Immigration News: July, 2005 - Volume 12

Labor, H-Visas, Mobility

In April 2005, the US added 274,000 jobs, keeping the unemployment rate at 5.2 percent as the economy created almost 10,000 net new jobs a day. In May 2005 employment growth slowed to 78,000, while the unemployment rate stayed steady at just over five percent. In June 2005, some 146,000 net new jobs were added, and the unemployment rate was five percent. The US has added an average of 180,000 jobs a month in the first half of 2005.

About 66 percent of Americans 16 and older were employed or looking for work, down from a peak 67.3 percent in 2000. Hourly earnings averaged $16 for the 80 percent of the work force employed in production and office jobs below the level of supervisor or foreman.

Immigrants seem to be taking a disproportionate number of the new jobs in the US labor market. According to a Pew Hispanic Center report released in May 2005, Hispanics filled 40 percent of the 2.5 million new jobs created in 2004, even though they are only about 15 percent of the US labor force. Of the one million US jobs filled by immigrants in 2004, almost 900,000 went to recent arrivals. Mexicans increasingly dominate many of the construction trades, from plasterers and stucco masons to drywall installers.

The median weekly wages of Hispanics fell from $420 in 2002 to $400 in 2004. Explanations for falling Hispanic earnings include the fact that many workers are unauthorized and that many are going to the Midwest and Southeast, where wages are lower than in other regions. (http://pewhispanic.org/files/reports/45.pdf) About 40 percent of US Hispanics work in California, down from 60 percent in 1990.

In Nassau County on Long Island, the District Attorney arrested three Hispanic home-improvement contractors for not paying $50,000 in back wages to 20 day laborers, saying that the status of the workers did not matter in resolving the unpaid wage claim. Normally, unpaid wages are handled by labor inspectors or small claims court, but the district attorney said he wanted to send a message to employers who would cheat workers of wages.

There are about 80 organized day-labor centers across the US, including 60 that opened since 2000. Most have buildings and staff who register workers (without recording legal status) and record employer license plate numbers; some offer English classes and have clinics on site. An estimated 25,000 laborers seek jobs at 100 places in Los Angeles county each work day, followed by 15,000 at 60 places in New York City.

Wal-Mart is the largest private employer in the US, with 1.3 million employees and 3,700 stores. Wal-Mart says its full-time workers average $9.68 an hour, and their average annual pay is $17,600, which is below the $19,157 poverty line for a family of four but above the $15,219 poverty line for a family of three. Wal-Mart says that it provides health insurance to 570,000 of its workers, 550,000 receive health insurance via spouses or government programs, and 180,000 have no health insurance. Wal-Mart offers health insurance for families of full-time workers after 180 days of employment for worker-paid premiums of $150 to $300 a month.

Other retailers pay more and provide health insurance. Competitor Costco pays an average $16 an hour and says that 82 percent of the workers are covered by company health insurance, compared with 48 percent of Wal-Mart workers. Wal-Mart had $10 billion in profit on about $288 billion in revenue in 2004.

Many of the 2.3 million US janitors are immigrants, and advocates say that they are often denied overtime pay, classified improperly as independent contractors, locked in the stores overnight and forced to work their first two weeks unpaid. Most janitors are employed by cleaning companies, not building owners, reflecting a trend similar to that in agriculture, where farmers shifted from hiring workers directly to hiring them via labor contractors. As in agriculture, some labor contractors operating on thin margins allegedly cheat newcomer immigrants.

Over the past two decades, the share of Los Angeles janitors who are Hispanic rose from 25 percent to over 90 percent.

H-Visas. The annual limit on H-1B visas is 65,000 a year. That allotment was used up on the first day of FY05, but the cap was raised by allowing up to 20,000 foreign graduates of US universities with at least an MS degree to obtain visas outside this cap each year. Bill Gates, in an April 2005 discussion, said that he would eliminate the cap on the number of H-1B visas: "I'd certainly get rid of the H1-B visa cap." Critics noted that the unemployment rate for IT workers in 2004, 5.7 percent, was higher than for all US workers, 5.5 percent.

The number of H-2B visas is capped at 66,000 a year, but the yearly allocation of H-2B visas was used up on January 3, 2005, well before the end of the federal fiscal year, September 30, 2005. US employers may apply for H-2B visas 120 days before foreign workers are needed, so that summer resorts could not apply before the H-2B visas were gone. Many of the summer resorts applied for exchange student workers under the J-1 program, which allows foreign students to have a work and learn experience in the US and, as the New York Times noted June 10, 2005: "had the unintended effect of transforming formerly apple-pie resorts into virtual Epcot Centers of languages and cultures."

For the next two years, the Save Our Small and Seasonal Businesses Act of 2005 allows employers to bring back H-2B workers whom they employed during the previous three summers outside the 66,000 a year cap. The 66,000 H-2B visas are divided into summer and winter categories, so that one the summer employers are not shut out of the program.

Mobility/Education. The New York Times in a series of articles in May 2005 explored the question of economic mobility, the process by which Americans move up or down the income ladder. Most Americans believe that a good education and hard work allows someone who begins poor to end up rich.

On the one hand, there appears to be more mobility than ever, as the IT and stock market booms seemingly allow anyone with a good idea to become rich; 45 percent of respondents in the New York Times poll said they were in a higher class than their parents. However, the articles concluded that children are more likely than ever before to wind up in the same economic class as their parents because the "merit" that determines earnings is often class-based, as when college-educated parents have college-educated children.

Classes are groups of people of similar economic and social position. The people in a class often share political attitudes, lifestyles, consumption patterns, cultural interests and opportunities to get ahead. Traditionally, societies were sorted into three classes: upper, middle and working, but some sociologists today say that it is more appropriate to think of US society as having dozens of rungs on an economic ladder rather than three classes.

People have four major characteristics often used to assign them to a class or rung: education, income, occupation and wealth. Americans grouped themselves in a 2005 poll as follows: one percent said they were upper class; 15 percent upper middle class; 42 percent middle; 35 percent working; and seven percent lower class.

People are born into their parents' class, and their education and experience determine whether they stay in their parents' class or move up or down. Economist Gary Becker in the 1980s argued that economic mobility in the US was so high that the mobility prospects of the grandchildren of rich and poor were about the same. This assertion is unproven, however, since available data do not permit rigorous cross-checking of recollections of parents' incomes. However, other data show fewer families crossed from one income quintile to the next in the 1990s than in the 1970s.

How much economic mobility is optimal? Most analysts agree that the system should allow movement from one rung to another, but preserve the link between achievement and income. The single best determinant of earnings in the US is years of education, and highly educated parents tend to invest more in their children's education, giving them a boost on the economic ladder.

Globalization and technological change have redrawn class lines or mobility paths, as skilled blue collar workers in US factories get pushed down the ladder while college-educated professionals move up. The results are lower wages and pensions for factory workers and suburban neighborhoods where college-educated women have children later in life, when their earnings are higher. Americans still believe in Horatio Alger's rags-to-riches mobility, but the reality appears to be that parental influence plays a larger role than simple hard work in determining the place that one starts and ends on the income ladder. Education can offset parentage, but a recent study found that only 40 percent of low-income students entering a four-year college graduate within five years, that is, most children from low-income families do not complete the extra years of education that tend to raise status and income.

The federal No Child Left Behind Act requires that student performance data be reported separately in each school for racial, ethnic and certain other groups. Schools are to bring all students to grade level over the next decade, which has sparked efforts to close achievement gaps between minority and white and Asian students.

Immigrants. A May 26, 2005 New York Times article profiled a 70-year Greek immigrant who opened a successful restaurant in Manhattan and a 34-year old unauthorized Mexican who worked for him. The Greek arrived in 1953 when he illegally left his ship with $100 and joined a cousin in New York City. The Mexican slipped across the border in the mid-1990s and joined an uncle in New York City.

The Greek found a supportive community and odd jobs, learned English, was deported and returned, married a US citizen and became a legal immigrant, and then opened a restaurant. The Mexican man's uncle got the newcomer a job at the bakery where he worked, and the migrant supplemented his bakery earnings with a job in a diner, where he learned the importance of tips.

The Mexican returned to Mexico and married, brought his wife to New York City and had a child, and found work in the Greek restaurant. Despite weekly wages of $600 for 10 hour work days, six days a week work, or $25,000 to $30,000 a year, he has not gotten ahead because of high rents, loans to relatives and remittances, and illegal status and lack of English. After a dispute, the Mexican picketed the Greek restaurant and was fired, and lost jobs at other restaurants after disputes with their owners.

Many of those who assess the progress of unauthorized Mexicans are at two extremes of the spectrum. Some believe that Mexicans will not assimilate, and that the separate culture they are developing threatens the United States. Others say that, if Mexicans were legalized, they would integrate as earlier European immigrants did.

Economy. The U.S. trade deficit rose to a record $61 billion in February 2005, including a $14 billion deficit with China. China, Korea and Japan continue to run trade surpluses with the US, accumulating US treasury bills that give them a vested interest in a healthy US economy and strong dollar.

Since 2000, median household income in the US has been stable at $40,000, but median household spending has continued to rise as a result of more debt. Median household debt was $100,000 in 2004, including $9,200 in credit card debt (in households with at least one credit card).

Denny Lee, "Few Visas, Fewer Resort Workers," New York Times, June 10, 2005. Janny Scott and David Leonhardt, "Class in America," New York Times, May 15, 2005. Anthony DePalma, "15 Years on the Bottom Rung," New York Times, May 26, 2005.