No evidence of labor shortages but Congress considering giving H-2B employers access to more exploitable and underpaid guestworkers

Expanding and deregulating the H-2B visa program (a temporary foreign worker program that allows U.S. employers to hire low-wage guestworkers from abroad temporarily for seasonal, non-agricultural jobs, mostly in landscaping, forestry, seafood processing, and hospitality) has been a top goal for business groups including the U.S. Chamber of Commerce, ImmigrationWorks USA, landscaping and seafood employers, and the Essential Worker Immigration Coalition (EWIC)—lobbyists representing employers claiming they can’t find U.S. workers willing to mow lawns, plant trees, or pick crabmeat.

These lobbyists have never presented a credible case regarding labor shortages in H-2B jobs. But H-2B employers have spent millions of dollars on litigation, lobbying, and campaign contributions; anything it takes to keep wages from rising and to prevent their access to low-paid indentured foreign workers with few rights from ever being restricted.

And it’s happening again. To avoid a government shutdown, Congress has to pass appropriations legislation soon to fund the entire federal government. Whenever that happens, members of Congress attempt to insert “riders,” legislative provisions tucked into appropriations bills that amend the law in substantive ways that have nothing to do with appropriations. Thanks to the aforementioned corporate lobbyists, the current 2016 fiscal year appropriations negotiations have included discussions about riders to remake the H-2B program. The omnibus bill introduced in the House on the evening of December 15 included riders that would: 1) vastly increase the size of the H-2B program, 2) eliminate protections that keep workers from being idled without work or pay for long periods of time, and 3) prevent U.S. workers from having a fair shot at getting hired for job openings by preventing enforcement of the rules that require employers to recruit workers already present in the United States before they can hire an H-2B worker. Finally—and worst of all—if the House appropriations bill becomes law it will also dramatically lower the wage rates employers are required to pay, which would permit employers to pay their H-2B workers much less than American workers employed in the same jobs and local area. Needless to say, the lower wages H-2B workers will be paid create a huge incentive to hire temporary foreign workers instead of the local U.S. workers who reside in communities where the jobs are located.

In addition, legislation in the House and Senate has been introduced that would permanently implement these changes, including reducing H-2B wage rates, expanding the size of the H-2B program to about 200,000, and repealing all of the protections for foreign and American workers that the Obama administration just implemented in April 2015, after fighting opposition to them from corporate lobbyists and Congress for the past five years.

Sadly, the legislator spearheading both the legislative and appropriations efforts to weaken H-2B rules on behalf of corporate lobbyists is a Democrat, Sen. Barbara Mikulski.

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States and districts must fulfill the promise of more equity in education offered by new education law

For many of the nation’s schools, this week feels distinctly festive. Congress finally passed, and the President signed, the Every Student Succeeds Act (ESSA), reauthorizing the Elementary and Secondary Education Act (ESEA), wrapping up a nearly eight year effort.

There’s much to celebrate in the new bill. First, no more No Child Left Behind, the 2001 iteration of ESEA that shifted our flagship federal education legislation from a civil rights law supporting the nation’s neediest schools and students to one that penalized those same schools for failing to meet higher standards, while withholding many of the supports they need to do so. Second, the newly reauthorized law returns key aspects of education policy to state and local authority, making it easier for schools to target interventions and resources based on their unique contexts. Third, by incorporating such strategies as pre-kindergarten and wraparound supports for disadvantaged students, it recognizes that students’ needs—and education itself—extend beyond K-12 and the school day.

At the same time, skeptics rightly point out that many of the states and localities celebrating their renewed authority have historically used that authority pretty badly. Under ESSA, state and local education agencies must practice due diligence and recognize that with increased flexibility and autonomy comes increased responsibility. The skeptics also point out that ESSA is still a far cry from what is needed to level the education playing field. Substantially improving education and narrowing gaps requires, at a minimum, funding levels that enable ESSA to serve as a real equalizer and implementation that extends that equalizing potential at the state and local levels.

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Remarks by Josh Bivens on why it is too soon for the Fed to slow the economy

On Wednesday, December 16, the Federal Reserve is expected to announce that it is raising interest rates above zero for the first time in seven years. In recent briefings and presentations, EPI Research and Policy Director Josh Bivens has argued that a rate increase would be a mistake. The following is a rough transcript of remarks delivered at events including a December 1 briefing with Rep. John Conyers.

It’s a near lock that the Fed will raise the short-term interest rates it controls off of zero this week—where they’ve been sitting since the end of 2008. I think this is a mistake. You should raise interest rates only when you think you need to start slowing the pace of economic growth because you’re worried that fast growth and falling unemployment will spark too-rapid wage growth that will bleed into rapid price inflation. But there’s no reason to think that the pace of economic growth today is excessive and needs to be slowed because of incipient inflation.1

And the stakes to getting this tradeoff between low unemployment and stable inflation wrong are huge. Since 1979, the bottom 70 percent of American workers have essentially seen one multi-year episode of strong, equitable growth in hourly pay. That occurred in the late 1990s and early 2000s, when unemployment fell far below what existing estimates said it could without sparking inflation—it bottomed out at 3.8 percent for a month in 2000, and averaged 4.1 percent for two solid years in 1999 and 2000. This led to the only serious period of strong, equitable wage growth in the past 35 years. The bottom 70 percent saw trivial wage growth (or wage declines) in the entire rest of that period. The figure below shows wage growth in the late 1990s/early 2000s compared to the rest of the 1979-2013 period for various points in the wage distribution. Besides the top 5 percent, it can be seen that most wages grew much faster during the late 1990s high-pressure labor markets than in other periods post-1979.

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Republicans and some Democrats defend financial advice that’s not worth getting

What if the next time you went for a medical checkup, you were accosted by a pharmaceutical rep waiting for her expense-account lunch with the doctor. But instead of saving her pitch for the doctor—a sleazy enough practice—the drug rep began telling everyone in the room that they should take an expensive drug that has no advantage over a generic version and is approved only for medical conditions no one there has.

Illegal? Yes. But imagine that this was actually legal and that President Obama, with the support of progressives in his party, had issued a proposed rule intended to curb such practices by requiring that anyone offering advice to patients in a doctor’s office have the patient’s best interest at heart.

Here’s what would happen: Republicans in Congress would start parroting industry talking points about this having a chilling effect on urgently-needed advice people are receiving for free and can’t afford to pay for. A substantial minority of congressional Democrats would claim to agree with the president in principle, but find one reason or another to delay the rule indefinitely with quibbles and questions. The industry lobby would continue to shower Republicans with campaign donations, while the hand-wringing Democrats would avoid being singled out by the industry in their quest for reelection. Pundits would treat it as a complicated issue where there is serious risk of unintended consequences, and Americans would continue to be suckered into paying exorbitant prices for risky products they shouldn’t be buying in the first place.

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The labor market still recovering: We should let it

The Job Openings and Labor Turnover Survey (JOLTS) report released today by the Bureau of Labor Statistics shows signs of a continued slow recovery. Job openings fell slightly to 5.4 million, and the quits rate remained, stubbornly, at 1.9 percent, where it has been for most of the last year. Along with last Friday’s jobs report, today’s report provides more evidence of a recovering but still weak economy. While most indicators have been trending in the right direction, nominal wage growth and the prime-age employment-to-population ratio remain far outside of target ranges, and provide ample evidence that the economy has a way to go before reaching full employment.

In October, there were 1.5 unemployed workers for every job opening, a slight tick up from last month. That means they for every 15 jobs, there are five potential workers who won’t be able to find a job no matter how hard they look. And the job-seekers-to-job-openings ratio is higher among certain sectors. Notably, there are still 45 unemployed construction workers for every 10 job openings in construction.

The sluggish quits rate is particularly troubling. At 1.9 percent, the quits rate was still 9.2 percent lower than it was in 2007, before the recession began. This is evidence that workers are stuck in jobs that they would leave if they could. A larger number of people voluntarily quitting their jobs would indicate a strong labor market—one in which workers are able to leave jobs that are not right for them and find new ones. Hopefully we will see a return to pre-recession levels of voluntary quits, but given that the rate has stayed flat, we are obviously not there yet.

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December Interest Rate Increase: Will the Fed Raise Rates vs. Should It

This piece originally appeared in the Wall Street Journal’s Think Tank blog.

Our friend and former colleague Jared Bernstein has mounted a small but strategic retreat in the campaign to have the Fed continue focusing on full employment. He has written that Friday’s jobs report, though not stellar, was good enough to make a December increase in interest rates a near-certainty. He then argues that this might not be the worst thing in the world:

Even while I do not see much rationale for an increase, especially given elevated underemployment and the stark lack of inflationary pressures, given their recent messaging, a non-liftoff in December would suggest the economy is a lot worse than they thought in some secret way they’ve been keeping from us. Such a negative surprise would be ill-advised.

Presuming that they won’t want to go there, it’s now all about the ‘path to normalization:’ how fast they raise. … [I]f I’m Chair Yellen, my message to the hawks is: ‘OK, you got your rate liftoff even though the data weren’t really there for it. Now back…off and let’s go back to being data-driven about future increases.’ ”

Jared is right that the larger economic question is not just about a 25-basis-point increase this month but about how rapidly interest rates climb over the next year or so. But we’re still really uncomfortable with starting lift-off before the data support it. Once you start indulging faith-based arguments about monetary policy, you’ve lowered the bar for data-driven analysis, making smart policy choices harder and harder to sustain.

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What to watch on Jobs Day: The call for a rate increase is not backed up by wage data

On Friday, the Bureau of Labor Statistics will release the November numbers on the state of the labor market. On December 15, the Federal Open Market Committee will meet to determine whether they should raise interest rates, and most prognosticators think that this time they will actually go through with it. Last month’s stronger than expected jobs report led many to declare, prematurely, that it is time to start raising rates in order to ward off incipient inflation. The reality is that we need to see strong wage growth that is consistent and strong enough so that labor share of income returns to pre-recession levels and the labor market achieves a full recovery. Then, and only then, should we begin a conversation about raising rates.

Over the last six years, nominal wage growth has continued hover around 2.0 to 2.2 percent, far below target (see below on the target). Yes, October’s year-over-year growth was stronger—2.5 percent for nonfarm employees, although it was lower for production and nonsupervisory workers (2.2 percent). But again, one month of data is not sufficient evidence, and even 2.5 percent is still far below the wage target.

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The Department of Homeland Security’s proposed STEM OPT extension fails to protect foreign students and American workers

For decades, the Optional Practical Training (OPT) program has permitted foreign graduates of U.S. universities, who visit the United States to study through the F-1 nonimmigrant visa program, to be employed in the United States for up to 12 months immediately after graduation. In 2008, the George W. Bush administration extended the OPT program period to 29 months for F-1 graduates of a science, technology, engineering, or math (STEM) program—known as the STEM OPT extension—through an Interim Final Rule (IFR) promulgated by the Department of Homeland Security (DHS). On August 12, 2015, the U.S. District Court for the District of Columbia struck down the 2008 IFR, ruling that the regulation was illegally created in violation of the Administrative Procedure Act. Judge Ellen Segal Huvelle vacated the IFR effective February 12, 2016.

On October 19, 2015, President Obama proposed new DHS regulations that would reinstate the STEM OPT extension and increase its duration from 29 months to 36 months per STEM degree for foreign STEM graduates, and allow the extension eligibility to apply to up to two STEM degrees. Effectively, this would allow foreign graduates with STEM degrees to be employed for up to six years while on an F-1 visa. The DHS regulatory notice solicited comments from the public. In our comment, we argue that the president’s STEM OPT extension proposal is problematic for several reasons:

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Closing loopholes in Buy American Act could create up to 100,000 U.S. jobs

By closing loopholes in the Buy American Act, the 21st Century Buy American Act will increase demand for U.S. manufactured goods and create at least 60,000 to 100,000 U.S. jobs. The Buy American Act requires “substantially all” direct purchases by the federal government (of more than $3,000) “be attributable to American-made components.” However, there are a number of exclusions or loopholes in the Buy American Act. The single largest is an exception for “goods that are to be used outside of the country,” and the 21st Century Buy American Act includes provisions to close it. In addition, current regulations interpreting the Buy American Act state that “at least 50 percent of the cost must be attributable to American content,” which can reduce net demand for American made content.

Between 2010 and 2015, the “goods used outside of the country exception” was used to purchase $42.3 billion in goods that were manufactured outside of the United States, an average of $8.5 billion per year.1 The 21st Century Buy American Act would require most or all of those goods to be U.S. made, increasing demand for U.S. manufactured goods by up to $8.5 billion per year.2 Although labor markets have improved in the United States since the recession, there remains substantial slack and 2.6 million jobs were still needed to catch up with growth in the potential labor force in September 2015. I assume, based on recent research by my colleague Josh Bivens (Table 5) that wages earned by new manufacturing workers will support a macroeconomic multiplier of 1.6 in the domestic economy over the next year.3 I also assume, based on total GDP and employment levels in 2014 that a 1 percent increase in GDP adds 1.3 million jobs to the economy. Thus, the $8.5 billion increase in spending on domestic manufactured goods (with 100 percent domestic content) would increase GDP by $13.6 billion (0.08 percent), creating up to 100,000 new jobs in the domestic economy.

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Remarks by Congresswoman Rosa DeLauro at the unveiling of EPI’s Women’s Economic Agenda

Congresswoman Rosa DeLauro (D-Conn.) spoke at the unveiling of EPI’s Women’s Economic Agenda on November 18, 2015. Her remarks, as prepared for delivery, are posted below.

Good morning. Maya, thank you for that kind introduction. I have to first recognize EPI and Larry who have been a godsend in providing members of Congress great economic information that focuses on the impacts of public policies on low and middle class Americans and their families. The topics they cover are wide-ranging—from the impact of various trade agreements to the current jobs crises, where people are in jobs that don’t pay them enough to live on.

Let me also acknowledge my colleagues and the advocates who join me at the podium. Senator Warren—a woman who needs no introduction. The Boston Globe describes her as “a fierce advocate for the lot of working families.” Senator Warren has a reputation for knowing how to get things done.

Elise Gould at EPI—thank you for your tireless work on this Women’s Economic Agenda. Let me acknowledge Liz Shuler. Thank you for your leadership and advocacy at AFL-CIO. And all the advocates here today. Each of them put working families at the heart of everything they do.

Today we come together to push the policies as part of the Economic Policy Institute’s Women’s Economic Agenda to improve the lives of working women and families.

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