Why the 400,000 new ‘low-skilled’ work visas business wants is a ridiculously high number

As I wrote earlier, one of the great things about the Chamber of Commerce and AFL-CIO agreement on a new W-visa program is that it doesn’t open up a large flow of indentured workers as other programs do. Those brought in work under the same laws and have the same rights as other workers, and they are able to obtain legal status and a path to citizenship. They can also switch jobs so they’re not indentured to one employer. Now the comments are coming in that the caps on the number of visas are too low. There will be 20,000 in the first year rising to 75,000 in the fourth year, and thereafter determined by a commission staffed by labor market experts but capped at 200,000.

Rick Newman, Chief Business Correspondent at U.S. News & World Report, writes that these limits are too strict and cites an American Enterprise Institute expert saying, 200,000 is “a really, really low number.” Newman explains:

“Some context explains why. There are roughly 135 million working Americans, so 200,000 immigrants per year would amount to a tiny fraction of the total labor force. Construction alone employs about 5.8 million people, with peak employment hitting 7.7 million in 2007.”

It is easy to see why this analysis is wrong. The comparison should not be to the total workforce but to those who are similarly skilled and working in the same occupations as the W-visa workers. Even more important, the flow of new workers each year should be compared to the newly available jobs for such workers each year.

I can illustrate why Newman is wrong using the proposal from the Essential Worker Immigration Coalition (the business coalition) for a visa program for “nonfarm, low-skilled job[s] that does not require a college degree,” as an example. (See Laura Reiff’s testimony on March 13th for details.) The proposed program would start at 400,000 each year and be adjusted up or down by a formula. Reiff notes that BLS projects employment growth of 20 million jobs over ten years. So, how many of those jobs would be filled by workers with these new visas (which are in addition to all the current visa programs)? At that rate of job growth (two million each year) visa workers would fill 20.0 percent (400,000 divided by 2,000,000) of all new jobs. But this new program is explicitly designed for occupations that do not require a four-year college degree, so the number of such jobs is far less. In 2011 roughly two-thirds of the workforce did not have a bachelor’s degree, so let us assume that just two-thirds of the new jobs (1,333,333) were appropriate for W-visa workers. That means that 400,000 visa workers could fill 30.0 percent of the new jobs available to the non-college educated workforce. This is not a small and inconsequential amount. Even the 200,000 cap under the agreement represents 15.0 percent of newly available jobs and therefore represents a substantial flow of workers.

It’s possible to quibble about the specific parameters I used in this illustration. I look forward to someone explaining why 400,000 new entrants in the labor market is small. Under the EWIC proposal each visa holder will be able to stay for six years (and probably longer). That means that after six years there would be an additional 2.4 million workers competing for jobs that do not require a college degree. I think that’s a hard number to explain to the American public and especially to the Republican base.