The J-1 and H-2B guest worker programs hurt young people’s employment prospects

Youth unemployment exploded during the Great Recession and now stands at 16.8 percent for 16-24 year olds. For those not enrolled in school and possessing only a high school diploma, the unemployment rate is 21.5 percent. For teenagers 16-19, it’s nearly 24 percent. In fact, the share of young people employed in the United States in July 2011 was 48.8 percent, the lowest level of summer employment in more than 60 years. This will have long-lasting, negative impacts on young workers. Some countries, like the United Kingdom, are proactively implementing programs to put young people to work (and investing £1 billion in public funds to do so). Others, like Spain – with its 46 percent youth unemployment rate – have done little.

It is concerning that the U.S. not only is doing little to create jobs for young people, but is actually keeping young people jobless through the J-1 and H-2B guest worker programs.

The J-1 Exchange Visitor Program was created more than a half-century ago to facilitate cultural and educational exchanges in the United States between young Americans and foreign visitors. But the program has evolved into a massive guest worker program, and most of the 320,000 J-1 participants come here primarily to work. Of the 16 J-1 sub-programs, the largest, the Summer Work Travel program, last year admitted 132,000 workers, down from 150,000 at its peak.

J-1 guest workers now fill many jobs that traditionally went to high school and college students or to recent grads during the summer, including at amusement parks on the Jersey Shore and in Ocean City, Md., and national parks like Yellowstone. J-1 workers have also taken what used to be unionized jobs with decent pay and fringe benefits, working, for example, in a Hershey plant packing candy bars. Most of these jobs cannot be offshored, and were the traditional avenues for young people to enter the labor market for the first time. But instead of providing our young people with their first taste of real work, these jobs are going to J-1 guest workers. Why? Because employers have tight control over guest workers, can pay them less than the prevailing wage, and aren’t required to pay Social Security, Medicare and unemployment taxes on their behalf.

The employer preference for guest workers is contributing to high unemployment for Americans. Consider this: In Worcester County, Md., where many J-1 amusement park jobs are located, the unemployment rate normally drops sharply when the summer tourists arrive, but this past July (when most J-1 workers there are employed) the unemployment rate was double its pre-recession level. And the county unemployment rate is in double digits during the rest of the year. In addition, as the New York Times reported, even older, recently unemployed Americans have been vying for summer jobs like these at amusement parks due to a lack of other opportunities.

So how can we find jobs for 132,000 young people? End the Summer Work Travel program.

Or if Congress rejects that option, then restrict the program only to jobs that have an obvious educational or cultural value, and link the program’s size to the national unemployment rate. For example, if the unemployment rate averaged more than 5 percent in the preceding year, the SWT program could only admit 30,000 foreign workers, but if it fell below 5 percent, then the SWT limit could be raised to 50,000.

Another way to put tens of thousands of young people back to work is to reform or abolish the H-2B visa guest worker program. Up to 66,000 H-2B visas go to workers with little or no education, and for jobs that require little training or experience. Most H-2B workers who enter the country work as landscape laborers, cutting grass, trimming hedges, and laying sod. Last year, over 32,000 landscaping and groundskeeping workers were certified by the Department of Labor to work as H-2Bs. Tens of thousands more were certified to work as janitors, or laboring at amusement parks, on construction sites, in hotels and restaurants, and planting trees in forests.

Because most of these jobs require very little training and experience, yet pay a living wage, many unemployed young people would be willing and able to do them.  From personal experience, I know these jobs can offer a viable career path. A high school friend who never attended college, but instead began landscaping in his early twenties, kept at it and eventually started his own business. Tens of thousands of young people are being denied that opportunity by the H-2B program.

Employers and politicians regularly claim that there are labor shortages in typical H-2B occupations, and thus, employers need access to foreign workers who can do these jobs. Proponents of the H-2B program almost always cite anecdotal evidence about a company that could not find enough workers, but there are no labor market data, such as rapidly rising wages relative to other occupations, or low or rapidly declining unemployment rates, that might suggest a labor shortage in these occupations.

For example, in construction, in 2001, unemployment was 6 percent and rose to 17.9 percent in 2010 (and to a whopping 22 percent for construction workers with only a high school diploma or less). Construction workers (including managers and supervisors) earned $18.57 per hour in 2001 – but by 2010, their wages had dropped by $2.50 an hour, to $16.07.

Unemployment among lodging and hospitality workers rose from 9.6 percent to 13.7 percent over the past decade, and the average hourly pay declined by 8 cents. In 2001, unemployment for landscapers, the largest H-2B occupation, was at 8 percent. By 2010, it stood at 18.5 percent – an increase of 10.5 percentage points over the decade, while their hourly wage increased only 15 cents during this period.

There is no labor shortage in these occupations. In fact, quite the opposite – there are hundreds of thousands of unemployed construction, hotel, and landscape workers who are desperate to get back to work. And there are plenty of unemployed young workers who could be trained quickly to do these jobs.

Allowing companies to bring in 200,000 guest workers through the J-1 Summer Work Travel and the H-2B programs to fill jobs that young unemployed U.S. workers need and are qualified to do, in the face of 17 percent youth unemployment, is absurd, and offensive. These programs should be abolished or suspended until the economy recovers.


  • Rjohnson

    Mr. Costa,
    I enjoy reading your blog you have a very clear style of writing. On the other hand, I am not in full agreement with your conclusion of closing the border to afford more jobs to US workers. The arguement has shades of Smoot-Hawley, the notorious legislation blamed for contributing to the great depression.
    We live in a world where capital is fluid and labor is not. The ideal world would allow totally fluid capital and labor. Your argument that the H2B wages are often below minimum assumes that job would be there at higher wages. I would argue that closing H2B would actually shrink the economy.

  • Rjohnson

    Mr. Costa,
    I enjoy reading your blog you have a very clear style of writing. On the other hand, I am not in full agreement with your conclusion of closing the border to afford more jobs to US workers. The arguement has shades of Smoot-Hawley, the notorious legislation blamed for contributing to the great depression.
    We live in a world where capital is fluid and labor is not. The ideal world would allow totally fluid capital and labor. Your argument that the H2B wages are often below minimum assumes that job would be there at higher wages. I would argue that closing H2B would actually shrink the economy.

    • Dfarris

      The world you describe is a world made by law. Capital would not be nearly as fluid without the protective legislation of the WTO and trade agreements. You are also mistaken about Smoot-Hawley.
      “In 1930 Total imports were only 4% of GNP, Smoot-Hawley applied to
      1/3 (1.3%) of that 4% of GNP. HOW could a tariff that applied to only 1.3% of GNP cause the collapse of 5000 banks, wipe out 5/6 of the stock market, cause a 46%  drop in GNP, and increase unemployment to 25% ? DID anticipation of Smoot-Hawley upset the little tummies of stock traders & cause the market to crash 8 months before Smoot-Hawley became law?”
      The Great Betrayal pg. 245-247 quoting Opening America’s Market, pgs
      100-139