President Trump announced yesterday that he would suspend several foreign worker programs for the remainder of the year. These visas include the J-1, L-1, H-1B, and H-2B. The president claims that the suspensions are necessary to protect jobs for Americans, but the fact is that these programs create jobs for Americans, and eliminating them will undermine job growth, hurting the recovery.
The most important point is that all immigrant workers create jobs because they participate in the economy not just as workers but also as consumers. So when new workers enter the economy, they increase both the supply of workers and the demand for workers. If new workers fill particularly difficult jobs to fill—as foreign workers do—they increase demand faster than would otherwise occur, resulting in faster job growth. If Trump wants the economy to recover quickly, he should favor an all‐hands‐on‐deck approach, not a government‐micromanaged strategy.
L-1 program: The L-1 program exists to allow multinationals to bring their key employees to the United States including top executives. As I explained in my analysis of the program, the L-1 visa is essential to businesses looking to invest or expand in the United States. The Trump administration is trying to attract foreign direct investment with its lower corporate tax rates, yet at the same time, telling these businesses that they cannot bring their people to help set up operations here. It will devastate job growth in this country. Recent academic research by the Wharton School confirms that following restrictions on high skilled immigration, “firms were more likely to open new foreign affiliates abroad in response, and employment increased at existing foreign affiliates.” Some L‐1s are even entrepreneurs themselves who are coming to establish their businesses in this country.
H-1B program: The H-1B program allows businesses to hire foreign workers in jobs generally requiring a college degree. As I show in my analysis of H-1B wage data, H-1B workers receive wages at nearly the 90th percentile nationally. H-1B workers are disproportionately involved in information technology jobs, and as my colleague Alex Nowrasteh has explained, these jobs are essential during a time when people are transitioning to remote employment. Research by Adam Ozimek has found that “the ability to work remotely has reduced the risk of job loss early in the crisis by 32 percent to 53 percent.” Other research has shown that more jobs would have been created during the last recession if so many H-1B workers weren’t denied visas because these highly productive workers greatly increase a firm’s production and increase demand for workers elsewhere in the economy.
H-2B program: The H-2B program is for seasonal nonagricultural workers. It requires businesses to offer all jobs to unemployed Americans before they can hire H-2B workers. There’s absolutely no reason to force these jobs to remain open in order to require businesses to either downsize, shift production strategies, or hire Americans. The longer these temporary seasonal jobs remain open, the less demand will be created for other, better, permanent jobs elsewhere in the economy. The goal should be to increase production quickly during this time so that demand for workers returns to normal. “Without workers, we’re looking at closure,” Johnny Graham, who runs Graham & Rollins Inc., the biggest crabmeat processor in Virginia, told the Prince George Journal. “The plant’s been mothballed, the power’s pretty much cut off [and] the water supply’s being cut off.”
J-1 program: The J-1 program includes several different programs, but the programs that are suspended include intern, trainee, teacher, camp counselor, au pair, or summer work travel programs. The Summer Work and Travel Program is by far the largest of these programs. As I explained in my post detailing the program, participants are foreign exchange students who come to experience the country and work in temporary summer jobs in places like Ocean City, Maryland and Nantucket, Massachusetts.
The same principles that apply to the H-2B apply here. U.S. businesses cannot hire J‐1s if they’ve laid off any Americans, and any job that a foreign worker fills creates demand for other jobs for U.S. workers elsewhere. When the Trump administration suddenly increased J-1 visa denials last year, some businesses in Ocean City, Maryland had cut their operations. “We reduced our hours which in exchange has reduced our business,” said Anna Dolle Bushnell, the co‐owner of Dolle’s Candyland in Ocean City. “So May wasn’t so great. It could have been a fantastic month, but we just weren’t able to keep our stores open simply because we don’t have enough staff.”
Suspending the au pair program at the exact time that workers are trying to figure out how they can work from home and raise children is completely counterproductive to getting the economy back to full productivity. Moreover, research has shown that expanding child care increases the productivity of U.S. workers, particularly women, resulting in higher incomes.
If the president wants a V‐shaped recovery, turning down foreign investment, keeping out talented skilled workers, and punishing businesses trying to survive this period is not the way to do it. To respond to a downturn caused by a pandemic, the goal should be to stop the pandemic, not fundamentally alter the U.S. labor market.