Archive for the ‘Economics’ Category

EB-5 program to be drastically revised

Thursday, September 12th, 2019

The Trump administration is revamping the Green Card program for wealthy foreign investors that benefited developers such as Trump and his son-in-law, Jared Kushner. A new final rule, effective Nov. 21 will nearly double the minimum amount of cash required to secure an EB-5 investor visa from $500,000 to $900,000 for projects in needy areas. It will also revise the standards for what is considered a blighted or high-unemployment neighborhood, to prevent developers from “gerrymandering” their own boundaries to attract investments for projects located in affluent communities.

The standard investment threshold for projects in non-needy areas will increase from $1 million to $1.8 million. The amount will automatically adjust for inflation every five years. From here.

The EB-5 program was created in 1990 to encourage investment in economically distressed areas. Foreigners only really started using it in 2008, when turmoil in American capital markets caused real estate developers to scramble for other ways to raise money. It now generates more than $5 billion a year, in exchange for nearly 10,000 green cards — a number that is capped by statute. Chinese applicants take up almost all of the 10,000 spots. From here.

 

Ukraine’s remittance economy

Tuesday, September 3rd, 2019

Ukraine is Europe’s biggest recipient of remittances in proportion to the size of its economy. More than 11 per cent of Ukraine’s gross domestic product comes from remittances and its 5m-strong workforce abroad last year sent home a record $14.4bn through wire transfers and cash carried across the border.

Between 1m and 2m Ukrainians work in Poland, drawn by a combination of linguistic ties, geographical convenience, higher wages and better economic prospects. Salaries are three times higher than back home, and gaps left by young Poles heading to western Europe have caused labour shortages.

The lion’s share of these workers are from Ukraine’s western regions around Lviv, the 1m-strong provincial capital an hour’s drive from Poland where there is a two-decade-long tradition of working both seasonal and long-term jobs across the border, from construction to vegetable picking.

A widespread distrust of local banks means that workers abroad are pouring their cash into other assets, particularly real estate. As a result high-rise apartment complexes are sprouting up around Lviv and property developers say migrant labourers are some of their biggest customers.

From the Financial Times

Dairy workers: at least half are immigrants

Wednesday, August 14th, 2019

 

From 2017 interviews in Spanish with dairy workers throughout New York State: 90% are men, 61% from Mexico, 34% Guatemala, 2% Honduras, 2% Puerto Rico; 93% are undocumented; 73% speak little to no English; 62% are married; 70% have children.

Two-thirds had sustained a work injury; more than 80% were estimated to live and work on farms with too few workers to fall under OSHA’s jurisdiction for inspection and sanctioning (that is, below 11 non-family workers). Typically paid $9 an hour; 97% live in on-farm housing provided by their employers.

New York is a major dairy state. In 2015, it ranked fourth nationally in terms of milk production.

A national survey, done in late 2014, reports much less dependence on immigrant workers but shows better the impact of immigrant workers on the entire dairy industry. It reports that immigrant labor accounts for 51% of all dairy labor, and dairies that employ immigrant labor produce 79% of the U.S. milk supply. Dairy farm workers are paid an average wage of $11.54/hour. Dairy farms employed an estimated 150,418 workers in 2013. An estimated 76,968 of those are immigrants.

A bill was introduced in March, 2019 to expand the current H-2A visa program to allow for its use by dairy farmers. Under current law, dairy workers are not allowed to utilize H-2A visas because the dairy industry is not considered seasonal. The bill would allow for an initial three-year visa with an option to extend for another three years.

Revisiting the hourglass of immigrant workers

Saturday, July 27th, 2019

 

Here are charts which succinctly describe how immigrant workers form an hourglass: greater variance in education and in compensation.

The first chart shows the distribution of education status, comparing immigrants with native-born workers. Immigrant educational achievement concentrates at the extremes.  The very high less than HS share among immigrants are primarily Hispanic.  Recent inflows from Latin America have been more formally educated.

The second chart compares average wages by education status. Immigrants earn less except among college-educated where they are paid more.

Source: BLS for 2018

Spotlight on migration to the Persian Gulf States

Wednesday, July 24th, 2019

The economies of Persian Gulf countries expanded between 2005 and 2015. This encouraged millions of migrants to move to the Middle East. Overall, the number of non-displaced, international migrants living in the Middle East grew by 61% between 2005 and 2015, from about 19 to 31 million. Sources of worker include Bangladesh, Ethiopia, India, Pakistan, the Philippines, and Yemen. Two thirds of these migrants are in Saudi Arabia and the United Arab Emirates (source).

The Gulf countries use the “kafala” system of employing migrant workers. The kafala system binds these migrant workers in a direct relationship with their private sponsoring recruiters or employers to a particular job for a specific period of time. The system codifies the centrality of sponsors, as workers cannot change their employment or leave the country without approval.

The United Nations in 2014 told Qatar the kafala system led to dangerous working conditions and exploitation. Hundreds of foreign workers have died in the massive construction buildup underway for the 2022 World Cup, with estimates that as many as 4,000 workplace deaths could occur. In 2015, Qatar had 1.7 million migrant workers, up from 600K in 2005.

In late 2018 Qatar passed an act which allows some migrant workers to leave; Human Rights Watch criticized it.

Most recently, as their economies have cooled, Gulf countries have been expelling migrants. This has impacted the flow of remittances back to source countries.

Recent Mexican immigrants more likely to be college educated

Friday, July 12th, 2019

The share of Mexican immigrants with a college degree has increased in Texas. There are 145,000 persons from Mexico in Texas with a college degree. 45% of them are naturalized citizens. That’s 8% of the Mexican born population of the state, or 2.2 million.

Today almost one in five recent (since 2013) Mexican immigrants living in the state has a college degree versus 7% in 2000. This mirrors a nationwide trend that is increasing the level of educational attainment among recent Mexican and other immigrants. Temporary visa holders (ie business related) from Mexico are about 55% college educated.

Mexicans in Texas with a college degree tend to work in primary and secondary education and in construction.

There appear to be several factors driving these trends. First, educational attainment in Mexico has increased significantly. Another likely factor is rising violence in Mexico which reached historically high rates in 2017. This may be driving Mexican professionals to move to United States mostly living in border city such as McAllen and El Paso as well as nearby cities such as San Antonio

Finally many Mexican companies have made major investments in the US presence in the past decade, bringing senior executives and key personnel with them. Texas has led the way as a major destination in America for Mexican business investment.

However, 40% of Mexicans in the United States with a college degree have low English proficiency. This contrasts with the roughly 10% of college educated immigrants from other countries with low English proficiency.

From here.

Farmers desperate for guest workers

Tuesday, June 25th, 2019

 

“For us, there is no non-H-2A labor,” said Dennis Brawdy, partner with Amos Zittel and Sons in Erie County, New York, which employs 72 workers this year. “Three to five years ago, we were 100% non-H-2A because there was an adequate amount of workers around,” Mr. Brawdy said of the vegetable-growing and greenhouse operation.

As the U.S. has tightened border security in recent years, many agricultural companies that had relied on illegal immigrant laborers are turning to H-2A visas. More than 196,000 H-2A visas were granted in 2018, compared to about 89,200 in 2014, according to the U.S. Labor Department.

But getting H-2A workers is expensive. Farmers incur additional costs such as transportation, food and legal aid to bring them into the country, as well as guaranteeing them at least 75% of their pay. And once those workers arrive, the farmers also must provide housing and other amenities, unlike non-H-2A labor.

In addition, H-2A workers in New York are paid $13.25 per hour, more than the current minimum wage rates for areas outside of New York City, according to the Labor Department.

It costs farmers an average of about $1,000 per H-2A worker—just to get them to the farm, said Dulce Demay, of Demay Labor, which helps match potential workers with farmers, including apple farms. She has helped 40-plus New York farms switch to the H-2A program over the last couple of years, mostly hiring workers from Mexico, she said.

From the Wall Street Journal

Data from the WSJ and the Economic Policy Institute

More Hispanic and Asian men work

Friday, June 21st, 2019

Hispanic men have for decades had a higher labor force participation rate (percentage employed or looking for work) than have white men. Asian men used to have a lower rate in the 1990s but now have a higher participation rate than white men. Since the 1990s, the spread between these rates for Hispanic men and those of white men have increased, from roughly 4% to 8%. The Federal government projects that the gap will increase into the 2020s.(Go here).

The Wall Street Journal says that Labor participation among Hispanic immigrants with a high-school degree (72.2%) is nearly 20 points higher than similarly educated native whites (53.8%) and about equal to those with bachelor’s degrees (72.7%).

 

Massive increases in global remittance flows

Monday, June 10th, 2019

Remittances to low- and middle-income countries reached a record high in 2018 of $529 billion, up 9.6% from 2017, according to the World Bank. They are expected to reach $550 billion in 2019, making them higher than all foreign aid. Remittances can be equal to one fifth of country’s gross domestic product.

The global average cost of sending $200 is around 7%. New internet money transfer systems could greatly reduce these costs.

About 80% of the remittances from the United States (total outflow $68B) goes to Mexico and Central America. Total inflow of remittances (from all countries) to Mexico, Guatemala, Honduras and El Salvador rose 70% between 2010 and 2018 ($55.4B).

For analysis go here and for data for here.

poorly educated workers sort into different jobs by origin

Friday, June 7th, 2019

If  you are concerned about demographic isolation and low mobility of low wage immigrants, look here. Among those in the American workforce with low formal education, you find that immigrant and native-born workers are sorted into different jobs. On the whole, immigrants without a high school degree fill jobs that are relatively (1) not customer facing, hence do not demand high English proficiency and American cultural know-how, and (2) more dangerous. I suspect also lower mobility potential.

I looked at 20 jobs that do not require a high school degree, totalling 31 million jobs (2014 data). Five were jobs requiring a lot of communication and imposed little or no injury risk, such bar tending, waitress and cashier. 15% of these jobs were filled by immigrants. Compare that with 15 jobs requiring limited communication and generally higher injury risk, such as construction laborers, cooks, and inventory workers. Immigrants filled 30% of these jobs. Nationwide, 17% of jobs are filled by immigrants.

One job does not fit in: personal aide jobs have high communication demands, but 24% are filled by immigrants. A large percentage of immigrant direct care workers emigrate from two English speaking areas: the Philippines and Jamaica (go here).

A poorly educated immigrant worker tends to take a job which has double the injury risk of that of poorly educated native born worker.