Summary

The Essential Worker Immigration Coalition (EWIC)—a lobbying group representing the interests of employers—claims that it is “concerned with the shortage of both semi-skilled and unskilled (‘essential worker’) labor” and thus “supports policies that facilitate the employment of essential workers by U.S. companies that are unable to find American workers.” Representatives of other influential corporate lobbying groups, including the U.S. Chamber of Commerce and ImmigrationWorks USA, have made similar claims.

These groups are advocating to deregulate and expand the H-2B temporary foreign worker program, which permits U.S. employers to temporarily hire workers from abroad with H-2B nonimmigrant visas for lower- and semi-skilled occupations that are non-agricultural and seasonal in nature. And, claiming that “many American businesses could not function without the H-2B program” the Chamber and ImmigrationWorks USA want Congress to create a new and much larger program that would permit them to hire lower- and semiskilled guestworkers for year-round jobs.

While Congress debates whether to expand existing temporary foreign worker programs and whether to create a larger new program, it should note the lack of credible evidence that there are labor shortages in lesser-skilled jobs. This report does not attempt to establish whether labor shortages exist in H-2B occupations, but instead looks at employment growth, wages, and unemployment rates in the main occupations of H-2B workers. Following are the main findings of the report.

1. Despite above-average employment growth in some of the top H-2B occupations, the fact that wages have been stagnant or declining, combined with persistently high unemployment rates, suggests that there are no labor shortages at the national level in the top H-2B occupations.

Specifically, looking at the top 15 H-2B occupations (the occupations with the largest numbers of certifications) in fiscal year 2014 and assessing how they changed from 2004 to 2014, we see that:

• There was no significant wage growth; in fact, wages were stagnant or declining for workers in all of the top 15 H-2B occupations.
• Seven of the top 15 occupations experienced employment growth that exceeded the overall growth of 5.5 percent for all occupations, two experienced employment growth that was less than the overall growth for all occupations, and six contracted.
• In the three fastest-growing occupations of Nonfarm Animal Caretakers (up 99.5 percent), Coaches and Scouts (up 72.3 percent), and Cooks in Restaurants (up 44.3 percent), wages declined over the same ten-year period.
• Unemployment rates increased in all but one of the top 15 H-2B occupations, and all 15 occupations had very high average unemployment rates in 2013–2014 (the most recent data available). In 11 of the top 15 H-2B occupations, unemployment dropped from 2004–2005 to 2006–2007, but then rose significantly between 2006–2007 and 2013–2014. Such high unemployment rates suggest a loose labor market in the top 15 H-2B occupations.

2. While a change in prevailing wage rules in the middle of 2013 (known as the 2013 Interim Final Rule or IFR) may have helped fuel a slight increase in the wages that H-2B jobs were certified at by the U.S. Department of Labor, H-2B wage rules continue to allow hourly wage rates that are far lower than state and national averages in the overwhelming majority of cases.

As a result, employers save multiple dollars an hour per worker by hiring a lower-paid H-2B worker instead of a U.S. worker earning the local average wage for the occupation. This suggests that despite the rule change, the wage rates employers are required to pay H-2B workers are not high enough to attract U.S. workers and thus not high enough to ensure compliance with the Immigration and Nationality Act’s statutory requirement that an H-2B worker not be hired unless “unemployed persons capable of performing such service or labor cannot be found in this country.” (The 2013 rule requires employers to pay the local average wage unless a collective bargaining agreement is applicable, or unless the U.S. Department of Labor approves the use of a wage survey that it did not conduct.)

Specifically, the report calculates the difference between the H-2B wage certified by the U.S. Department of Labor and the average national or state wage from DOL’s Occupational Employment Statistics (OES) wage survey data. In most cases this difference represents how much employers can save on their wage bill, on average, by hiring an H-2B worker instead of a U.S. worker earning the local average wage for the occupation. This report finds that for the top 15 H-2B occupations in fiscal years 2012, 2013, and 2014:

• Except for six instances out of 45, nationwide, on average, H-2Bs were certified at a wage that was below the national OES average wage.
• In the top H-2B occupation, of Landscaping and Groundskeeping Workers, employers saved on average between $2.59 and $3.37 per hour by hiring an H-2B worker instead of a worker earning the national average wage for the occupation.
• In the second-largest H-2B occupation, Forest and Conservation Workers, employers saved on average between $3.27 and $3.80 per hour by hiring an H-2B worker instead of a worker earning the national average wage for the occupation.
• Comparing the average hourly certified H-2B wage for an occupation in a particular state with the average hourly wage for the occupation in the state yields similar results, with the share of all top 15 H-2B certifications that were in occupations where the average certified H-2B wage exceeded the state OES average rising but still low: from 1.2 percent in fiscal 2012 to 3.5 percent in fiscal 2013, to 9 percent in fiscal 2014.

3. Soon after the 2013 Interim Final Rule came into effect, H-2B employers shifted en masse to the use of private wage surveys—and evidence revealed in federal litigation clearly suggests that the shift to the use of private wage surveys was a systematic response by H-2B employers to keep H-2B wages lower than the average OES wage rate that would otherwise be required under the 2013 Interim Final Rule.

Specifically, in the nine months between July 1, 2013, and March 31, 2014, employers increased their submissions of private wage surveys for H-2B prevailing wage determinations by 3,182 percent, as compared with the 12 months leading up to the federal court decision that invalidated the previous H-2B wage rule. In 21.1 percent of those determinations, the certified H-2B wage was lower than the Level 1 H-2B prevailing wage, which is the 17th percentile wage by occupation and local area (according to U.S. Department of Labor OES wage survey data), and 94.4 percent of the determinations were for a wage that was lower than the Level 2 (34th percentile) wage (whereas the Level 3 wage is generally considered the local average wage, or roughly the 50th percentile wage).

Introduction/background

The Essential Worker Immigration Coalition (EWIC)—a lobbying group representing the interests of employers—claims that it is “concerned with the shortage of both semiskilled and unskilled (“essential worker”) labor” and thus “supports policies that facilitate the employment of essential workers by U.S. companies that are unable to find American workers” (EWIC 2015). Representatives of other influential corporate lobbying groups, including the U.S. Chamber of Commerce and ImmigrationWorks USA, have made similar claims.

The main policy solution these groups advocate is the deregulation and expansion of the H-2B temporary foreign worker program (also often referred to as a “guestworker” program), which permits U.S. employers to temporarily hire workers from abroad with H-2B nonimmigrant visas for lower- and semi-skilled occupations that are non-agricultural and seasonal in nature.

In 2010, the U.S. Chamber and ImmigrationWorks USA published a joint report touting the economic benefits of the H-2B program. In the foreword to the report they claim that “many American businesses could not function without the H-2B program” (U.S. Chamber and ImmigrationWorks USA 2010). Yet the report cites a survey showing that H-2B employers believe “the annual cap of 66,000 H-2B visas is too low to meet business needs” and “the program is so complicated and difficult to apply for that it discourages many small businesses from using it” (U.S. Chamber and ImmigrationWorks USA 2010, 3). These employer groups have lobbied Congress to expand the H-2B program and have lobbied and litigated to prevent federal agencies from implementing additional regulations that would raise the minimum wages they must pay and provide more rights and protections to U.S. and foreign H-2B workers (Luban 2015). The employer groups have largely succeeded in these efforts, having blocked almost all of the Obama administration’s proposed H-2B reforms from being implemented from 2011 to April 2015.1

A second policy response advocated by the U.S. Chamber, ImmigrationWorks USA, and EWIC is the creation of a new and much larger temporary foreign worker program to fill year-round jobs in lower- and semi-skilled non-agricultural occupations. Unlike in the H-2B program, temporary foreign workers employed in the United States under the EWIC plan would be allowed to work year round instead of only seasonally, as well as to switch to another job with a different employer under an employer registration protocol. Guestworkers in this program also would eventually be allowed to apply for permanent residence if they met certain requirements. Under the EWIC plan, the new temporary foreign worker program would have an annual numerical limit that starts “at 400,000 a year to keep up with demand” (EWIC 2007).

On more than one occasion, a program resembling the EWIC proposal has been seriously considered by Congress. In May 2005, a bill authored by Senators Edward Kennedy and John McCain that would have comprehensively reformed the U.S. immigration system, included provisions that would have created a new temporary foreign worker program with an initial annual limit of 400,000 that could be adjusted upward after the first year in response to employer demand.2 More recently, in the context of spring 2013 Senate negotiations to craft comprehensive immigration reform legislation, representatives of the U.S. Chamber and the AFL-CIO (the nation’s largest trade union federation) agreed to a legislative proposal to create a new, year-round temporary foreign worker program for non-agricultural lower-skilled occupations (Parker and Greenhouse 2013).3 The agreed-upon framework became part of the Border Security, Economic Opportunity, and Immigration Modernization Act (also known by its bill number, S. 744), which passed the Senate on June 27, 2013, by a vote of 68 to 32 (Silverleib 2013). If S. 744 had become law, a new temporary foreign worker program known as the “W-1” visa program would have eventually permitted employers to hire a maximum of 200,000 additional guestworkers per year.

While Congress continues to debate whether to expand existing temporary foreign worker programs and whether to create a much larger new program for employers who claim there are labor shortages in lower- and semi-skilled occupations, there is no credible evidence that such labor shortages exist. In fact, little has been written regarding the current state of the most common H-2B occupations, in terms of employment levels, wages, and unemployment rates. Other than employer anecdotes, no credible data or labor market metrics have been presented by non-employer-affiliated groups or organizations—let alone by disinterested academics—proving the existence of labor shortages that could justify a large expansion of non-agricultural lower- and semi-skilled temporary foreign worker programs. This report collects and assesses the available evidence on employment, wages, and unemployment rates in the top 15 certified H-2B occupations in fiscal 2014, for the 2004–2014 period. This report does not, however, attempt to conduct a detailed national, regional, or local labor shortage analysis or make a determination about the existence of shortages in particular H-2B occupations.

This report reviews the average wages certified nationwide in the top 15 H-2B occupations in fiscal years 2012, 2013, and 2014, and compares them with the average wages nationwide for each occupation and with the average wage in each state where an H-2B job was certified. The report also explains the different prevailing wage rules in place during the different fiscal years, and explores how they may have affected the results. Specifically, the report calculates the difference between the H-2B wage certified by the U.S. Department of Labor and the average national or state wage, and this gap in most cases represents how much employers can save on their wage bill, on average, by hiring an H-2B worker instead of a U.S. worker earning the local average wage for the occupation. The impact of employer-submitted private wage surveys (i.e., wage surveys that were not conducted by the U.S. Department of Labor) on determining H-2B prevailing wages is also assessed.

Data and methodology

Data presented on H-2B occupations are from the labor certification data sets provided annually and made publicly available by the Office of Foreign Labor Certification (OFLC), U.S. Department of Labor (DOL) (OFLC 2015). Filing for a labor certification is the first step in the process that an employer must complete if he or she wishes to hire an H-2B worker. Basically, the employer identifies a job he or she wants to fill with an H-2B visa holder and specifies the wage that the future H-2B visa beneficiary will earn if hired; the specified wage is also the wage the employer must promise to pay in advertisements targeting U.S. workers before the employer may hire an H-2B worker from abroad. The DOL reviews the request to make sure that the wage matches the correct wage rate for the job in its own database, unless a wage is set for the job through a collective bargaining agreement (in that case, the wage specified in the agreement is the H-2B wage), or is otherwise justified by a private survey submitted by the employer and approved by DOL.4

In the available H-2B data, requests for labor certification from employers are either labeled as certified, partially certified (meaning some fraction of the total number of the workers requested is certified, while the rest are denied), or denied (entirely) by DOL. Some records in the data may also be labeled as “certification expired” or “partial certification expired” (however not every year of DOL data on H-2B includes records labeled as certification expired or partial certification expired). H-2B labor requests that are certified may then be sent by employers to the United States Citizenship and Immigration Services (USCIS), which is part of the Department of Homeland Security (DHS), for review. USCIS may approve or deny the H-2B petition submitted by the employer. H-2B petitions that are approved by USCIS are then forwarded to the U.S. Department of State (DOS), which determines whether or not to issue an H-2B visa to an individual foreign worker after a consular interview, unless the H-2B worker is already in the United States in another immigration status (in that case, USCIS can adjust the worker’s status to H-2B).

These requests populate the DOL database, which is able to provide data on the pledged wages attached to each request for labor certification—the hourly wage rates contained in the requests that were certified but not yet approved by USCIS are referred to in this report as the certified H-2B wage. It is important to note that the number of certified H-2B labor requests is not the same as the final number of H-2B visas issued in a fiscal year (which are tallied by DOS) (Bureau of Consular Affairs 2015) or the number of H-2B “admissions,” i.e., persons crossing through a port of entry into the United States with a valid H-2B visa (which are tallied by DHS) (Monger 2013).

Because some of the requests for labor that DOL certifies do not result in an H-2B visa for a worker, the number of labor certifications is always higher than the number of petitions approved by USCIS and the eventual number of visas issued by DOS. For example, in fiscal 2013, DOL certified 82,307 requests for H-2B workers, of those USCIS approved 79,219 workers, and DOS issued 57,600 H-2B visas. (U.S. law also specifies that the number of H-2B visas issued in a fiscal year may not exceed 66,0005—this is commonly referred to as the annual H-2B “cap”—however certain exemptions6 may allow the total number to be higher than 66,000 in a given fiscal year.) This is a limitation inherent in H-2B data because DOS does not publish any data on the employers who received H-2B visas, the occupations of the H-2B workers, or the wages employers have promised to pay the H-2B workers issued visas by DOS. H-2B data from approved USCIS H-2B petitions that are disaggregated by Standard Occupational Classification code (SOC) and listing wages promised to be paid to H-2B workers would not be as reliable as DOS visa data, but would be preferable to DOL labor certification data because they would reveal a narrower subset of employers likely to eventually get an H-2B visa. Unfortunately, USCIS does not publish those data either. USCIS only publishes the total number of H-2B petitions it has approved, along with other limited information found in a report to Congress that it is required by law to publish every year (USCIS 2015). The total number of H-2B petitions USCIS approved for fiscal years 2009 to 2013 was also published in a March 2015 report by the United States Government Accountability Office (GAO 2015, 21).

The same GAO report criticized USCIS’s data collection, noting that while DOL uses modern SOC codes for classifying H-2B occupations, USCIS then converts those 840 occupations used by DOL to a different classification system that has a much smaller and broader subset of 83 detailed occupations (GAO 2015, 22). Data on wages to be paid by H-2B employers are collected by USCIS on the Form I-129 petition, but because they are not stored in electronic format (the data are stored in paper files), they are inaccessible to the government’s own auditors, or to the public, even with the use of a Freedom of Information Act request. As a result, DOL labor certification data are the most accurate and reliable public source of information for examining the occupations, work locations, and wages of H-2B workers.

The H-2B data used in this report exclude all H-2B labor certification records labeled as “denied,” “certification expired,” and “partial certification expired,” because denied and expired records were not likely to become approved USCIS H-2B petitions or visas issued by the State Department. As a result, there may be a discrepancy between the total number of H-2B certifications listed in this report for fiscal 2012, 2013, and 2014 and the total number of certifications found in the raw data sets published by DOL online, as well as on DOL’s annual “Selected Statistics” fact sheets,7 which report all certification records, including those listed as expired. This may also result in lower totals by occupation in this report than are reported by DOL in the Selected Statistics fact sheets.

The data on the wages of all workers in an occupation for the entire United States or by state comes from the Bureau of Labor Statistics’ Occupational Employment Statistics (OES) survey data (BLS 2015). These data are appropriate for comparing with certified average H-2B wages because most certified H-2B wages are based on OES wage data reported in the Online Wage Library at the Foreign Labor Certification Data Center, and these OES wage data correspond to the SOC codes for the jobs. The wages reported in the Online Wage Library are based on OES survey data for nearly every occupation (by SOC code) and region in the United States, therefore comparing certified H-2B wages with OES wages is comparing apples to apples in the vast majority of cases.8

When calculating occupational unemployment rates, the SOC codes do not correspond perfectly with the occupational codes used in the Current Population Survey (CPS) monthly household survey microdata, published jointly by the U.S. Census and the Bureau of Labor Statistics. CPS microdata are needed to calculate the unemployment rates for the top H-2B occupations. However, the H-2B occupations with the 15 largest numbers of certifications in fiscal 2014 match up reasonably well with the same or similar occupations found in the CPS data using the government’s crosswalks between the occupations, even though the occupational titles may differ slightly.

Top 15 H-2B occupations in FY2014

Table 1 shows the 15 occupations with the largest number of approved labor certifications for H-2B workers in fiscal 2014, for the entire United States. The top 15 occupations account for 67,978 labor certifications out of 83,843 total certifications, 81 percent of all labor certifications in fiscal 2014. The largest occupation by far is Landscaping and Groundskeeping Workers, with 34,159 workers certified, making up 40.7 percent of all H-2B labor certifications in fiscal 2014. The second largest occupation is Forest and Conservation Workers, with 6,753 certifications (8 percent of the total). Together, the top two H-2B occupations accounted for nearly half of all H-2B certifications (48.8 percent). The third and fourth largest H-2B occupations were Maids and Housekeeping Cleaners and Amusement and Recreation Attendants, each of which accounted for approximately 6 percent of all H-2B certifications. The fifth-largest H-2B occupation, Meat, Poultry, and Fish Cutters and Trimmers, made up 3.5 percent of all H-2B certifications and the sixth-largest, Construction Laborers, accounted for 2.9 percent. The rest of the top 15 H-2B occupations in fiscal 2014 are listed in Table 1.

Lower-skill and low-wage occupations in the United States

According to the Organization for Economic Cooperation and Development (OECD), 25 percent of all jobs in the United States are “low-wage” jobs (defined as earning less than two-thirds of the national median hourly wage); the largest share of low-wage jobs among all OECD countries (Schmitt 2012, 1). (The United Kingdom has the next highest share at 21 percent, and Belgium has the lowest, with 4 percent.)

In 2013, 27.5 percent of all workers in the United States were earning “poverty-level” wages; this share has increased by 2.4 percentage points since 2000 (EPI 2013).9 From 2000 to 2012, the bottom 60 percent of wage earners in the United States on average experienced negative or zero real wage growth (Shierholz and Mishel 2013), and from 2000 to 2014, the median income for non-elderly households fell 12.3 percent (Mishel and Davis 2015). Even the most educated workers have not seen their wages rise since 2007; in fact, workers at all education levels have experienced stagnant or declining wages since 2007 (Gould 2015). Despite these dire statistics, low-wage occupations have been growing faster than middle-income or high-paying occupations since the end of the financial crisis of 2007–2009 (the “Great Recession”). According to the National Employment Law Project, low-wage occupations “constituted 21 percent of recession losses, but 58 percent of recovery growth” (NELP 2012). Many of the occupations that experienced high employment growth in 2014 (from BLS 2015a, Table 1.4), as well as the occupations projected to be the “fastest growing” between 2014 and 2024 (from BLS 2015b, Table 1.3) are in low-wage occupations that require little or no postsecondary education. While low-wage-earning workers in lower-skilled occupations in the United States are a significant share of the workforce and are in many cases employed in rapidly growing occupations, most have seen their wages stagnate or decline for many years.

Education/skills of workers in the top 15 H-2B occupations

Many of the top 15 H-2B occupations require minimal or no education and training. The Occupational Information Network (O*NET), which is developed and maintained by U.S. Department of Labor’s Employment and Training Administration (ETA), provides detailed background information on each of these occupations.10 O*NET assigns each occupation a “Job Zone” number which corresponds to “a group of occupations that are similar in: how much education people need to do the work; how much related experience people need to do the work; and how much on-the-job training people need to do the work.”11 The O*NET website has a brief descriptor of each Job Zone:

• Job Zone 1 – occupations that need little or no preparation
• Job Zone 2 – occupations that need some preparation
• Job Zone 3 – occupations that need medium preparation
• Job Zone 4 – occupations that need considerable preparation
• Job Zone 5 – occupations that need extensive preparation12

Of the 15 top H-2B occupations, nine are in O*NET Job Zone 1 (60 percent), four are in Zone 2 (26.6 percent), one is in Zone 3, and one is in Zone 4 (Table 2). According to O*NET, Job Zone 1 occupations “may require a high school diploma or GED certificate” and have employees who need “little or no previous work-related skill, knowledge, or experience” and “anywhere from a few days to a few months of training.” Job Zone 2 occupations “usually require a high school diploma” and have employees who usually need “[s]ome previous work-related skill, knowledge, or experience” and “anywhere from a few months to one year of working with experienced employees.” The O*NET survey data on the education levels of all workers who are employed in the United States in the top 15 H-2B occupations show that the vast majority either possess a high school diploma or its equivalent (but no additional education), or have less than a high school diploma. Therefore, because 13 of the top 15 H-2B occupations require little education and training, it can safely be said that they are lower-skilled occupations. The two possible exceptions are: Coaches and Scouts, in which over a quarter (28 percent) of workers reported possessing an associate’s degree, nearly half (47 percent) possess a bachelor’s degree, and 15 percent possess a master’s degree. The other is Nonfarm Animal Caretakers, in which 18 percent of workers reported possessing a bachelor’s degree. However, a worker may have a bachelor’s or master’s degree even though the job the worker performs requires little or no education. For example, many jobs in these two occupations, such as grooming horses at a stable (Nonfarm Animal Caretakers) or coaching a community college softball team (Coaches and Scouts), are unlikely to require a bachelor’s or master’s degree in any field.

Employment change in the top 15 H-2B occupations, 2004–2014

Table 3 shows the U.S. employment levels in 2004 to 2014 for all occupations and for the top 15 H-2B occupations (by Standard Occupational Classification) in fiscal 2014. Table 4 shows the change in employment from 2004 to 2014 for all occupations in the United States, and for all workers in the United States who were employed in the occupations making up the top 15 H-2B occupations in FY 2014.

From 2004 to 2014, employment in all occupations grew 5.5 percent, averaging 0.5 percent per year. Over the same period, the top 15 H-2B occupations had widely varying rates of employment growth. Six experienced employment declines; seven experienced growth that was positive and above the 5.5 percent growth rate for all occupations; and two experienced growth that was lower than the percentage change for all occupations.

Amusement and Recreation Attendants, Coaches and Scouts, Waiters and Waitresses, Nonfarm Animal Caretakers, and Cooks, Restaurant, all grew by more than 10 percent from 2004 to 2014. Three occupations experienced employment growth far exceeding the overall growth of 5.5 percent for all occupations from 2004 to 2014: Nonfarm Animal Caretakers (99.5 percent), Coaches and Scouts (72.3 percent), and Cooks, Restaurant (44.3 percent). The three occupations with employment declines from 2004 to 2014 were Fishers and Related Fishing Workers (-57.4 percent); Forest and Conservation Workers (-24.8 percent), and Packers and Packagers, Hand (-20.5 percent). The top H-2B occupation in FY 2014, Landscaping and Groundskeeping Workers, grew by only 1.0 percent from 2004 to 2014 (an average of 0.1 percent per year).

Average hourly wages in top 15 H-2B occupations, 2004-2014

Table 5 shows the change in hourly wages for all workers in the United States and workers in the top 15 H-2B occupations from 2004 to 2014, adjusted to 2014 dollars. As the table shows, there was no significant wage growth for workers; wages were stagnant (growing less than 1 percent annually) or declined for workers in all of the top 15 H-2B occupations between 2004 and 2014.

For all workers in the United States in all occupations, wages rose by just $0.40 in real terms (adjusted to 2014 dollars), just 1.8 percent over the decade. For workers in 10 of the top 15 H-2B occupations, wages declined, between $0.13 and $0.93 in 2014 dollars. The five occupations that saw slight hourly wage increases were Forest and Conservation Workers (by $0.04, or 0.3 percent), Maids and Housekeeping Cleaners ($0.02, 0.2 percent), Waiters and Waitresses ($0.80, 8.3 percent), Fishers and Related Fishing Workers ($0.82, 4.7 percent), and Dining Room and Cafeteria Attendants and Bartender Helpers, ($0.54, 5.8 percent). While workers in these occupations experienced real wage growth between 2004 and 2014, it was insignificant; wages in each of the five occupations grew by much less than 1 percent per year. Nationwide, workers in the other 10 top H-2B occupations were actually worse off in 2014 than they were 10 years earlier.

Unemployment rates in top 15 H-2B occupations, 2004–2014

Unemployment rates in H-2B occupations are calculated from Current Population Survey basic monthly microdata, which are jointly maintained by the U.S. Census and the Bureau of Labor Statistics. These data are not classified by SOC code, but instead use Census codes. However, the H-2B occupations with the 15 largest numbers of certifications in fiscal 2014 match up reasonably well with the same or similar occupations found in the CPS data using the government’s crosswalks between the occupations, even though the occupational titles may differ slightly in some cases.

Figure A shows the average unemployment rates in each of the occupations listed, for 2004–2005, 2006–­2007, and 2013–­2014. Two years of data were pooled together to increase sample sizes. The first two periods listed were chosen because they exclude the years of the recession that began in 2008 and its aftermath, and 2013–2014 was chosen because those years represented the most recent data available.

Figure A shows that the unemployment rate rose in all but one of the top 15 H-2B occupations between 2004 and 2014. The average unemployment rate of Helpers-Production Workers was 10.8 percent during 2004–2005 and ended up at 10.3 percent during 2013–2014. Although the unemployment rate in this occupation has declined since 2004, it has declined by only one-half of a percent, and remained very high in 2014.

The average annual unemployment rate for all workers in the United States in 2014 was 6.2 percent. During 2013–2014, none of the 15 H-2B occupations was at or below the overall U.S. unemployment rate for 2014. Three occupations—Nonfarm Animal Caretakers; Athletes, Coaches, Umpires, and Related Workers; and Butchers and Other Meat, Poultry, and Fish Processing Workers, had an unemployment rate that was roughly about one percentage point higher than the national unemployment rate, while the other 12 occupations had much higher unemployment rates. Nine of the occupations had unemployment rates 10 percent or higher in 2013–2014, with the highest being Construction Laborers at 14.7 percent. Grounds Maintenance Workers, which corresponds to Landscaping and Groundskeeping Workers (SOC code 37-3011), the top H-2B occupation by far, had an average unemployment rate of 12.7 percent during 2013–2014, more than double the national unemployment rate.

Are there labor shortages at the national level among the top 15 H-2B occupations?

The claim by the Essential Worker Immigration Coalition that it is “concerned with the shortage of both semi-skilled and unskilled (‘essential worker’) labor” begs the question of whether there is any evidence that semiskilled and unskilled labor are in short supply. And since EWIC and other employer groups look to the H-2B visa as the remedy for labor shortages, it is reasonable to think about this in the context of the top H-2B occupations. However, it should be noted at the outset that determining whether a labor shortage exists in a particular occupation can be a difficult and inexact science. Numerous books and articles have been written on how to determine the existence of a shortage.13 While the definitions vary, the governments of various developed countries maintain and regularly update shortage occupation lists based on quantitative and qualitative labor market data and analysis.14 They rely on these analyses when crafting legislation and policy related to the workforce, the labor market, and immigration.

How to define and determine a labor shortage

A detailed explanation of how to conduct a labor shortage analysis is beyond the scope of this report. As mentioned, a substantial body of literature already exists on the subject, and in fact, this report will not conduct a detailed shortage analysis or make a determination about the existence of shortages in H-2B occupations. Exact methodologies for determining labor shortages may vary, and a discussion about their relative efficacy is also beyond the scope of this report. There are, however, basic definitions that many labor market economists can agree on. A good example is the simple definition offered by economists Philip Martin from the University of California, Davis, and Martin Ruhs from Oxford University, who have summarized the three essential elements required to establish a shortage (Martin and Ruhs 2011). Martin and Ruhs assert that industries and occupations reporting labor shortages should have (1) rising real wages relative to other occupations, (2) faster-than-average employment growth, and (3) relatively low and declining unemployment rates.15 The preceding sections of this report provide the available evidence relating to these three factors.

(1) Are real wages in top 15 H-2B occupations rising relative to other occupations?

Real wages are rising in only three of the top 15 H-2B occupations, and this rise is not significant. According to OES data, wages across all occupations stagnated in the United States between 2004 and 2014, rising only $0.40 in real terms (2014 dollars), 1.8 percent for all occupations. And as Table 5 shows, the story was mostly similar or worse in the top 15 H-2B occupations, where wages declined in real terms in 10 of the top 15 occupations. While wages increased in real terms in five of the top 15 occupations, the increases were insignificant: less than $1 in all cases, and less than a nickel in two of the occupations. In three occupations (Waiters and Waitresses, Fishers and Related Fishing Workers, and Dining Room and Cafeteria Attendants and Bartender Helpers) wages did rise faster than they did for all occupations, but rose at far less than even 1 percent per year.

(2) Is there faster-than-average employment growth in top 15 H-2B occupations?

There is faster-than-average employment growth in less than half of the occupations. As Tables 3 and 4 show, from 2004 to 2014, seven of the top 15 occupations experienced employment growth that exceeded the 5.5 percent increase for all occupations, six experienced declines; and two experienced growth lower than the rate for all occupations. Three occupations experienced employment growth far exceeding the overall growth of 5.5 percent for all occupations from 2004 to 2014: Nonfarm Animal Caretakers (99.5 percent), Coaches and Scouts (72.3 percent), and Cooks, Restaurant (44.3 percent); however, wages in these three fastest-growing occupations declined over the same 10-year period.

(3) Do the top H-2B occupations have relatively low and declining unemployment rates?

Rather than declining, unemployment rates increased in all but one of the top 15 H-2B occupations between 2004–2005 and 2013–2014, and all averaged very high unemployment rates in 2013–2014. The unemployment rate declined in one occupation, Helpers-Production Workers, which had an average unemployment rate of 10.8 percent during 2004–2005 and 10.3 percent during 2013–2014. Although the unemployment rate in this occupation declined by half a percentage point between 2004–2005 and 2013–2014, the unemployment rate remained very high in 2013–2014. In 11 of the top 15 H-2B occupations, the unemployment rate dropped from 2004–2005 to 2006–2007, but then rose significantly between 2006–2007 and 2013–2014.

Such high unemployment rates suggest a loose labor market—an oversupply of workers rather than an undersupply—in the top 15 H-2B occupations. The unemployment rates presented in this report may underestimate how many workers cannot find work in the occupation because the official rates do not count workers who are no longer actively seeking employment in the occupation (either because they found a job in another occupation or because they gave up looking for work in the occupation).

Summing up the results of the three tests

While seven of the top 15 occupations experienced employment growth that exceeded the 5.5 percent increase for all occupations, the fact that wages were stagnant or declined, combined with persistently high unemployment rates, makes it highly unlikely that labor shortages exist at the national level in any of the top H-2B occupations. This does not mean that no labor shortages exist anywhere in the United States in these occupations—it is entirely possible and even likely that shortages exist in some states or localities—but the high national unemployment rates in H-2B occupations suggest that even the employers experiencing a local labor shortage might find available U.S. workers if they recruited outside their city, region, or state, and if they offered more attractive wages and benefits (including transportation and housing).

H-2B wages compared with the wages of all workers in top 15 H-2B occupations and the significance of prevailing wage regulations

Two additional issues deserve to be explored in depth. Are the wage rates that employers are required to pay H-2B workers high enough to attract U.S. workers and comply with the Immigration and Nationality Act’s statutory requirement that an H-2B worker not be hired unless “unemployed persons capable of performing such service or labor cannot be found in this country”?16 And are the prevailing wage regulations promulgated by the U.S. Departments of Labor and Homeland Security adequate to prevent downward pressure on the wages of U.S. workers who are employed in the top H-2B occupations?

This section reviews the average wages certified nationwide in the top 15 H-2B occupations in fiscal years 2012, 2013, and 2014, and compares them with the average wages nationwide for each occupation, as well with the average wage in each state where an H-2B job was certified. The difference between the H-2B certified wage and the average national or state wage in most cases represents how much employers can save on their wage bill, on average, by hiring an H-2B worker instead of a U.S. worker.

Since 2010, the rules governing the legally defined “prevailing wage” that employers are required to pay H-2B workers (corresponding to occupation and local area) have been modified several times by the departments of Labor and Homeland Security, and have been the subject of litigation and congressional appropriations riders. As a result, different sets of prevailing wage regulations were in place during fiscal years 2012, 2013, and 2014. This section explains the different prevailing wage rules in the different fiscal years, and explores how they may have affected the results. Finally, the impact of employer-submitted private wage surveys (i.e., wage surveys that were not conducted by the U.S. Department of Labor) on determining H-2B prevailing wages is also assessed.

The 2008 H-2B prevailing wage rule

In 2008, the U.S. Department of Labor (DOL) issued a regulation establishing the methodology for determining the prevailing wage that employers would be required to pay their H-2B employees. DHS and DOL describe the 2008 wage methodology in the preamble to H-2B regulations jointly promulgated in 2015 (DHS and DOL 2015, 24148):

The 2008 rule provided that the prevailing wage would be the collective bargaining agreement (CBA) wage rate if the job opportunity was covered by an agreement negotiated at arms’ length between a union and the employer; the Occupational Employment Statistics (OES) wage rate if there was no CBA; a survey if an employer elected to provide an acceptable survey; or a wage rate under the Davis-Bacon Act (DBA), 40 U.S.C. 276a et seq., or the McNamara-O’Hara Service Contract Act (SCA), 41 U.S.C. 351 et seq., if one was available for the occupation in the area of intended employment. See 20 CFR 655.10 (2009). In the absence of the CBA wage, the employer could elect to use the applicable SCA or the DBA wage in lieu of the OES wage. See 20 CFR 655.10(b) (2009). The 2008 rule and the agency guidance implementing it required that when prevailing wage determinations were based on the OES wage survey, which is compiled by the Bureau of Labor Statistics (BLS), the wage had to be structured to contain four tiers to reflect skill and experience.⁶

Footnote 6: The 2008 rule required that when the prevailing wage was based on the OES, it should reflect skill levels. The agency’s implementing guidance required that the prevailing wage contain four wage tiers based on skill level. As a result, we refer throughout this rule to the 2008 rule’s requirement of four wage tiers.

Because the OES survey captures no information about actual skills or responsibilities of the workers whose wages are being reported, the four-tiered wage structure, adapted from the statutorily required four tiers applicable to the H-1B visa program under section 212(p)(4) of the INA, 8 U.S.C. 1182(p), was derived by mathematical formula as follows to reflect “entry level,” “qualified,” “experienced,” and “fully competent” workers: Level 1 is the mean of the lowest-paid 1/3, or approximately the 17th percentile; Level 2 is approximately the 34th percentile; Level 3 is approximately the 50th percentile; and Level 4 is the mean of the highest-paid 2/3, or approximately the 67th percentile.

In addition, wage methodology guidance published by the Employment and Training Administration (ETA) at DOL in 2009 provided “policy and procedural guidance” for private wage surveys submitted by employers for H-2B prevailing wage determinations (ETA 2009).

On January 19, 2011, the Obama administration issued a final rule to modify the 2008 H-2B wage methodology and 2009 wage guidance that would have set the H-2B prevailing wage “as the highest of the OES arithmetic mean wage for each occupational category in the area of intended employment; the applicable SCA/DBA wage rate; or the CBA wage” and “eliminated the use of employer-provided surveys as alternative wage sources, except in limited circumstances.” (DHS and DOL 2015, 24148) (The limited circumstances included in which the H-2B job was not represented in the DBA, SCA, or OES, and the surveys submitted had to meet the methodological standards in the 2008 rule.) However, due to legal challenges in federal court, the administration postponed implementation of the 2011 final wage rule (DOL 2011a), and was also prevented by Congress from using any funds to implement, administer, or enforce the January 2011 wage rule as a result of enacted appropriations legislation (DOL 2011b).17 As a result, the four-tiered 2008 wage methodology remained in effect, and the use of of private wage surveys under the terms of the 2008 wage rule and 2009 wage guidance continued to be permitted throughout all of fiscal 2012.

Fiscal 2012 H-2B wage data

Table 6 shows the top 15 H-2B occupations in fiscal 2012, and the nationwide average hourly wage for certified H-2B workers in each of the occupations. The 2012 OES average hourly wage for all workers in the occupation nationwide is listed next to the H-2B wage. In tables 6 through 11, the final column shows the difference between the average hourly certified H-2B wage and the average hourly OES wage (nationwide or by state); this is what employers save, on average, by hiring an H-2B worker instead of a worker who is paid the average (national or state) wage for the occupation. A negative value in the employer hourly wage savings column represents an H-2B job that was, on average, certified at a higher wage rate than the corresponding OES national or state average hourly wage.

Table 6 shows that in each of the top 15 H-2B occupations in fiscal 2012, the average hourly wage certified nationwide for H-2B workers was lower than the OES average hourly wage for all workers in the occupation. The biggest wage savings for employers was found in the First-Line Supervisors/Managers of Housekeeping and Janitorial Workers occupation; employers could save nearly $9 per hour on average by hiring an H-2B worker instead of a worker earning the national average for the occupation. In the top two occupations of Landscaping and Groundskeeping Workers and Forest and Conservation Workers, the average hourly savings were over $3. If for example, an employer hired an H-2B landscaper to work for 40 hours per week for nine months (approximately 36 weeks) at $3 per hour less than the local average wage, the employer would save $4,320.

These findings are consistent with what DHS and DOL described in 2013. Employers were allowed to pay the Level 1, 17th percentile and Level 2, 34th percentile wage—both of which are below the local average wage for the job the H-2B worker would perform—and were in fact taking advantage of this wage rule in order to pay their H-2B workers wage rates that were well below average:

According to the distribution of the 59,694 H-2B prevailing wage determinations the Department of Labor issued based on the Occupational Employment Statistics (OES) wage survey in FY 2011 and 2012,¹⁶ 72.3 percent of H-2B prevailing wage determinations based on the OES were at Level I. The percentages of H-2B prevailing wage determinations based on the OES at Levels II, III, and IV were 14.4, 5.9, and 7.4, respectively. In over 90 percent of those cases, the H-2B prevailing wage was determined at the wage rate lower than the mean of the OES wage rates for the same occupation. [Emphasis added]

Footnote 16: In FY 2011 and 2012, a total of 72,037 prevailing wage determinations were issued by the Department of Labor’s National Prevailing Wage Center (NPWC) for employers seeking wage rates for H-2B workers. Of the 72,037, 59,694 determinations (82.9%) were based on the OES and 12,343 determinations were based on a collective bargaining agreement (CBA), the Davis-Bacon Act (DBA), or the Service Contract Act (SCA) prevailing wage, or employer-submitted wage surveys. (DHS and DOL 2013, 24057)

The results are similar when the average wages in each state and for each occupation for which data are available are compared with the average certified H-2B wage for the corresponding state and occupation. Table 7 (which can be found at the end of this report) shows that in the vast majority of cases, H-2B workers on average were certified to be paid lower wages than the state average. In 27 instances (representing a total of 675 workers), the average certified H-2B wage was higher than the state OES average wage for the occupation.

The 2013 H-2B prevailing wage rule, private wage surveys, and fiscal 2013 H-2B wage data

For approximately the first half of fiscal 2013, the 2008 H-2B wage methodology regulation and 2009 wage guidance remained in effect. But on April 24, 2013, the DHS and DOL issued a joint interim final rule (IFR) that was effective on the day it was published (DHS and DOL 2013), which eliminated the 2008 four-tiered wage methodology, and modified the regulation to require that:

If the job opportunity is not covered by a CBA, the prevailing wage for labor certification purposes shall be the arithmetic mean, except as provided in paragraph (b)(4) of this section, of the wages of workers similarly employed in the area of intended employment. The wage component of the BLS Occupational Employment Statistics Survey (OES) shall be used to determine the arithmetic mean, unless the employer provides a survey acceptable to OFLC under paragraph (f) of this section. (DHS and DOL 2013, 24061)

Although the April 24, 2013, IFR required employers to pay the “arithmetic mean,” meaning the average hourly wage (which is in most cases identical to the Level 3 wage), and no longer permitted employers to pay their H-2B workers the 17th (Level 1) or 34th (Level 2) percentile wages, the 2013 IFR continued to permit the use of private wage surveys submitted by employers to set prevailing wage levels under the terms of the 2008 wage rule and 2009 wage guidance; something that the final 2011 wage methodology regulation was much more restrictive about permitting (but which never became effective). In a 2014 case, the United States Court of Appeals for the Third Circuit considered the legality and continued use of private wage surveys, and noted that “DOL allowed this unlimited use of private surveys despite its 2011 findings that such surveys are unreliable and should only be used in extraordinary circumstances.”18 The wage methodology that employers were required to use from April 24, 2013, through the rest of the fiscal year (ending on September 30, 2013) was the wage methodology promulgated in the 2013 IFR (the arithmetic mean by occupation and local area) along with DOL-accepted private wage surveys under the terms of the 2008 wage rule and 2009 wage guidance.

Table 8 shows the top 15 H-2B occupations in fiscal 2013, and the nationwide average hourly wage for certified H-2B workers in each of the occupations. As with Table 6, the final column shows the difference between the average hourly certified H-2B wage and the OES average hourly wage for all workers in the occupation; in other words what employers save, on average, by hiring an H-2B worker who is paid the certified wage instead of a U.S. worker who is paid the average wage for the occupation.

Table 8 shows that in 14 of the top 15 H-2B occupations in fiscal 2013, the average hourly wage certified for H-2B workers was lower than the OES nationwide average hourly wage for the occupation. The biggest savings was in the Construction Laborers occupation; employers could save $6.39 per hour on average by hiring an H-2B worker instead of a worker earning the national average for the occupation. In the top two occupations, the average hourly wage savings were again over $3. The only occupation where on average, the certified hourly H-2B wage was higher than the national OES average hourly wage was Cooks, Restaurant, where the average certified H-2B wage was $0.31 an hour higher.

The results are similar when comparing the average wages in each state and for each occupation for which data are available with the average certified H-2B wage for the corresponding state and occupation in fiscal 2013. Table 9 (which can be found at the end of this report) shows that in the vast majority of cases, H-2B workers on average were certified to be paid lower wages than the state average. In 34 instances representing a total of 2,403 workers, the average certified H-2B wage was higher than the state OES average wage for the occupation. While 2,403 H-2B certifications is still a very small share of all the labor certifications in the top 15 for fiscal 2013—accounting for only 3.5 percent of certifications in the top 15—it represents a larger share than in fiscal 2012, when only 1.2 percent of H-2B certifications in the top 15 were in occupations in a state where the average certified H-2B wage was higher than the state OES average wage for the occupation.

The 2013 H-2B prevailing wage rule and fiscal 2014 H-2B wage data

On October 1, 2013, at the beginning of fiscal 2014, the prevailing wage rule laid out in the 2013 DHS/DOL Interim Final Rule (IFR) had been effective for just over five months. Therefore, during the entirety of fiscal 2014, employers were required to follow the wage methodology in the April 24, 2013, IFR, along with DOL-accepted private wage surveys under the terms of the 2008 wage rule and 2009 wage guidance. This allows us to compare a full year of H-2B wage data under the 2013 IFR wage rule and private wage surveys with the OES average wages for the top 15 H-2B occupations.

The most obvious shift in the fiscal 2014 data displayed in Table 10 is that one-third of the top 15 H-2B occupations were on average, certified at an hourly wage that was higher than the national OES average hourly wage for the occupation, compared with only one occupation in fiscal 2013 and zero occupations in fiscal 2012. It is possible that the 2013 IFR requiring that employers pay the local OES average wage (unless a collective bargaining agreement existed for the job or if an alternative wage survey was accepted by DOL) may have raised average certified H-2B wages enough for this to occur. However, if employers were in fact paying the local average wage to their H-2B workers after implementation of the 2013 IFR, one could reasonably expect that the significant wage savings employers get by hiring an H-2B worker instead of a U.S. worker earning the local average wage would mostly disappear.

But hourly wages for H-2B Landscaping and Groundskeeping workers—the largest H-2B occupation, accounting for over a third of all H-2B jobs certified in fiscal 2014—were on average certified at a much lower hourly wage than the national OES average hourly wage for the occupation: $2.59 less. That means employers still saved significantly on their wage bills by hiring H-2B landscapers instead of local workers earning the local average wage. Employers hiring H-2B workers for other jobs in the top six, such as in seafood processing (as part of the Meat, Poultry, and Fish Cutters and Trimmers occupation), construction (Construction Laborers), and working for traveling fairs and carnivals (Amusement and Recreation Attendants), also saw significant wage savings despite the 2013 IFR requiring that H-2B workers be paid the local average wage.

Again, because the 2013 IFR required that the local average wage be paid, it would have been reasonable to expect that average certified H-2B wages would have risen higher than the wages shown in Table 10. However, two factors related to the H-2B prevailing wage regulations are likely to have reduced the average wage levels for which H-2B jobs were certified at in fiscal 2014. One is the requirement that employers pay their H-2B workers the collectively bargained–for wage, if one exists, even if it is lower than the OES average wage. As the New York Times reported in September 2015, a federal investigation is ongoing into whether an employer-created-and-controlled union was purporting to represent workers while bargaining with employers to keep wages low for H-2B workers for traveling fairs and carnivals (Meier 2015).19

However, likely the main reason that wages certified for H-2B workers in fiscal 2013 and 2014 did not increase enough to achieve parity with the state and national average OES wages for all workers is that employers were allowed to continue submitting private wage surveys to determine H-2B prevailing wages under the terms of the 2008 wage rule and 2009 wage guidance. The CATA v. Perez decision in the Third Circuit noted in no uncertain terms that H-2B employers responded to the higher prevailing wage requirements in the 2013 IFR by substantially increasing the number of private wage surveys they submitted to DOL in order to keep certified H-2B wages low:

Congress has charged DOL with the duty to ensure that it grants certifications only if they do not adversely affect wages and working conditions of United States workers, and it is the burden of DOL to be mindful of and honor that charge. However, employers increasingly have been submitting private surveys authorized by Section 655.10(f) in order to obtain a wage rate that is lower than the OES wage rate indicates would be appropriate—the wage rate DOL itself has determined is necessary to avoid an adverse effect on foreign and domestic employee’s wages. The 2009 Wage Guidance therefore establishes criteria contrary to both the letter and spirit of 5 U.S.C. § 706(2)(A) and (C), and DOL’s use of it in the consideration of labor certification applications is unlawful.20

A media report from Bloomberg BNA (Francis 2014) on the CATA v. Perez decision highlighted the increase in the use of private wage surveys in response to the 2013 IFR:

In the 12 months leading up to the March 2013 CATA decision striking down the 2008 H-2B wage rule, employers seeking labor certification for H-2B visas submitted a total of 49 applications using private surveys to determine the prevailing wage, the court said. By contrast, employers submitted 1,559 applications using private surveys in the nine months between July 1, 2013, and March 31, 2014—a 3,182 percent increase.

According to the court, 21.1 percent of those prevailing wage determinations certified wages less than the average wage for the lowest skill level on the OES survey, and 94.4 percent of the determinations included wages lower than the OES’s Level II.

As the data revealed in the CATA v. Perez decision and reported by Bloomberg show, a significant number of employers began to request that DOL approve their submitted private wage surveys—by an increase of 3,182 percent soon after promulgation of the 2013 IFR—and in 21.1 percent of those determinations, the certified wage was lower than even the Level 1, 17th percentile wage for the position (by occupation and local area), and 94.4 percent of the determinations were for a wage that was lower than the Level 2, 34th percentile wage.

The aforementioned wage differential between the average OES wage and the average certified H-2B wage for Landscaping and Groundskeeping workers in fiscal 2014 is almost entirely explained by the new and increased use of private wage surveys by landscaping employers after promulgation of the 2013 IFR. Landscaping employers:

did not submit any employer wage surveys in the year prior to April 2013 despite being the industry employing the most H-2B employees. In the nine-month period from July 2013 to March 2014, 1,240 prevailing wage determinations for landscape workers (SOC Code 37-3011) were based on employer surveys, accounting for 42.7% of all the prevailing wage determinations made for that occupation during that period. DOL approved 97.7% of those surveys at wage rates below the OES Skill Level II wage rate.21

This is clear evidence that the shift to the use of private wage surveys was a systematic response by H-2B employers to keep H-2B wages lower than the local average OES wage rate that would otherwise be required under the 2013 IFR.

The results by state and occupation for fiscal 2014 are similar to the two previous years’ differences between the average certified H-2B wage and the average OES wage for the occupation in the state. Table 11 (which can be found at the end of this report) shows that in the vast majority of cases, again H-2B workers on average were certified to be paid lower wages than the state average. However, in fiscal 2014, the share of top 15 H-2B workers whose certified H-2B wage was higher than the state OES average wage for the occupation was greater than in fiscal 2012 or fiscal 2013. In fiscal 2014 there were 86 instances in which the H-2B average hourly wage was certified at a higher average hourly wage than the state OES wage for a particular occupation in a state. These instances represented 6,145 workers out of a total of 67,978 H-2B labor certifications in the top 15 occupations, or 9 percent.

The 2015 H-2B prevailing wage rule

On April 29, 2015, the Department of Homeland Security (DHS) and the Department of Labor (DOL) jointly issued another wage rule to establish the prevailing wage methodology for the H-2B program (DHS and DOL 2015). The April 29, 2015, H-2B Final Wage Rule became effective on the day it was published and superseded the April 24, 2013, Interim Final Rule (IFR). The April 29, 2015, rule is similar to the 2013 IFR in its requirement that employers pay their H-2B workers the OES average wage unless the job is covered by a collective bargaining agreement. It differs by prohibiting employers from choosing the Davis Bacon or Service Contract Act wage rates as a source for the prevailing wage unless the work performed by the H-2B worker is covered by a government contract. The April 29, 2015, wage rule also puts additional restrictions on the use of employer-provided wage surveys; wage data sources other than the OES will be considered for the purpose of establishing an H-2B prevailing wage only if the survey falls into one of the following categories:

(i) The survey was independently conducted and issued by a state, including any state agency, state college, or state university;

(ii) The survey is submitted for a geographic area where the OES does not collect data, or in a geographic area where the OES provides an arithmetic mean only at a national level for workers employed in the SOC;

(iii)(A) The job opportunity is not included within an occupational classification of the SOC system; or

(B) The job opportunity is within an occupational classification of the SOC system designated as an “all other” classification.

If the survey falls into one of these categories, then additional methodological requirements for the survey are listed in the remaining subsections of 20 C.F.R. 655.10(f).

Because the 2015 wage rule was published relatively recently, it will be difficult to assess the impact of the rule in the same comparative manner used in this report until future years of H-2B data are published. The 2015 wage rule has some obvious flaws, however, which could lead to results similar to past years when H-2B wages were mostly certified at below-average wages. The 2015 rule continues to allow paying H-2B workers an hourly wage rate that is lower than the local OES average if a CBA applies, and the 2015 rule still permits the use of non-OES wage surveys. While 20 C.F.R. 655.10(f) restricts which non-OES surveys may be used to establish an H-2B prevailing wage, still permitted are surveys “conducted and issued by a state, including any state agency, state college, or state university.” Employers and employer groups might respond by requesting that state agencies and/or universities conduct new wage surveys in certain regions and occupations, and may even fund such surveys—and therefore perhaps exert undue influence on the results—since nothing in the H-2B regulations prohibits requesting that a wage survey be conducted by a public agency or a university and then privately funding it.

Amendments to H-2B rules in the Consolidated Appropriations Act of 2016

In addition, the 2015 wage rule was amended in Congress through a legislative rider included in the Consolidated Appropriations Act of 2016 (an omnibus bill to fund the government during fiscal 2016), which included a number of changes to the H-2B program (Lipinski 2015a; Siskind 2015; H-2B Workforce Coalition 2015; Mikulski 2015), and was signed into law in December 2015. The substance of the amendment that affects the H-2B wage rule is found in Section 112, and requires that:

The determination of prevailing wage for the purposes of the H-2B program shall be the greater of—(1) the actual wage level paid by the employer to other employees with similar experience and qualifications for such position in the same location; or (2) the prevailing wage level for the occupational classification of the position in the geographic area in which the H-2B nonimmigrant will be employed, based on the best information available at the time of filing the petition. In the determination of prevailing wage for the purposes of the H-2B program, the Secretary [of Labor] shall accept private wage surveys even in instances where Occupational Employment Statistics survey data are available unless the Secretary determines that the methodology and data in the provided survey are not statistically supported.22 [Emphasis added]

As a result, employers will likely be permitted to use private wage surveys in a much broader range of circumstances, and this may result in H-2B workers being paid wages that are below the OES local average wage for their jobs. As of the time of publishing this report, the DOL has only given a preliminary indication of how it will interpret, implement, and enforce some of the December 2015 amendments to the H-2B program in the Consolidated Appropriations Act of 2016 (DOL 2016). DOL has not, however, explained in detail how it will implement the provisions relating to private wage surveys. DOL has also not yet indicated whether it will publish new regulations to implement these changes, either as an interim final rule or as a regulation that is subject to notice and comment procedures under the Administrative Procedure Act. H-2B wage levels in fiscal 2016 will depend much on DOL’s interpretations and actions, and any possible litigation that results.

One of the other notable changes to the H-2B program in the Consolidated Appropriations Act of 2016 is found in Section 565, commonly referred to as the “returning worker exemption,” which exempts foreign workers who participated in the H-2B program in fiscal 2013, 2014, or 2015 from being counted under the program’s annual numerical limitation of 66,000. This could lead to a large increase in the number of H-2B workers in the United States; as a result of the returning worker exemption, the size of the H-2B program could as much as quadruple. However, previous years in which the returning worker exemption was the law of the land suggest the number of H-2B workers is more likely to double or triple, but ultimately will depend on employer demand. In fiscal 2007 for example, the last year the returning worker exemption was in place, nearly 130,000 H-2B visas were issued (Bruno 2015).

In addition, DOL has been prohibited in fiscal 2016 from using appropriated funds to enforce H-2B regulations that require “employers of H-2B workers to provide at least the same wages and other working conditions as they provide to H-2B workers to certain U.S. workers performing substantially the same work identified in the labor certification or performed by the H-2B workers,” or to enforce the rule requiring employers “to offer workers full-time employment for a total number of work hours equal to at least three-fourths of the workdays of each 12-week period (or 6-week period if the employment covered by the job order is less than 120 days)” (DOL 2016). While DOL cannot enforce these rules during fiscal 2016, the substantive rules remain in place even in fiscal 2016. The Consolidated Appropriations Act of 2016 also prevents DOL from using funds to audit H-2B applications or to conduct assisted or supervised recruitment (i.e., where DOL helps employers search for willing and available U.S. workers).

Most of the December 2015 amendments to the H-2B program, including the amendment to the 2015 wage rule, will remain in place for all of fiscal 2016. If no further amendments are made through standalone legislation or appropriations legislation to fund the U.S. government in fiscal 2017, the original 2015 wage rule (as promulgated in April 2015) would become effective again at the beginning of fiscal 2017 and the restrictions on using appropriated funds to enforce the rule would expire.

Conclusion

The evidence presented here—flat wages and persistent high unemployment rates in the top 15 H-2B occupations for the past decade—sheds doubt on claims that there are labor shortages in the top 15 H-2B occupations. Members of Congress and the federal agencies tasked with administering the H-2B temporary foreign worker program should take these data points into consideration when employer groups and other corporate representatives urge them to modify the H-2B wage methodology or rules relating to the recruitment of U.S. workers. One sensible policy response could be to reform the H-2B program so that the availability of work visas is tied to occupations and regions that are experiencing proven and documented labor shortages; but that would also require that an entity of the U.S. government be tasked with assessing and declaring labor shortages, and perhaps publishing and continually updating shortage occupation lists, according to a selected methodology.

The increase in the share of H-2B wages that were on average certified at a wage higher than the state or national OES average wage from fiscal 2012 to fiscal 2014 suggests that the prevailing wage rules put in place in the middle of fiscal 2013 (by the 2013 DHS/DOL Interim Final Rule) may have put some limited upward pressure on H-2B wages. To recap, the 2013 IFR requires employers to pay the local average wage unless a collective bargaining agreement is applicable, or if the U.S. Department of Labor approves the use of a wage survey that it did not conduct. The intention of the 2013 Interim Final Rule was indeed to prohibit employers from continuing to pay their H-2B workers wages that were much lower than the average being paid to local U.S. workers in the same occupations. However, the use of private wage surveys by employers to determine H-2B prevailing wages in the 2013 IFR—which continued to use the 2008 wage rule and 2009 wage guidance on private wage surveys—has prevented certified H-2B wages from closing the gap with the average wages paid to other similarly situated workers in the United States.

The 2015 H-2B Final Wage Rule continues to permit wage surveys that were not conducted by the U.S. Department of Labor in some circumstances; and whether employers will continue to be allowed to underpay their H-2B employees vis-à-vis U.S. wage standards will depend on how the 2015 Final Wage Rule is implemented by the U.S. Department of Labor, if and when it becomes effective. In fiscal 2016, it is all but certain that the likely increased use of private wage surveys to set H-2B wages as a result of the December 2015 appropriations riders will lower the wages paid to H-2B worker to levels far below the local averages paid to similarly situated U.S. workers.

In addition to the December 2015 appropriations riders which became law, multiple legislative proposals were introduced in Congress in late 2015 (Lipinski 2015b) that would reform the H-2B program. Specifically the proposals would permanently reinstitute the use of private wage surveys and the four prevailing wage skill levels for determining H-2B wages that were introduced in the 2008 wage rule and 2009 wage guidance. If such legislative proposals or additional appropriations riders were enacted, they would likely ensure that the temporary foreign workers employed through the H-2B program will continue to be underpaid for the foreseeable future, which would continue to put downward pressure on the wages of similarly situated U.S. workers employed in the top H-2B occupations.

Acknowledgements

The author is grateful to Arthur Read, David Griffith, Ross Eisenbrey, and Meredith Stewart for the insightful comments and observations they provided during the drafting of this document. The author is also grateful for the valuable research assistance provided by Will Kimball and Tanyell Cooke. However, the author is solely responsible for any errors or omissions.

Endnotes

1. The 2015 wage rule (along with numerous other H-2B reforms) was published by DHS and DOL in April 2015 and was able to come into effect (was not postponed by litigation or appropriations legislation). However, in December 2015, Congress made changes to these rules through riders to omnibus appropriations legislation, as discussed at the end of this paper.

2. See Title III—Essential Worker Visa Program, Secure America and Orderly Immigration Act, S.1033, 109th Cong. (2005–2006).

3. For a detailed listing of the elements of the W-1 visa program in S. 744, see Costa (2013).

4. The employer must also demonstrate certain steps have been met; for example that the job was advertised to U.S. workers at the same wage in the labor certification. For more background about the labor certification process, see DOL’s website on Foreign Labor Certification, “H-2B Certification for Temporary Non-Agricultural Work.”

5. INA § 214(g)(1)(B); 8 U.S.C. § 1184(g)(1)(B)

6. H-2B workers who have their H-2B visas extended for longer than the original validity period will not be counted again against the H-2B annual cap. Also, fish roe processors, fish roe technicians, and supervisors of fish roe processing are exempt from the annual cap (see Pub. L. No. 108-287, § 14006, 118 Stat. 951, 1014 (2004)), and from November 28, 2009, until December 31, 2019, workers performing temporary labor or services in the Commonwealth of the Northern Mariana Islands (CNMI) or Guam are also exempt from the annual cap (see 48 U.S.C. § 1806(a)(2) as amended by sec. 10 of Pub. L. 113-235; 48 U.S.C. § 1806(b)).

7. See e.g., OFLC (2015b).

8. The one notable exception where OES data may be lacking is in the second-largest H-2B occupation, Forest and Conservation Workers, (SOC code 45-4011). In recent New Jersey District Court litigation in Comité de Apoyo a Los Trabajadores Agricolas (CATA) v. Perez case (1:15-cv-04014-RBK-JS Doc. 21-3, filed July 15, 2015, and see also Docs. 1-2 and 21-2), the plaintiffs argue that the Bureau of Labor Statistics did not sample critical industries employing H-2B workers in SOC code 45‐4011, and therefore, the OES wages reported do not calculate a valid average wage rate for workers in 11 states in which prevailing wage determinations are made for workers employed in SOC 45-4011. Specifically, plaintiffs note that excluded from the OES survey “are almost all of the industries that hire 96% of H-2B forestry workers, including: North American Industry Classification System (NAICS) 1131 (Timber Tract Operations); NAICS 1132 (Forest Nurseries and Gather of Forest Products); NAIS 114 (Fishing, Hunting and Trapping); and NAICS 1154 (Support activities for Forestry). The exclusion of the industries that employ most forestry workers calls into question the validity of the OES forestry wage even in those states where one is reported.” Plaintiffs argue that Service Contract Act (SCA) wage rates are more appropriate for setting H-2B wage rates in forestry jobs because “The SCA survey…does not exclude the industries that hire H-2B forestry workers and, as a result, reports wages specific to H-2B forestry jobs in virtually all areas.” (CATA) v. Perez (Doc. 21-3, at 34).

9. The poverty-level wage in the figure cited is calculated using an estimate of the four-person weighted average poverty threshold in 2011 of $23,010 (based on the 2010 threshold updated for inflation). This is divided by 2,080 hours to obtain a poverty-level wage of $11.06 in 2011. The poverty-level wage is roughly equal to two-thirds of the median hourly wage. This figure is deflated by CPI-U-RS (Consumer Price Index Research Series Using Current Methods) to obtain the poverty-level wage levels for other years. The threshold is available at the U.S. Census Bureau website.

10. According to its website, O*NET “is the nation’s primary source of occupational information…containing information on hundreds of standardized and occupation-specific descriptors. The database, which is available to the public at no cost, is continually updated by surveying a broad range of workers from each occupation.” See Occupational Information Network (O*NET) website, “About O*NET.”

11. Occupational Information Network (O*NET) website, “O*NET OnLine Help, Job Zones,”

12. Id.

13. See e.g., Barnow, Trutko, and Piatak (2013) and Downs (2009)

14. See e.g., the Australian Government’s Skilled Occupations List, and the UK government’s Tier 2 Shortage Occupation List.

15. It must be noted that the labor market data metrics used for determining whether a labor shortage exists can also be usefully supplemented with additional evidence. For example, when assessing whether a labor shortage exists, the United Kingdom’s Migration Advisory Committee (MAC) also interviews employers, workers, labor unions, and other stakeholders to get a more complete picture than can be gathered purely from national-level labor market statistics. (The MAC refers to these surveys as “bottom-up” evidence.) These qualitative data can be useful and round out the analysis when labor market data do not provide a clear-enough picture on their own (Martin and Ruhs 2011). Nevertheless, if unemployment rates in an occupation are exceptionally high and wages do not rise for a prolonged period of time, those two factors are strong evidence that a labor shortage does not exist.

16. Immigration and Nationality Act, § 101(a)(15)(H)(ii)(b) [8 U.S.C. §1101(a)(15)(H)(ii)(b)].

17. Multiple appropriations bills that were enacted continued to prevent DOL from using funds to enforce the 2011 wage rule; see Consolidated and Further Continuing Appropriations Act, 2012, Pub. L. 112-55, 125 Stat. 552, Div. B, Title V § 546 (2011); Consolidated Appropriations Act, 2012, Pub. L. 112-74, 125 Stat. 786, Div. F, Title I § 110 (2011); Continuing Appropriations Resolution, 2013, H.J. Res. 117, 112th Cong., 126 Stat. 1313 (2012); Consolidated and Further Continuing Appropriations Act, 2013, Pub. L. 113-6, 127 Stat 198, Div. F, Title 5 (2013).

18. Comité de Apoyo a Los Trabajadores Agricolas (CATA) v. Perez, No. 14-3557, Doc. No. 003111811504 (3d Cir. Dec. 5, 2015), at 15.

19. For further discussion, see also Costa (2015).

20. Comité de Apoyo a Los Trabajadores Agricolas (CATA) v. Perez, No. 14-3557, Doc. No. 003111811504 (3d Cir. Dec. 5, 2015), at 36–37.

21. Comité de Apoyo a Los Trabajadores Agricolas (CATA) v. Perez, No. 14-3557, Doc. No. 003111811504 (3d Cir. Dec. 5, 2015), at 26–27 (footnotes omitted).

22. Consolidated Appropriations Act of 2016, H.R. 2029, 114th Cong., § 112 (2015). Pub. L. No. 114-113.

Data sources

The tables and figure in this report draw from the following data sources

Bureau of Labor Statistics (BLS) Occupational Employment Statistics (OES). 2015. May 2014 National Occupational Employment and Wage Estimates.

Current Population Survey basic monthly microdata. Various years. Survey conducted by the Bureau of the Census for the Bureau of Labor Statistics [machine-readable microdata file]. Washington, D.C.: U.S. Census Bureau.

Office of Foreign Labor Certification (OFLC) (U.S. Department of Labor). 2015a. OFLC Performance Data.

O*NET OnLine. www.onetonline.org (accessed on July 8, 2015).

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Tables 7, 9, and 11: State-by-state wage comparisons for H-2B occupations