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David Bier: If we want expansive, robust economic growth, we need the workers to be able to do the jobs that will increase that productivity and expand the economy. We’re losing out every single year when those people go to other countries.
Stephanie Kelton: Welcome to the Best New Ideas in Money, a podcast for MarketWatch. I’m Stephanie Kelton. I’m an economist and a Professor of Economics and Public Policy at Stony Brook University.
Charles Passy: And I’m Charles Passy, a reporter at MarketWatch.
Stephanie Kelton: Each week we explore innovations in economics, finance, technology, and policy, that rethink the way we live, work, spend, save, and invest.
Charles Passy: Last week we talked about a problem, and to be specific, a population problem.
Stephanie Kelton: That’s right, Charles. According to the Census Bureau, the US population grew at a slower rate in 2021 than in any other year since the founding of the nation. Worse yet, according to Congressional Budget Office projections, by 2043, we’ll see more annual deaths in the United States than annual births.
Charles Passy: One major economic implication of a shrinking population is a shrinking labor force.
Stephanie Kelton: And that’s a situation we really want to avoid, as it can have a cascade of consequences, including reduced productivity, reduced economic growth, and more. Not to mention what most of us have probably experienced, reduced services at the businesses we depend on.
Charles Passy: From healthcare to hospitality and from agriculture to construction, if you can think of a sector, chances are high it’s probably short on workers. Simply put, the United States needs people. And that’s why we’re talking about immigration today and why we talked about it last week.
Stephanie Kelton: Today we’re going to begin with a look at the current employment based immigration system and consider a few of the ways that according to some it isn’t working. Later on, we’ll hear some ideas that aim to fix the system as well as some new approaches.
Daniel Costa: The employment based immigration system is really just two main components.
Stephanie Kelton: Daniel Costa is an attorney and the Director of Immigration Law and Policy Research at the Economic Policy Institute, a left-leaning think tank based in Washington DC.
Daniel Costa: An employer can seek out a worker from abroad using permanent residence, so essentially apply for a worker who would come in with lawful permanent residence status, most commonly referred to as a Green Card. Workers arrive almost with all the same rights as a US citizen and are on their way to becoming a US citizen.
Charles Passy: Sounds simple enough, but note that these employment-based immigration visas are highly limited and have been for many years.
Daniel Costa: There is a annual cap that broken into five different categories, but in total, the annual numerical limit of employment based Green Cards is 140,000 a per year, and that’s been in place since at least 1990.
Charles Passy: Which was, if you can believe it, almost 33 years ago.
Now, Costa mentioned that there were two main components of the employment based immigration system. We’ve talked about employment based immigrant visas. So what’s the second component?
Daniel Costa: Temporary work visas. Now, these are under US law referred to as non-immigrant visas. The reason they’re called that is because people who get those visas are not allowed to be intending to immigrate permanently to the United States. So non-immigrant visas are temporary visas. And there’s a whole alphabet soup of different visas, which are known by the letter in the alphabet that corresponds to their section in the statute that creates them. The most commonly known work visas are the H visas. So you’ve got the H-2A visa program, which is for temporary farm workers. That’s about 300,000 working each year in the United States. Then you have the H-2B program, which is it’s sort of counterpart program for workers outside of agriculture.
Charles Passy: According to estimates from the Economic Policy Institute, there were about 117,000 H-2B workers in 2021. They’re employed in industries like landscaping, construction, forestry, traveling carnivals, restaurants, hospitality, and seafood and meat processing.
Daniel Costa: Then you have the H-1B program, which is for workers and jobs that require a college education. The biggest employers there are IT outsourcing companies as well as the blue chip well known tech firms like Microsoft and Apple and Google and Facebook. And there’s about 600,000 workers currently in the United States on that H-1B status according to estimates from the Department of Homeland Security.
Charles Passy: Costa outlined three major categories of temporary visas. And yes, it is a mouthful. Here’s what you need to know. According to Costa, because employment-based Green Cards are so scarce, capped at levels last adjusted in 1990, employers are increasingly relying on these temporary visas.
Daniel Costa: Temporary work visas, the issuance of them, has really shot up exponentially without any real change in the law. And part of the reason is that employers have really shifted towards using these visas and many of the visas don’t have any sort of annual numerical limit. Only two of the programs have an annual cap. And so the main takeaway is that there are pathways for migrant workers to come to the United States, but they are overwhelmingly temporary, overwhelmingly programs where their rights are restricted.
Stephanie Kelton: Although we hear more about labor shortages today, in the not so distant past the unemployment rate was much higher, and millions of Americans were out of work. Many still are today. So you might ask, “Aren’t there unemployed Americans who can do these jobs, workers who ought to have priority over immigrant workers?”
Daniel Costa: There are a number of reasons for each of the different visa programs that we have, but the most common is to fill labor shortages. And I think that we do need some sort of pathway for workers to come in for that purpose. But fact of the matter is, when it comes to the immigration system, you need to have a process that is fair and credible where employers have to recruit and hire US workers before they hire a worker through a temporary work visa program. Essentially, they need to test the labor market. So if you have that, then it doesn’t really matter what you or I think about whether there’s a labor shortage because if you have a system that’s fair, then it’s going to work when there’s a hot job market as well as when there’s high unemployment.
Charles Passy: It’s worth talking about some history, and it goes without saying that the relationship between labor and immigration in the United States is complicated. The first temporary worker program in the United States was created to address labor shortages during World War I.
Daniel Costa: Yes, we could start talking about what’s generally considered the first guest worker program, which was the Bracero Program.
Stephanie Kelton: Braceros refers to the workers themselves, braceros. That word derives from the Spanish braco, or arm, and describes the manual labor that the workers performed. But Bracero also refers to a series of temporary worker programs through which millions of primarily Mexican workers were recruited to work in the United States, mostly in agriculture.
Daniel Costa: There was a version of this program around the years of World War I and then another one beginning around the World War II era that lasted from 1942 to 1964. And those were to fill farm jobs due to labor shortages on US farms. And the basic structures were not all that different than the programs that we have today. Farm employers who wanted to hire braceros needed a version of certification from the Labor Department that they tried and failed to find US workers and they had to offer a minimum wage and then the Labor Department had to certify that the presence of those bracero workers wouldn’t adversely affect US workers.
Charles Passy: Bracero remains controversial to this day and for many reasons.
Daniel Costa: There were a number of factors that led to its end. There were a lot of abuses reported at the time. There was a perception that the program was adversely impacting US farm workers, and famously, many workers in California who were packed into a truck died when they got hit by a train, which killed dozens of people, almost all braceros, and that ended up being a factor in Congress ending the program in 1964.
Charles Passy: Costa is referring to the Chualar bus crash, which happened back in 1963 near Salinas, California. 32 people were killed.
Stephanie Kelton: That was a long time ago, but according to Costa, the current temporary visa programs and the H-2A and H-B programs in particular aren’t so different from the Bracero Program.
Daniel Costa: Fast forward a couple decades and you start to see development of another version of that same program essentially, which is the H-2A program as well as it’s accompanying program, the H-2B program. And how have they changed? I mean, I don’t think in terms of structure and functionality, I don’t really think that they’ve changed all that much and that’s part of the problem from my perspective.
Charles Passy: When we’re back, we’re going to consider how existing temporary visa programs might be updated. Plus, we’ll dig into a set of new ideas. That’s after the break.
Stephanie Kelton: Welcome back to the Best New Ideas in Money. Before the break, Daniel Costa, Director of Immigration Law and Policy Research at the Economic Policy Institute talked about the two main components of the employment based immigration system. Costa also traced the historical roots of a portion of that system, namely temporary work visas, and described a few of the problems with how temporary work visas function today.
Charles Passy: In this second half of the episode, we’re going to hear about some fixes that might address some of these issues as well as some proposals for new types of visas, visas specifically tailored to the needs of states and local communities.
Stephanie Kelton: But first, the fixes. Here’s Daniel Costa.
Daniel Costa: First and foremost, I think you have to regulate recruitment, and that means both the recruitment chain when workers are recruited from abroad to come to the United States, and then in the United States you have to make sure that you have a credible fair recruitment of US workers to make sure that they have an opportunity to take the jobs that are on offer. Then once the migrant workers get to the United States, second thing is make sure that they’re paid fairly, according to US wage standards.
Charles Passy: For Costa, the reforms begin before workers are even on the job, during the recruitment process. And once migrant workers start a job, Costa believes it’s important that different classes of workers aren’t created, American workers who receive higher wages and have more on the job protections, and migrant workers who receive lower wages and have fewer protections.
Daniel Costa: Maybe the most important part is allowing workers to change jobs and have protections from retaliation when things go wrong on the job. And I should say that changing jobs on its own is not a panacea. We know that US workers can change jobs, but that doesn’t mean that they automatically have great conditions. We really need more and better labor standards enforcement.
Charles Passy: Think about it. If you’ve ever had a job that you couldn’t leave, for whatever reason, you might have had to put up with marginal, unpleasant, or even unsafe conditions. Now imagine that your pathway to citizenship depended on that job, which brings us to Costa’s next point.
Daniel Costa: You need to allow a path to a Green Card for the migrant workers who come in. Migrant workers should be able to go and petition to get a Green Card for themselves. At present, the one program that really allows it, the employer controls it and can hold that over the worker, and we need to kind of decouple that and allow workers to stay temporarily. If they’re really coming here to fill labor shortages, we should allow them to stay and continue to contribute. The last thing I would say is depoliticizing the setting of numbers.
Stephanie Kelton: Costa is referring to the immigration quotas he mentioned earlier in the episode. In his view, they’re arbitrary, subject to politics, and not connected to the shape of current economic needs.
Daniel Costa: We don’t have a real data driven way to set the numbers that we need for whatever the economy needs. If we’re in a recession, obviously we probably need fewer workers. If we’ve got a hot job market, we probably need more. And it needs to be data driven. Instead, what we have are numbers that have been set in statute basically since 1990.
Charles Passy: Stephanie, we did promise listeners new ideas.
Stephanie Kelton: And we have them. Our next guest is David Bier, associate Director of Immigration Studies at the Cato Institute, a right-leaning think tank that is also based in Washington DC. Bier has been involved with a new idea called the state sponsored visa since at least 2017.
David Bier: So the idea of a state sponsored visa would be to allow states to essentially sponsor an immigrant based on whatever grounds they thought was best for their state. I suspect most states are going to be focused on their labor force needs, and those needs are very diverse. The labor force needs in North Dakota are not the same as the labor force needs in Florida. And so we’d have a great diversity in the types of programs being designed, the types of protectionist measures for protecting American workers would be different, and we’d have some experimentation, and it would be constantly updating and changing with the times. And that would be a much more adaptive model that would allow innovation and prevent stagnation that we’ve seen in the immigration system for 30 years.
Stephanie Kelton: As proposed, these state sponsored visas would be temporary, but for Bier, they would include a pathway to citizenship.
David Bier: I personally think that it should be a temporary visa that becomes permanent if you stay in the state, whatever period, three years, five years, would be in a reasonable amount of time to say, “Okay, you made your commitment to the state that sponsored you.” That would give the states buy-in to want to participate in the program, and then after that, you have a path to citizenship.
Stephanie Kelton: According to Bier, Canada has maintained a successful and similar program since 1998.
David Bier: So Canada has had a provincial nominee program for many years. Their provinces are similar in their constitution to states, and the provinces can nominate someone to receive what effectively is a Green Card in the Canadian system. It’s worked very well. I mean, it’s one of the most popular programs in Canada. It’s highly thought of by the provinces. So I think something similar could certainly work at the state level.
Charles Passy: A related idea involves issuing visas at the community level. Here’s Bier.
David Bier: Right, so it’s just you’re taking it down to the local level and it could be a certain city or municipality or county wants to sponsor someone. And there are a lot of different types of iterations of this idea, most of them focused on the local governments just because it’s easier, but there are other ways of doing it too. You could have a community organization want to sponsor someone. So it’s just another way of approaching the problem.
Charles Passy: It’s a shift from employment based visas as a federal concern to employment based visas as a state or even local concern.
David Bier: There’s different ways of looking at it. I think the state level gives a little bit more political buy-in. The community level might be more attractive for specific communities that are looking to attract population growth or more immigrants.
Charles Passy: Questions abound. Immigration is, for the most part, regulated by the federal government. So would the courts permit states to issue these visas? How would such a program impact workers, both American and immigrant? How would implementation vary? Is it an idea that would solve some of the problems we have without creating new problems? These state sponsored visas aren’t just a concept on a white paper. They’ve appeared in proposed legislation. Here’s Bier.
David Bier: The actual bill that’s been introduced on this is a little bit more limited, but effectively has a similar concept. Representative Curtis of Utah, and earlier, Senator Ron Johnson of Wisconsin, had introduced a bill that would create a pilot program idea for this. And it would be a temporary visa, but if you got sponsored by your employer, you could extend that visa indefinitely until you got a Green Card through the current federal Green Card program. The numbers in those bills were almost a half a million for all the states, divided up by population. It would be a start. It would be a way to see how this is working, get states buy in, and start working on creating their programs to benefit their states.
Stephanie Kelton: To be clear, that would be a big increase in the amount of legal immigration we have today. Depending on your politics, you might have strong feelings about that.
Charles Passy: And speaking of politics, because of the politics of the present moment, it’s unlikely that there will be any major changes to how our immigration system works in the near future.
Stephanie Kelton: I’m not so sure about that, Charles. I mean, we have seen some bipartisan legislation pass recently. Infrastructure, for example, and even the CHIPS and Science Act.
Charles Passy: A great point, Stephanie. I mean, who knows? But like we talked about at the beginning of the episode, there is a reason that we need to think about immigration. The United States is on the verge of, well, shrinking, and a shrinking population has serious economic implications. Long term, it’s either immigration, a baby boom, or the robots. So why is it important to rethink legal immigration now? Back to David Bier.
David Bier: It’s very important, and it’s growing in importance every single day because of the decline in our birth rate, and the fewer college graduates, fewer people who are entering the labor force year after year. And if we want expansive, robust economic growth, we need the workers to be able to do the jobs that will increase that productivity and expand the economy. The demands today are not the demands there were 30 years ago. And we’re losing out every single year when those people go to other countries where their talents are welcomed.
Charles Passy: We’ve talked a lot about the economic impact that immigrants have, but immigration is more than just an economic issue, much more. Here’s Daniel Costa.
Daniel Costa: We have mostly talked about immigrants as economic units and I really don’t like that discourse. And often you see people who push for immigration just speaking in these terms about how much they contribute economically, but that’s not all they are. They also contribute socially and culturally. And then the whole other very important component of the immigration system that we haven’t talked about is the humanitarian system, the asylum system and refugee system, those two pathways with which migrants can come into the United States.
Charles Passy: In Costa’s view, it’s important to remember that immigrants are people. They come to the United States for a better life.
Daniel Costa: So there’s so much more that we can do just in general on the humanitarian side that I think would actually allow people to come and they would contribute as workers, and I think they’d be better off because they wouldn’t be tied to these employment visas.
Stephanie Kelton: Thanks for listening to the Best New Ideas In Money. You can subscribe to the show wherever you get your podcasts. If you like what you heard, please leave us a rating or review. And if you have ideas for future episodes, drop us a line at [email protected]. Thanks to David Bier and Daniel Costa. To learn more about employment based immigration, head to marketwatch.com. I’m Stephanie Kelton.
Charles Passy: And I’m Charles Passy. The best New Ideas In Money is a podcast from MarketWatch. Melissa Haggerty is the executive producer, and the producers are Katie Ferguson, Metta Lutzhof, and Michael McDowell. This episode was mixed by Steve Cooper. Jeremy Binckes is our news editor. Mark DeCambre was our newsroom editor on this episode. The Best New Ideas In Money theme was composed by Sam Retzer. Stephanie Kelton is an economist and a Professor of Economics and Public Policy at Stony Brook University and not part of the MarketWatch Newsroom. We’ll be back next week with another new idea.