A troubled guest farm worker system in the U.K.

I recently posted on discussion in the U.S. about a guest worker program, the Seasonal Workers Pilot. The United Kingdom introduced such a program which has horrible results, as reported by the Financial Times. Excerpts:

Two labour providers, Concordia and Pro-Force, are permitted to recruit people from places such as Russia, Ukraine and Belarus to work in edible horticulture on strict six-month visas. The pilot started in 2019 with an annual quota of 2,500 workers. It was extended to 10,000 workers in 2020 and to 30,000 workers in 2021, with an additional two recruitment agencies set to be added.

The workers on the farm that employed Russia [one worker from Russia], Castleton Fruit in north-east Scotland, were on zero-hour contracts, which do not guarantee any work, and were paid for the amount of fruit they picked rather than by the hour. Under the law, pickers on this “piece rate” system must be “topped up” to the minimum wage of £8.72 [$12.10] an hour if they have not picked enough to earn this amount. Because of this, the supervisors would check everyone’s work every two hours, and the workers who had not picked fast enough would be sent back to the caravans for the rest of the day, unable to earn any more money.

Between March 2020 and February 2021, Focus on Labour Exploitation, an NGO, investigated the experience of workers in Scotland on the pilot programme, in a project part-funded by the Scottish government. FLEX surveyed 84 farm workers and interviewed 62 on 12 different farms, of which 39 were on the scheme.

The researchers found that more than half were on piece rates, and three-quarters felt like they were always or usually being pushed to do more work than was possible in the time they had. Two-thirds reported receiving threats of loss of work, 60 per cent said the information they were given about earnings before travelling proved inaccurate, and a similar proportion said they were refused transfers to other farms.

A Home Office minister stated in a written parliamentary answer in 2019 that “the scheme operators are not permitted to offer zero-hours contracts to workers” but the Financial Times has seen worker contracts that do not guarantee any hours, including one titled “Terms and conditions of zero hours employment”.

Research suggests that, over the course of decades, UK farmers have intensified these jobs in response to the rising minimum wage and the pressure from powerful supermarkets for flexibility, speed and low prices. For example, according to British Summer Fruits, an industry body, government data suggest that prices paid to farms for strawberries barely rose between 2008 and 2018. The UK has some of the lowest food prices in western Europe.


Construction workforce woes and immigrants

Besides farming and STEM jobs, immigrants have supported the residential construction industry, which is now facing a shortage of workers.

Foreign-born workers now account for almost a quarter of workers in the construction industry, and close to 30% of construction tradesmen. In some states, reliance on foreign-born labor is even more pronounced. Immigrants comprise close to 40% of the construction workforce in California and Texas. In Florida, New Jersey and New York, close to 37% of the construction labor force is foreign-born and in Nevada, one out of three construction industry workers come from abroad. (From here. Also here.)

Legend for table:
A carpenters
B laborers
C painters and paper hangers
D carpet installers
E brick masons
F drywall workers
G roofers

Source of data on trades here.

Farm workers and immigration reform

Farming, especially corporate produce farming, is heavily dependent on immigrant labor. Temporary farmworker visas (the H-2A visa) are up. Over half of farm workers, some half million, are estimated to be unauthorized.

To protect its farm workforce, the state of California has made a special effort to get these workers vaccinated. Per the NY Times, “The challenges to getting farmworkers vaccinated go well beyond worries about their immigration status. The odds of being able to sign up for a vaccine online are low in a population that often lacks broadband access and faces language barriers. Many cannot easily reach vaccination sites in urban areas because they do not have reliable transportation or the ability to leave work in the middle of the day.”

The Biden immigration bill, the U.S. Citizenship Act of 2021. aims to protect all workers, including unauthorized from exploitation. Per Politico, over 70 percent of federal labor standards investigations of farms found violations, including wage theft and inadequate housing and transportation, according to a recent report by the Economic Policy Institute. “It’s pretty clear that the lack of a legal status leads to the ability for employers to break the law against you without much worry of getting in trouble,” Costa said. “They fear retaliation and can’t speak up in the workplace because that could lead to their deportation and they’re afraid to report violations to government officials because they don’t want to interact with officials over deportation fears.”

Types of temporary skilled foreign worker programs

The United States does not have an immigration vision or overarching policy. Rather, it has an elephantine mass of laws including a huge grab bag of visa categories, largely under regulatory capture by special interests. Congress has abetted this state of affairs. One step towards a coherent policy would be to better manage the temporary acceptance of skilled workers. Here, I summarize what is in effect competition among the U.S, Canada, Australia and the U.K. for skilled workers. (Go here for the report from which this a taken.)

Each of these countries has a core program. The U.S. lags in all significant measures of efficiency including longer processing times, significantly higher filing costs, and escalating rates of denial. Australia has the highest temporary admission-to-population ratio at 2.62 skilled workers (new per year) per 1,000 people. Canada has a ratio of 2.52. The U.K. has a ratio of 0.85, and the United States has a ratio of just 0.26 skilled foreign workers per 1,000 people. To bring the U.S. up to 2 per 1,000 persons, that would cause the formal limit per year to go from 85,000 to 600,000. The data broadly suggest that skilled global talent is increasingly choosing to work in Canada and the United Kingdom over Australia and the United States.

United States: H-1B Visa (created in 1990). The H-1B visa program is the primary skills-based work visa program that permits global talent to work in the United States on a temporary basis. The temporary visa is valid for a period of three years from the date of filing with the option to extend for an additional three years. The formal quotas are so shot through with exceptions that it is impossible to estimate the total potential number of new visas per year. The number of requests for evidence (RFEs) since 2016 has increased from 21% of petitions received to 60% in the first three months of 2019. The number of visa denials has increased significantly from 6% to 26%.

Australia Subclass 457 (482) The Australian temporary work (skilled) visa, also known as subclass 457, was created in 1996 after a government report recommended that the entry of skilled workers be simplified and streamlined to bolster the Australian economy. The temporary work visa authorizes skilled immigrants, accompanied by their immediate families, to work in Australia for approved employers for a periodof up to four years. The program has no numerical cap.

United Kingdom: Tier 2 Visa. Established in 2008 to replace the provisions of work permit employment, the Tier 2 visa program covers skilled workers with an offer of employment from a UK-based employer. Similar to Australia’s temporary work visa, Tier 2 is a points-based system whereby points are awarded based on educational qualifications, future expected earnings, English language proficiency, company sponsorship, and funds available (to support oneself ).

Canada: Temporary Foreign Worker Program and International Mobility Program. Created in 1973, the Temporary Foreign Worker Program (TFWP) allows Canadian businesses to employ foreign nationals to fill temporary labor and skill shortages for up to four years. The program was initially intended for high-skilled workers but has been expanded to include low-skilled workers. In order to hire a foreign worker, employers require approval from the government to ensure that the foreign national possesses in-demand skills.15 The International Mobility Program (IMP), on the other hand, does not require such permission, so it is subject to a far simpler and quicker hiring process.

Immigrants have been upwardly mobile for a long time

Here is a very important study of the mobility of immigrants, looking at second generation achievement. Immigration policy is in effect a 50 – 75 year policy, embracing two or more generations for impact on American society. The authors write:

We find that, both in the past and today, children of immigrants, especially those growing up in poorer families, had greater chances of moving up in the income distribution relative to the children of US-born parents. Children of immigrants from nearly every sending country have higher rates of upward mobility than the children of the US-born.

Whereas immigrants in the past predominantly hailed from Europe, immigrants today have more diverse ethnic backgrounds, coming from various Latin American and Asian countries. (US GDP per capita was more than 7 times higher than in Mexico or China when migration flows from these countries took off in 1970, whereas it that was only 2–3 times higher than in European sending countries circa 1900.)

We might have expected this change in the ethnic mix to have an influence on the rates of intergenerational assimilation. Immigrants today come from countries with lower income levels relative to the United States. Overall, our findings stand in contrast to the nostalgic view that it was easier for immigrants in the past to integrate into the US economy and society.

Geographic mobility is higher. We find that an important explanation for why the children of immigrants are more upwardly mobile is that immigrant families are more likely than the US- born to move to areas that offer better prospects for their children.

Higher education mobility. Immigrants enjoyed a faster rate of educational mobility: for a given level of father’s education, the children of immigrants in the bottom half of the distribution tended to achieve more years of schooling than the children of the US-born.

Source: Intergenerational Mobility of Immigrants in the United States over Two Centuries, by Ran Abramitzky, Leah Boustan, Elisa Jácome, and Santiago Pérez

Pandemic and household financial distress

Pew Research in September 2020 found that the adverse economic impact of the pandemic varied greatly by ethnic/racial groups. The graph below shows this disparity in term of difficult in paying bills.

Black and Hispanic adults are more likely to have drawn on government or charitable food resources since the outbreak began. Black adults (48%) and Hispanic adults (40%) are significantly more likely to say they have drawn on either of these resources since February than White and Asian adults (16% and 19%).

The disparity is, I believe, mostly driven by job wage and job security, and they are closely correlated with education status. Here is somewhat outdated (2016) data on educational attainment by race and ethnicity. The Pew Research report said that 47% of “lower income” households were laid off or had to take a pay cut, vs 32% of “upper income” households.

About a third of adults with a high school diploma or less education (34%) and 27% of those with some college experience say they have struggled with paying bills, compared with 12% of those with a bachelor’s degree or more education. About one-in-five adults with some college or high school or less education say they have had problems paying their rent or mortgage (18% and 23%) since the beginning of the coronavirus outbreak. Those with a high school diploma or less education are twice as likely as those with a bachelor’s degree or more education to have lost their health insurance in the same time period (6% vs. 3%).

Labor participation rates and the pandemic

The Migration Policy Institute reports on employment rates and the effect of the pandemic. Here are the employment rates of men and women, showing immigrant and U.S. born workers. Note that the decline in employment among immigrant women is much steeper than among U.S. born women, but there is not such a discrepancy among men.

Comments on the lower employment rate of immigrant women (Migration Policy Institute).

In part, the lower employment rate is due to their nature of employment. They are concentrated in several leisure and hospitality occupations (such as waitstaff, maids, and housekeepers) that saw the largest job losses in leisure and hospitality. As a result, immigrant women working in that industry had a higher unemployment rate in September than did other workers: 28 percent versus under 20 percent.

In part it is due to children. Immigrant women were less likely to be in the labor force than U.S.-born women in part because they were more likely to have children under age 18 at home and to have competing demands on their time. In January, before the pandemic, 44 percent of working-age immigrant women (ages 25 to 64) had a child at home, compared to 31 percent of U.S.-born women. And immigrant women with children at home historically are less likely to be in the labor force than U.S.-born women with children. In January, 61 percent of immigrant mothers with children participated in the labor force, versus 77 percent of U.S.-born mothers.

As of fall 2020, women with school-age children (ages 5 to 17) had seen the largest declines in labor force participation. Between January and September, the labor force participation rate fell 4.2 percentage points for immigrant women with school-age children, compared with a drop of 1.7 percentage points for those without school-aged children in the home. Among native-born women, participation fell 3.0 percentage points for those with school-age children and 1.6 percentage points for those without. Immigrant women were also more likely to have school-age children than U.S.-born women (26 percent versus 17 percent).

For the report, go here.

Unauthorized workers and the future of the American economy

The 160 million person workforce of the country includes roughly 8 million unauthorized workers who are predominantly with little formal education and very restricted as to their ability to progress into well-paying jobs, to buy household assets, and to demand good working conditions. This is a captive workforce, one which perpetuates low productivity jobs and social indignity.

A friend in London told me the story of the Midland Grand Hotel, which opened in about 1865 next to St. Pancras Station. Five stories tall, it was the epitome of luxury, coal fires every room, even elevators. But as there was no central plumbing a battalion of servant girls was required to haul coal and hot water up to the rooms and carry down full chamber pots. During World War One, women were hired to work in factories. They did not want to go back to domestic service, with its low pay and demeaning social status. The hotel was forced to close

It reopened in the 2011, without the servant girls.

Rising economic status of Hispanic workers

The median real (i.e. net of inflation) weekly wages of Hispanic men have improved by 20% between 2000 and today; for Hispanic women, by 17%. But half of that growth has taken place after 2013. Since then, Hispanic incomes have risen faster than those of whites, blacks and Asians.

A 2018 study of intergenerational economic mobility reports that “Hispanics have relatively high rates of absolute upward mobility and are moving up significantly in the income distribution across generations.”

Remittances to Mexico have grown by a lot

A fair indicator of the trends in economic fortunes of Mexican immigrants in the U.S. (legal, unauthorized, naturalized or not) is the trend in remittances from the U.S. to Mexico. The chart below shows that this amount grew significantly in the 2000s, declined and leveled off due to the 2008 financial crisis, and has grown by a lot during Trump administration. This most recent trend is consistent with the trend in Hispanic wages.

Does this translate in more Republican Hispanics?

The only Hispanic community with a distinctly pro-Republican presence is Cuban. The basic issue however is that Hispanics have relatively much lower rate of voting.

Trump Administration tightens H-1B rules

The Trump Administration is undertaking to severely constrain the use of H-1B visas. This visa program was created in 1990 for professional level temporary workers. This visa lasts for up to six years. Indian and Chinese workers in STEM fields have dominated the flow. The program, set at 85,000 new visas a year, attracts far more applicants than allowed by the cap.

The Administration is issuing new rules which constrain the problem in at least two ways. First, the rules are being changed to force a more narrow match between the applicant’s qualifications and the occupation the applicant will fill. Second, the wage paid to the applicant will need to meet a higher threshold of “prevailing wage,” i.e. be paid more,

The Administration has already restricted the right of a H-1B visa holder’s spouse to work in the U.S. 

Since the 1950s the use of skilled foreign workers has been debated, with waves of arguments for or against there being a labor shortage in the U.S. Two indicators are often referred to. One, are the wage levels in the occupational categories under consideration (such as computer scientists) going up significantly higher than average wage increases? Second, are the unemployment rates of the occupational categories relatively low? A “yes” answer to both questions can be taken an evidence that a labor shortage exists.

The case for importing skilled workers when both answers are “yes” is bolstered by a contention that in these skilled fields, the addition of a foreign-born worker leads to further job openings to be field by U.S. citizens.

I doubt the arguments for or against temporary foreign skilled workers are often overwhelmingly strong in one direction or another. This makes it particularly costly that Washington does not have an agency which tracks, studies and makes projections of labor demands and foreign workers.

for stories of these recent rules, go here and here.