A new study concludes temporary work visas allow firms to expand and hire more U.S. workers, contrary to the arguments of immigration opponents. Economists find it is the latest in a series of recent studies that demonstrate the key premise of immigration restriction—that there is only a fixed number of jobs in the economy—relies on ignorance of economics.
For more than 100 years, opponents of immigration have promoted the “lump of labor fallacy,” a discredited notion that there is a fixed quantity of labor needed in an economy. The latest research from Michael Clemens, an economist at the Center for Global Development, and Ethan G. Lewis, an associate professor of economics at Dartmouth College, again shows it is wrong to assume new entrants to the labor market mean fewer jobs for U.S. workers.
H-2B visas are temporary visas for nonagricultural work in landscaping, construction, crab picking, restaurants, hotels and other businesses. On October 12, 2022, to discourage illegal entry and provide more legal workers for employers, the Biden administration, as permitted by Congress, released 64,716 H-2B temporary visas at the beginning of FY 2023. Those are in addition to the regular allotment of 66,000 H-2B visas.
Critics of work visas fail to address the moral dimension of the anti-immigration policy that they favor, note analysts, namely that preventing the use of work visas kills people. Without access to legal visas, individuals attempt to enter illegally—and often die trying. Since 1998, officially, at least 9,000 immigrants have died attempting to cross the U.S.-Mexico border, but the actual number could be twice as high.
Many employers say they could not operate their businesses and serve customers without access to H-2B workers. Jack Brooks, an owner of J.M. Clayton Seafood Co. in Maryland, told the Washington Post, “We need a long-term fix to survive.”
H-2B workers made up 35% of the 160-person staff at the Bar Harbor Inn, in Maine, in summer 2022. General Manager Jeremy Dougherty told the Wall Street Journal that even with the additional workers, he struggled to meet the guests’ needs due to severe labor shortages.
In 2020 and 2021, H-2B visas were oversubscribed, and the Department of Homeland Security (DHS) awarded them by lottery. Michael Clemens and Ethan G. Lewis used the lottery and surveys of companies to examine the impact on firms that received or were denied H-2B workers.
“Our novel survey of a sample of the firms who participated in the 2021 lottery reveals little benefit, and substantial costs, due to restricting firms’ access to these visas,” write Clemens and Lewis. “Comparing firms that were able to hire more workers on these visas to those that were able to hire fewer—by random chance—we find that gaining access to immigrant hires raises firm revenues . . . and also weakly raises, rather than lowers, their employment of U.S. workers.”
The result is the opposite of what critics of H-2B visas and immigration contend would happen, but it is consistent with other economic research. In February 2022, Madeline Zavodny, an economics professor at the University of North Florida and a former economist at the Federal Reserve Bank of Atlanta, examined the decline in temporary visas issued due to Covid-19.
“The Covid-19 pandemic resulted in a sharp drop in international migration to the United States, but there is no evidence the entry of fewer foreign workers on temporary visas improved outcomes for U.S. workers,” concluded Zavodny in a report for the National Foundation for American Policy (NFAP). “The research examined labor markets where more temporary foreign workers were employed prior to the pandemic and found the drop in H-2B program admissions did not boost labor market opportunities for U.S. workers but rather, if anything, worsened them. The results also do not indicate gains for similar U.S. workers in labor markets that had relied more on the H-1B and J-1 visa programs.”
Clemens and Lewis conclude that their results are “so uniformly positive” because it suggests “there are simply few substitutes for the labor provided by legally authorized low-skill workers.” They write, “[W]e find that U.S. workers do not substantially substitute for foreign workers on H-2B visas.” Clemens and Lewis also note there “appears to be little potential to simply ‘automate away’ labor shortages.”
The economists explain that a permanent, higher level of H-2B visas would likely lead to even more positive outcomes for businesses, the U.S. economy and U.S. workers. “Unlike a one-time lottery, from a firm’s point of view a quota increase is tantamount to a permanent increase in the chances of being allocated an H-2B visa. This would reduce uncertainty and thus likely lead to larger responses (Ghosal and Loungani 2000). For example, a permanent increase seems likely to induce a greater response of investment and (likely) the hiring of year-round employees (we found no response), both of which likely complement the hiring of U.S. seasonal workers.”
Other recent studies have found that immigration opponents consistently have made assertions about immigrants, the labor market and integration not supported by the evidence:
– In a book, two economics professors from Stanford University (Ran Abramitzky) and Princeton University (Leah Boustan) concluded today’s immigrants assimilate as well as past immigrants, and their children are better off economically than the children of native-born. In Streets of Gold: America’s Untold Story of Immigrant Success, Abramitzky and Boustan write, “The data reveals a different pattern: children of immigrants from nearly every country in the world, including from poorer countries like Mexico, Guatemala and Laos, are more upwardly mobile than the children of U.S.-born residents who were raised in families with a similar income level.”
– In a paper for the Centre for Research and Analysis of Migration at University College London, Michael Clemens found immigrants provide significant fiscal benefits for U.S. taxpayers. An average recent immigrant without a high school degree causes a lifetime positive net fiscal balance of $128,000 using the proper measure, according to Clemens. “Including the expected children and grandchildren of the average immigrant without a high school degree, the lifetime positive net fiscal effect is $326,000.”
– Economist Madeline Zavodny found, “Enrolling more international undergraduate students does not crowd out U.S. students at the average American university and leads to an increase in the number of bachelor’s degrees in STEM majors awarded to U.S. students.” The NFAP study concluded, “Each additional 10 bachelor’s degrees—across all majors—awarded to international students by a college or university leads to an additional 15 bachelor’s degrees in STEM majors awarded to U.S. students.”
– Economists Kristin F. Butcher (Wellesley College), Kelsey Moran (MIT) and Tara Watson (Williams College), in research published by the National Bureau of Economic Research (NBER), found immigrants help older Americans live independently at home rather than in a nursing home. The study found a 10 percentage point increase in the less-educated immigrant population in an area reduces by 29% the probability someone 65 years or older would live in a nursing home or other institutional setting. For an individual 80 years or older, a 10 percentage point increase in the less-educated immigrant population in an area reduces the probability of institutionalization by 26%.
The consensus on immigration is clear, according to economists. In an article in the Financial Times, Michael Strain, the director of economic policy studies at the American Enterprise Institute, writes, “Over the long run, more immigrants mean more workers, more entrepreneurs and a more dynamic, faster-growing economy.”