Ben Powell promotes Red Card plan, H1Bs using shaky economics (immigration, Forbes)
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In Forbes, Ben Powell of Texas Tech University offers "A U.S. Worker Shortage Calls For 'Red Card' Immigration Reform" ( peekURL.com/zKuax6f ). A discussion of how the article is wrong follows this excerpt:
...The problem with the (H1B) system is that it's arbitrary and doesn't meet the needs of employers, as our recent research confirmed.
In each of the last 10 years, we found, employer demand has exceeded the supply of H1-B visas for high-skill workers. The visas become available on April 1 for the following fiscal year, beginning Oct. 1. In fiscal 2013, the government ran out of H1-B visas in less than a week. Indeed, only twice in the last decade has the supply of H1-B visas lasted for more than half the fiscal year; in both instances, this occurred during economic downturns.
Similarly, in four of the last 10 years the demand for H2-B visas also has exceeded the cap.
The H2-A program, for temporary agricultural workers, has faltered for different reasons. Before visas can be issued to guest workers, this program requires potential employers to prove that no native-born workers are willing to take their jobs. But that's almost impossible to prove. As a result, only about 30,000 foreign workers are in the United States under this plan.
The need, however, is much greater. The Western Growers Association, for example, has estimated that 80,000 acres of fruit and vegetable production moved out of California because of labor shortages. Perhaps the greatest evidence of the program's inadequacy is the large number of illegals involved in agricultural work.
The Senate immigration reform bill would improve the existing system, nearly tripling the current H1-B visa cap and creating a new "W visa" for low-skilled workers - setting the initial cap at 20,000, increasing over time to as many as 200,000.
Despite these improvements, the bill still involves government micromanagement of the immigrant labor market, mandating visa caps for particular industries and dictating wage rates for particular job categories. Construction related visas, as an example, would be limited to 15,000 - in an industry employing some 5.8 million - and foreign crop harvesters would have to be paid exactly $9.17 per hour.
Government planners have no way of knowing how many foreign workers an industry requires or the correct wage rate. Market forces need to set prices and quantities for labor markets to function efficiently.
There is a better way. It's known as the "Red Card" guest-worker plan, an idea being promoted by Denver's Vernon K. Krieble Foundation....
The Red Card plan would not resolve the immigrant labor issue. But it’s a step in the right direction and would make the market for foreign-born labor more efficient.
1. For how the Red Card solution would fail, see the entries on the Helen Krieble page (she's the daughter of Vernon K., heir to the Loctite fortune, and owner of a horse ranch).
2. "Estimates" from the Western Growers Association are shaky at best; see the link and the crops rotting in the fields page. For the wider issue, see the entries on the immigration agriculture page. The large number of illegal aliens in the U.S. - whether on the farm or not - is evidence of massive government corruption as growers, food processors and similar groups donate to (or otherwise fund) politicians that look the other way on enforcement of our laws.
3. Powell laments the low number of construction-related visas in the Senate immigration bill. In 2010, the unemployment rate in that industry peaked at over 25% (data.bls . gov/timeseries/LNU04032231). It's since fallen below 10%. But, both of those numbers probably understate the number of un- or under-employed current and former American construction workers; there are also large numbers of unemployed Americans who could do construction work but who are kept out of the market due to various factors related to the large numbers of illegal aliens in construction work (example).
4. H1B visas are beneficial to employers: they get to hire pliable foreign labor at a market rate, without fewer difficulties than hiring permanent employees. So, isn't it shaky economics for Powell to highlight how quickly that program runs out of visas? If the U.S. government were giving away discount candy, there'd be a lot of demand for that too. Whether with the current situation or the Red Card plan, employers could seek to drive down wages knowing that their current or former employees will be taken care of by the generous U.S. safety net. That safety net isn't going to go away no matter how much libertarians want it to, so any plan has to be constructed knowing that such a safety net will exist. With either the current H1B visa or Red Card system, isn't Ben Powell supporting something more akin to corporate socialism than an actual free market in labor? If Ben Powell were really interested in the free market, wouldn't he make employers pay the full costs of their labor? Isn't big business quickly snapping up H1B visas an indication of how little loyalty they have to Americans?