American Wages- Downhill?
- Bob O'Brien
- 8 minutes ago
- 3 min read
Within the past year, we have written a number of articles highly critical of the illegal immigration policies of former President Joseph Biden, and we emphasized, among other things, how his open border policies severely affected the financial well-being of the poor and middle-class American citizens. But what about legal immigration?
This week we read an interesting article in The American Conservative which highlighted Democratic Representative (CO) Brittany Pettersen’s criticism of Trump’s changes to the J-1 visa program. According to Wikipedia, a J-1 visa is issued by the United States to research scholars, professors and exchange visitors participating in programs that promote cultural exchange, especially to obtain medical or business training within the U.S. J-1 visa holders must usually return home for two years following visa expiration, so they impart cultural knowledge learned in the United States.
According to Representative Pettersen, “Trump’s attacks on legal immigration are hurting Colorado’s economy…60% of ski resorts rely on workers with J-1 visas, and many are now scrambling as they are unable to fill the positions needed. When we shut immigrants out, we hurt our local businesses, our tourism industry, and our economy.”
That’s quite ironic coming from a Democrat whose party professes to support the poor and middle class. According to The American Conservative, Colorado’s ski resorts are just one of various industries now dominated by very wealthy private equity firms, which continue to replace their locally staffed workforces with foreign temporary labor. The Institute for Sound Public Policy calls it “a cheap (as low as $8/hr.) labor pipeline with minimal wage enforcement.” To make matters worse, the article goes on to say that “Employers who hire J-1 visitors may also save up on payroll taxes (FICA). When J-1 visitors do not pay Social Security, Medicare or Federal Unemployment taxes, employers do not have to match these taxes.
This non-payment of FICA taxes by large and profitable corporations is terrible, for it is coming at a time when both the Social Security and Medicare trust funds are fast being depleted. The date at which Social Security will no longer have enough funds to pay full benefits has been moved up to 2034, instead of last year’s estimate of 2035. After that point, Social Security would only be able to pay 81% of benefits. In addition, the Medicare Hospital Insurance trust fund will be depleted in 2033, instead of 2036.
The changes which the Representative alludes to include ending open-ended “duration of status” stays and imposing stricter renewal limits. We agree with Representative Petterson that the changes will reduce the supply of cheap foreign labor; but we think that is a good thing, for it will force these private equity firms to pay a higher wage to attract American workers, and it will force them pay more taxes to support the Social Security system and Medicare.
President Trump is also making changes for new applicants for H-1B visas. This visa program was designed to allow U.S. companies to employ foreign workers to fill positions that require specialized knowledge and skills that are not readily available in the domestic labor market. There is a definite need for this type of program. For instance, Ford’s CEO recently said that Ford has been unable to fill 5,000 mechanic jobs paying $120,000 a year. It’s not just Ford. “We have over a million openings in critical jobs, emergency services, trucking, factory workers, plumbers, electricians and tradesmen.”
This is undoubtedly true, but there is also evidence that the H-1B visa program is being exploited to depress wages, with a majority of H-1B recipients receiving below market wages. H-1B critics say that it is “simply a way to recruit hundreds of thousands of relatively lower-wage IT and financial services professionals.”
We believe that the changes being made by President Trump will address this abuse. First of all, there is a new $100,000 employer fee for all new H-1B petitions. The fee is one-time, and is non-refundable; universities, nonprofits, and research institutions are excluded. This extra fee will increase the cost for employers to hire cheaper foreign labor, and it will tend to disincentivize companies from replacing American workers with cheaper foreign workers. In addition, employers will now be required to ensure that H-1B employees receive competitive salaries comparable to their US counterparts.
We think President Trump’s action on visas are just one more example of his America First agenda. Yes, all Americans are worried about the high cost of living, and one way to address that is to enact measures that elevate the wage level of the average American. The changes recently enacted in the visa programs do just that.
Check out the links below!⬇️
Comments