauthorized persons in the U.S. Trump’s people showed quickly that it absorbed the lessons from President Obama on the executive power over immigration. Obama protected classes of unauthorized persons; Trump applies his discretion to bar admittance, and to expand deportations. Obama deported millions, but his deportations fitted in the narratives about him of neither supporters nor opponents. The quickly emerging narrative of this administration is more coherent, sharply defined, relentless.

On March 20, President Trump said in a Louisville speech that illegal immigration at the southern border declined by 61 percent, “and we haven’t started.”

Illegal entries from Mexico have been declining for years.  A decline in the number of 15 – 40 year old Mexican males in the U.S. has been baked into demographics of Mexico for some time.

Prong Two: Domestic jobs

Expect executive branch-sponsored reports on how foreign workers combined with unfair foreign competition stymie the careers of native-born Americans.

American employers of low wage workers were already feeling the pinch of tight labor markets. Restaurants have a hard time finding cooks. Farms considering more mechanization, for instance to pick fruit. Meat processing plants are looking at automatic deboning machinery.

Computer engineers are in great demand, with salaries well over $100K. Google pays $177K for a recent bachelors graduate from a high ranked college.

A recent paper estimates that H-1B workers depress the wages all computer workers, and prompt native born workers to go into other fields. But the study also said that the program results in a larger total supply of computer workers. As information technology spurs all sectors, so grow the entire economy and the workforce.

Prong Three: Ethnocentrism.

The Administration nurtures a message that foreigners appear to fail in what I call civic culture – looking and acting like native Americans in public. Its focus on Muslims is a good example. Ironically, Muslim immigrants on the whole are very middle class, more American than Americans in their surveyed views.  As early as 2000, Robert Putnam of Harvard noted that rising immigration levels led to lower perceptions of civic culture.

I see the administration as selecting immigration as its signature policy through the 2018 and 2020 election cycles.

Trump admin targets temporary skilled foreign workers

Saturday, April 22nd, 2017

The Trump administration issued a “Buy American, hire American” Executive Order with a provision on temporary skilled workers:

“In order to promote the proper functioning of the H-1B visa program, the Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security shall, as soon as practicable, suggest reforms to help ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries.”

Temporary skilled worker H-1B visas (for 3 years, can be extended to 6) are awarded to 85,000 persons a year. There are over 500,000 H-1B visa holders in the U.S. Most work in computer jobs. The new visas for this year are awarded by lottery with an April 11 deadline. 199,000 applications were submitted.

Brookings in 2013 said that “Detailed data on H-1B wages by occupation suggests that the H-1B program helps to fill a shortage of workers in STEM occupations.

Job openings harder to fill

“Labor market experts interpret the duration of a job opening as an indicator that qualified candidates are hard to find. Using 2011 job openings data from the Conference Board for the 100 largest metropolitan areas, we find that 43% of job vacancies for STEM occupations with H-1B requests are reposted after one month of advertising, implying that they are unfilled. By contrast 38% of vacancies in non-STEM occupations requiring a bachelor’s degree go unfilled after one month, and just 32% of job postings for all non-STEM occupations.

Visa holders are paid more

“H-1B visa holders earn more than comparable native-born workers. H-1B workers are paid more than U.S. native-born workers with a bachelor’s degree generally ($76,356 versus $67,301 in 2010) and even within the same occupation and industry for workers with similar experience.”

We need an agency to identify occupational shortages.

The failed 2013 immigration reform act included a provision for a Bureau on Immigration and Labor Market Research, which could “collect better information from employers about job openings, including occupations, the number of qualified applicants, the number of interviews conducted, and the length of time it takes to fill the job. Likewise, the bureau should also consider how demand and supply play out in regional or metropolitan area labor markets, since job search and recruitment often happen locally.”

Camarota’s argument for less immigration

Friday, April 14th, 2017

 

Foreign Affairs just published, “Why the United States Should Look Out for Itself,” by Steven Camarota, Director of Research for the Center for Immigration Studies.

Camarota adds to the one million new green card awards each year another 700,000 new “long term” foreign entries as students or temporary work visa holders. These figures can be compared to the roughly four million new births each year and to the total native born population of about 275 million.

The author’s first critique involves what he sees as a shift from aspirations of assimilation towards acceptance of non-assimilated identity. “Emphasis on assimilation has been replaced with multiculturalism, which holds that there is no single American culture, that immigrants and their descendants should retain their identity, and that the country should accommodate the new arrivals’ culture rather than the other way around.” But how truly prevalent are “race- and ethnicity-conscious measures” today?

Camarota then addresses the disproportionate share of poor households among immigrants compared to native-born persons. “Some 51 percent of immigrant-headed households use the welfare system, compared to 30 percent of native households.” This is largely due to surge in immigrants from Mexico and Central America in the 1990s and early 2000s. They work in farming, low status construction jobs, buildings and grounds maintenance, kitchens, housecleaning, and packing / warehouse jobs. Some of these jobs pay above minimum wage, others do not. Jobs paying minimum wage or somewhat higher today tend to qualify the worker for some public assistance.

He concludes with a 30,000 foot proposal not very different than that of the Jordan Commission from the 1990s: “It could involve legalizing some illegal immigrants in return for tightening policies on who gets to come in. Prioritizing skilled immigration while cutting overall numbers would increase the share of immigrants who are well educated and facilitate assimilation.”

Unauthorized dairy workers in Vermont in a time of Trump

Monday, April 10th, 2017

Undocumented on the farm: inside the life of a Vermont migrant dairy worker,” by Terry Allen, appeared on Vermont Digger. Here are some nuggets from the best reporting I’ve seen on unauthorized workers at time of the Trump administration.

A thousand- plus dairy workers

Carlos [not his real name] just wanted a job. “It’s hard, hard work,” he says. “But you came to America to make money and go back quick. So you come to Vermont.” At his previous job, construction for a large company in a mid-sized Texas city, the hourly wages were comparable to dairy, but the potential earnings and the cost of living were not. The Vermont jobs include housing with heat and other utilities, isolation that brings fewer spending temptations, and an opportunity to work up to 90 hours a week.

Older Vermonters still remember when, in the 1940s, some 11,000 small, family farms the dotted the land…..The number of farms continues to decline — from 1,030 to 825 just in the last decade.

Nonetheless, milk production is up….What keeps the owners awake at night — besides the vagaries of weather and fluctuating milk prices that sometimes fall below costs — is finding and keeping cheap labor. Most have tried locals, and some have turned to former prisoners. But few stick it out.

It is little wonder that Americans with other options do not last. With two milkings a day, 12 hours apart, farms must be staffed 14 to 16 hours a day. Cows don’t get Christmas off, and neither do dairy workers.

Latino migrants are filling a gap and saving America’s farms. Nationwide, immigrants, many undocumented, comprise 51 per cent of the nation’s dairy industry, according to a 2015 study by Texas A&M University for the National Milk Producers Federation. If these workers were deported, the report concludes, milk prices would rise 90 per cent, and cost the U.S. economy more than $32 billion.

Without “our guests,” as then Vermont Gov. Peter Shumlin called migrant farm workers, much of the state’s milk industry would likely dry up. Say goodbye to affordable Cabot cheddar; kiss Vermont-sourced Cherry Garcia sweet adios.

A few times a year, officials from the Mexican consulate in Boston travel to areas with unauthorized Mexican citizens and, after careful screening, provide legal identification papers. The document allows migrants to buy a plane ticket to return to home, to prevent their being mistaken for criminals if picked up by authorities; and, in Vermont and 11 other states plus DC, to obtain a restricted “driving privilege” license.

While the Mexican IDs are useful, they do nothing to change U.S. legal status. And impediments to obtaining lawful visas are nearly insurmountable….Temporary H-2A agricultural visas last for months and are only for strictly seasonal jobs like planting and picking crops.
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Crackdown

Recently Immigration and Customs Enforcement (ICE) agents targeted and detained the three prominent activists with Migrant Justice, a Burlington-based group advocating for dairy workers’ rights. The detentions were denounced in public demonstrations and a sharp letter from the state’s congressional delegation and Republican Gov. Phil Scott.

Support for the migrants is not universal among Vermonters. Some workers at the Department of Motor Vehicles contacted authorities to drop the dime on people with “South of the Border” names who applied for the special driver’s licenses, according to emails obtained through a public records request by Migrant Justice, a local farmworker advocacy group.

As expected, wages on the rise on California farms

Sunday, March 26th, 2017

 

The LA Times reports on the rise in farm worker costs in California. Here are some excerpts:

The flow of labor began drying up when President Obama tightened the border. Now President Trump is promising to deport more people, raid more companies and build a wall on the southern border.

That has made California farms a proving ground for the Trump team’s theory that by cutting off the flow of immigrants they will free up more jobs for American-born workers and push up their wages.

Wages approaching $20 in some vineyards

Today, farmworkers in the state earn about $30,000 a year if they work full time — about half the overall average pay in California. Most work fewer hours.

A year ago, Leobijildo Martinez the 31-year-old from Mexico, was earning $14.75 an hour doing the same work for a different Napa company. He joined Silverado in April and now he’s making $19.50 working vineyards that produce grapes for a winery whose bottles go for about $300.

“Everything in Napa is different. They treat you differently there, they don’t pressure you, and they respect the law,” he says. “If you work here, in Stockton, you don’t have enough money.”

Machinery to pick wine grapes

About five years ago, Brad Goehring changed the wiring holding up parts of his vines so that no metal stakes exceed the height of the wire. The setup allows for a grape harvesting machine to prune the top of the vine, as well as both sides.

“I think we can eliminate, I’m just guessing, 85% of the labor on these new vineyards,” he says, reducing pruning costs from $300 per acre, on average, to $80. He plans to keep spending more on machinery, like his $350,000 tractor-like vehicle that shakes grapes off the vine and catches them before they fall to the ground.

The job is seasonal, so laborers have to alternate between long stretches without any income and then months of 60-hour weeks. They work in extreme heat and cold, and spend all day bending over to reach vegetables or climbing up and down ladders to pluck fruit in trees. If farmers upped the average wage to, say, $25 an hour, people born here might think twice. But that’s a pipe dream, many argue. “Well before we got to $25, there would be machines out in the fields, doing pruning or harvesting, or we would lose crops,” Philip Martin of UC Davis says.