Not All Foreign Work Forces Are Equally Harmful to American Workers

By David North on March 12, 2018

As I was reading about the Trump administration's possible termination of work permits for a large number of H-4 workers (primarily spouses of H-1B temporary workers), a subject to which I will return, it occurred to me that some groups of temporary, legal foreign workers are more harmful to American workers than others. All create negative impacts, but some more so than others.

The H-4 program may be one of the least offensive of those currently operating.

The differential impacts occur because each of these worker populations arrives with a different collection of rights and tax situations. I have identified five different labor market impacts, none of them helpful to resident workers.

Two of these sets of impacts come with all foreign workers: The most obvious is that a temporary (or illegal) alien worker, in virtually all cases, is holding a job that under other laws and policies would be held by a legal resident of the United States.

The other universal impact deals with numbers. As the number of foreign workers rises, so does the overall population of workers, and the more workers — all else being equal — the less likely wages are to rise. Even though the laws of supply and demand do not work consistently in the labor market all the time, generally if there is a surplus of workers, wages are lower than they would be otherwise.

These two impacts are shown in the table below in columns three and five.

The differentiation among the impacts on the United States caused by different groups of foreign workers depends on their precise immigration status. There appear to be three variables at work.

Numerical Limits. The most obvious one is the question of statutory limits on the number of visas to be issued. This relates to only two of the groups under consideration today, the H-1B (high tech) workers, and the H-2B (unskilled, non-ag) workers.

The limits are usually expressed not in the more revealing population figures, but in the number of new visas issued each year. While there are probably about a million H-1B workers in this country at any given time, what we hear are the yearly limits for new ones: 85,000 for industry and an unlimited number (usually in the tens of thousands) for universities and university-related activities, broadly defined. The other H-1Bs are here on visa extensions that are given out readily, at least so far.

The numerical limit for new H-2B visas is 66,000, again with some visa extensions causing the actual population to be somewhat larger than 66,000.

Concentration. Another variable is concentration. If there are a lot of alien workers (usually in the same program) in a given workplace, wage depression is likely to occur. The wage-depressing effects are less likely to be a problem where the worker has secured the employment authorization document (EAD) without any involvement from the employer. People in the H-4 program, for example, land jobs that resident workers might hold otherwise, but they are neither tied to an employer nor concentrated, so their negative impact is not so pronounced.

Subsidies. The final variable is the question of the federal subsidy that comes with some groups of foreign workers (reflecting the political power of Big Agriculture and Big Education). Foreign farm workers (they used to be called "braceros"), foreign students, and aliens with recent American college degrees bring to their employers tax breaks related to the non-payment of payroll taxes that make these workers highly attractive to employers. Obviously programs with a federal subsidy for hiring aliens, like the Optional Practical Training (OPT) program are more harmful than those without.

The table below shows the interplay among seven worker groups and the five impact variables.

Adverse Labor Market Impacts from Different Sets of Alien Workers

Category Numerical Limits? Hire Aliens Rather than Citizens? Depress Wages by Concentration? Depress Wages by Extra Numbers? Subsidy Paid to Employers of Aliens?
H-1B Yes Always Often Always None
H-2A (ag) No Always Often Always Yes
H-2B (non-ag) Yes Always Often Always None
H-4 (spouse) No Always No Always None
J-1, Q-1 No Always J sometimes,
Q often
Always Yes
OPT No Always No Always Yes
Illegals No Always Often Always None

The H-1B, H-2A, H-2B, J-1, and Q-1 programs are all employer-centric, with Q-1 being primarily used by Disney and J-1 by both universities and summer employers.

OPT and H-4, on the other hand, can be viewed as having worker-centric immigration statuses as their employers had nothing to do with either the workers' arrival in the United States or their ability to stay in the country. These workers can pretty much move around the labor market as citizens and permanent legal residents can. Of these two, OPT is clearly the more dangerous, involving more people and a subsidy, while the H-4s are smaller in numbers and without a subsidy.

We have added a line in the table for illegal alien workers; there are more of them than all the visa-carrying temporary workers combined, and while they are not in a completely comparable situation, they should never be left out of any conversation on foreign work forces.

This analysis would seem to suggest that among the legal alien work forces, the employer-centric programs are more harmful to resident workers than the nonimmigrant, migrant-centric programs, such as H-4. Further, numerically uncontrolled categories are more worrisome than numerically controlled ones and, of course, programs that subsidize the hiring of foreign workers by waiving payroll taxes are worse than those that do not do this.

When all these minuses are tallied we find that the most troublesome program, by this measure, is H-2A (no numerical limits, a subsidy, and a total of five black marks), while the H-4 program has just three black marks.

It is perhaps odd, or perhaps simply a reflection of the power of Big Agriculture, that the most troublesome program, H-2A, is never mentioned as the target of Trump administration reforms, while the less troublesome one, H-4, is.

The H-4s. As to the H-4s, they are the spouses and children of H workers; there are many more in this category who relate to the middle-class H-1Bs than to the other classes. During the Obama administration, a subclass of the H-4s — those related to H-1B workers on the waiting list for green cards — were given the right to work in this country.

These are primarily women from India — as most H1Bs are from that country — many of them college grads; they are scattered around the country (as the H-1Bs are distributed) and are not semi-indentured, as their spouses are, since they have no ties to their employers other than as workers. Further, unlike the OPT workers, there is no federal subsidy for employers hiring them.

H-4 workers are eligible for EADs for as long as they remain in legal status, and since that status routinely reflects their spouse's place on the green card waiting list, that's a long time. Given this information, we can conclude that the size of the population equals something like 90 percent of the issuances.

According to the most recent USCIS data available, from the H-4/EAD program's beginning on October 1, 2015, through September 30, 2017, there were these H-4/EAD issuances:

  • FY 2015: 26,858
  • FY 2016: 41,526
  • FY 2017: 48,500 (projected from nine months of data)
  • Total H-4/EAD issuances: 116,884

A handful of these workers died in this period or switched to another nonimmigrant category, and larger numbers left the country or got green cards, suggesting that the total population of these workers, as of September 30, 2017, was something like 100,000 to 105,000.

For more on the administration announcements, and the protracted litigation, on the subject, see this detailed article (published in India, of course).

While India is pushing hard to keep the H-4s working in the United States, no one seems to notice that spouses of American expatriates in India are not allowed to work in that country.