Trump’s Immigration Bans Backfire?

Dear Rich Lifer,

In December of 2020, the Trump administration extended a ban on immigrants coming to the U.S. on work-based visas and green cards through the end of March 2021.

Trump had initially issued the bans in April and June of 2020, saying they were meant to protect American workers from foreign competition, just as pandemic-related shutdowns began disrupting the economy.

The ban applies to immigrants coming to the U.S. on H-1B and several other employment-based visas, along with people coming with green cards to work or reunite with family. Farmworkers and spouses of U.S. citizens were exceptions to the ban.

What resulted from this ban was a better understanding of the relationship between immigration and the labor market…

The preliminary findings of this “experiment” show that even with record-breaking U.S. unemployment, businesses that relied on foreign workers and were able to stay open during the pandemic struggled to fill jobs.

How can this be?

Foreign Workers Are Integral to the Economy

According to Alex Nowrasteh, director of immigration studies at the libertarian Cato Institute, unemployed American workers lacked interest in jobs typically held by foreign hires at the lower and seasonal end of the job market, and the visa ban also failed to help those unqualified for specialized jobs at the higher end.

The visa programs banned by Trump are just a small piece of the overall immigration issue and do not include immigrants who are fleeing to American to escape poverty or violence or who are attempting to reunite with family.

Instead, the work visa programs are targeted at more niche categories such as temporary visas for nannies or foreign students looking for summer jobs, as well as long-term visas for high-skilled tech workers and foreigners starting their own businesses.

If anything, the bans showed how such workers have become integrated into certain parts of the U.S. economy… and how essential they have become.

In fact, since June, businesses that have survived the pandemic have had trouble finding the workers they need and have instead been forced to cut hours, scale back production, or send jobs overseas.

Responses to the Ban

Current President Joe Biden has been called on by more than 100 trade associations and immigrant-advocacy groups to reverse these policies. Mr. Biden had pledged to roll back multiple Trump immigration policies, and his administration has put on hold a Trump-era directive to overhaul how the visas are issued.

However, most of Biden’s executive orders have focused on refugees and asylum seekers, and he has not announced a plan for these particular visas.

Even supporters of limits on work visa programs have called for an overhaul of the ban, saying more requirements are needed to encourage employers to put more effort into finding American workers before looking abroad.

Daniel Costa, director of immigration law and policy researcher at the Economic Policy Institute, says raising wages on these types of jobs would help, but employers also need to do more when it comes to recruitment.

For example, the J1 visa, a State Department-led exchange program for foreign college students, doesn’t require employers to show they couldn’t fill the jobs with Americans. Costa believes employers should expand their searches to regions with higher unemployment and offer housing and travel subsidies.

Others believe the visa programs should be ended altogether, such as Mark Krikorian, executive director of the Center for Immigration Studies, who notes, “We have a large share of our potential workers not even in the workforce.”

Yet, there seems to be an apparent lack of training for Americans to fill the high-skill jobs employers are looking for.

Peter Leroe-Muñoz, general counsel and senior vice president of tech policy for the Silicon Valley Leadership Group, explains the problem the ban has brought to light, stating, “A deficit of domestic tech workers to fill available American tech jobs is worsened by the lack of access to foreign talent.” He points out that about 59% of the area’s workforce is foreign-born, including those holding H1B visas.

According to data from the State Department, H1B visas for highly skilled workers were down 94% to 7,696 in June through December last year from 130,112 over the same period in 2019…

Local Small Businesses Feel the Effects

Even more alarming? The ban is affecting more than the skilled work sector.

Take Keith Exton, owner of a chain of the popular Duck Donuts in North Carolina’s Outer Banks, which has a year-round population of about 57,000 and sees about one million tourists every summer.

Mr. Exton usually sponsors around 20 foreign students on J1 foreign exchange visas to work the summer season at his store. He will usually hire around 55 more part-time foreign hires brought to the U.S. by other local employers.

In the past year, he got eight hires overall.

And because Americans were unable to travel abroad, many flocked to local beaches and filled hotels and vacation homes in North Carolina. But Mr. Exton said he couldn’t hire enough staff to keep his shops open past 1 p.m. sadly reflecting, “We could have had the best year we’ve had if we had staff.” He was forced to open stores with five staff rather than his usual 15, and he closed six locations eight hours early every day.

Mr. Exton is now planning to rely on college students for his summer staff but worries about summer staffing shortages for a second year. He said that when he tried this route last year, he only wound up with about a dozen hires.

In October of 2020, a federal judge ordered the Trump administration to restart processing H1B, J1, L1 and H2B visas after a legal challenge from the U.S. Chamber of Commerce, the National Association of Retailers and other industry groups.

Visa processing has since restarted for some companies, but the decision excludes many small businesses, including Mr. Exton’s.

Many business owners now fear that even if the Biden administration moves quickly to end the work visa ban, the lengthy wait for visa interview appointments in the U.S. and abroad will likely slow hiring for months to follow.

We’ll see how it all plays out, but the failure of this experiment will likely mark the necessity of foreign work across blue and white collar jobs. Hopefully future administrations will remember. But, we can only hope.

To a Richer Life,

The Rich Life Roadmap Team

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