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A Summer Labor Drought Continues

tourist shops in Bar Harbor, Maine
Bar Harbor, Maine. Photo by Flickr user denisbin.

As usual, some parts of the country were cool and damp this summer (Houston, sadly, was more than just damp), others hot and dry. But from coast to coast, businesses were caught in a labor drought triggered when the well of common sense dried up in Washington.

President Donald Trump continues to press forward with his plans to restrict both illegal and legal immigration. This strategy includes making H-2B visas scarce, meaning fewer foreign workers can enter the country to perform temporary work. One of the main stated reasons: protecting the prospects of American workers.

Yet as the summer passed, it became increasingly clear that American businesses were this policy’s collateral damage. The Wall Street Journal reported that many restaurants and hotels in Martha’s Vineyard, Massachusetts, were forced to cut corners and reduce operations when the influx of foreign workers they usually expect failed to appear. The same tough choices faced Alaskan seafood producers.

Martha’s Vineyard restauranteurs and Alaskan crabbers not alone. Maine hotels, Minnesota resorts and Midwestern carnival operators are all feeling the pain. Understaffing has led to lost profits for owners and often left existing staff overworked and demoralized. You have to imagine that the business owners who are asking family members to pitch in to help vacuum or do hotel guests’ laundry may eventually strain some personal relationships too.

The H-2B visa program allows 33,000 workers into the country every six months for temporary, nonagricultural jobs. (Temporary agriculture workers can get visas through the H-2A program.) The program hit its cap for the first half of 2017 in March, which meant that many employers hoping to hire for the summer ended up completely shut out. Landscaping, hospitality and seafood industry employers scrambled to secure whatever visas they could before they ran out.

In May, Congress authorized the Department of Homeland Security to issue up to 63,500 more visas if it deemed them necessary to try to offset the mismatch between supply and demand. Then-Secretary John Kelly reported in Senate testimony that he was aggressively lobbied both by legislators who supported and who opposed the idea of authorizing more visas; in mid-July, he approved another 15,000 for businesses that could prove they would suffer “irreparable harm” without them. At that point, the cap for the second half of the year had also been reached.

By the time the additional visas became available, however, it was too late for many employers. Even for employers whose applications are approved, the wait sometimes continues, since it typically takes 30 to 60 days for the government to process the visas. (Businesses able to pay a $1,225 expedited processing fee can shave that to 15 days.) And Congress’ refusal to extend a 2016 provision that had exempted returning workers from counting against the 66,000-per-year cap exacerbated the problem

It is true that some of these business have hired a few more Americans, as the H-2B visa program’s opponents hoped. But it is equally true that many of them report they are still badly short-staffed, or are hiring fewer qualified employees with lower retention rates. As business leaders have pointed out, bringing in international workers is more complicated and more expensive than hiring locally; if businesses could get all the labor they wanted locally, they would do so.

Many seasonal foreign workers take positions Americans are not interested in filling. Either the type of work or its seasonal nature means locals look elsewhere, and remote locations like Martha’s Vineyard have trouble attracting out-of-towners to fill seasonal positions. Considering that the national unemployment rate is 4.4 percent, with even lower rates in many locations that rely on tourism and other seasonal industries, many Americans can chose to be picky. High school and college students, once a mainstay of seasonal employment, often focus instead on internships and other resume-building activities during the summers, and are generally not available at all in the “shoulder seasons” of late spring or early autumn.

The worst-case scenario, which is not unheard of, is when business owners respond to the labor shortage by cutting back the hours of their American workers, or laying them off completely – a result neither supporters nor opponents of the H-2B program presumably want.

Dealing with illegal migration is just one component of any sensible immigration policy. Related, but ultimately more important, is making sure American business has an adequate supply of labor to thrive, thus keeping Americans as well as foreigners gainfully employed. The administration’s “America first” rhetoric collided with reality everywhere from ice cream shops to farm fields and construction sites this summer. One day, the drought has to break and the labor stream will refill, once we get a reasonable immigration policy in place. I hope it happens before next summer rolls around.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s most recent book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.

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