The Corporate Subsidy That Undercuts Blue-Collar Wages and Jobs

As illegal immigration enforcement improves, lobbyists push to expand legal guest-worker programs

by Ian Smith | Updated 13 Sep 2017 at 6:42 PM

For supporters of an “America First” labor policy, budget season is always a terrifying time of year.

Lost in the news of President Donald Trump’s budget punt last week is the smorgasbord of cheap-labor measures currently sitting in the now-delayed FY2018 “Minibus” spending bill: measures designed to ramp up foreign-labor imports and drive down American blue-collar wages.

The nation’s biggest users of foreign workers on H-2B visas were on a lobbying tear in the lead-up to the budget debate, inserting into the House spending bill a provision that would loosen the standards for establishing the prevailing wage (what they’re required to pay their foreign laborers). The drive comes after the industry already gained a 20 percent increase in the supply of those visas, and as industrial farming companies boosted their use of H-2A farm worker visas by 40 percent.

On top of pushing down H-2B standards — which apply to non-farming sectors such as landscaping, restaurants, and seafood processing — another amendment, sponsored by Rep. Dan Newhouse (R-Wash.), will make it easier for employers to get H-2A foreign workers. Meanwhile, rumors about a general expansion of the H-2B program are swirling.

Why are companies pushing so hard now to maximize guest-worker programs? The answer: President Trump. By returning immigration enforcement to its pre-Obama status quo, the American public has watched unlawful entries drop, deportations and voluntary departures jump (up 30 percent year-on-year), and the fees paid to human smugglers increase fivefold (to about $10,000 a head). As pro-business news outlets say, such dramatic changes are unwelcome because they take "certainty" away from business operations. That is, operations addicted to cheap, non-American labor.

Everyone knows about outsourcing, but few know about insourcing. Unlike manufacturers that can slash labor costs by spiriting operations abroad, industries such as large-scale farming have to insource labor from poor countries in order to cut labor costs. For example, so "successful" has Big Agriculture been at insourcing, today its workforce is about 7 percent guest workers and a whopping 30 percent illegal aliens (actually, that's the low estimate). This means that when enforcement and removals tick up, without innovating or hiring native-born Americans, industrial farms only have one choice: lobby for more guest workers.

Not only is insourcing just as consequential as outsourcing, it's also a much older practice. The "Bracero" farm labor program, for instance, became official Labor Department policy 75 years ago this summer. Although it officially ended in 1964, it never really ended and lives on today in the H-2 programs currently being expanded by Congress.

Labor historians and husband-and-wife team Linda and Theo Majka are authorities on Bracero and big agribusiness, and their 1982 book "Farm Workers, Agribusiness, and the State" is a classic on both subjects. Although Bracero officially started in 1942 during the Second World War (perhaps the one time we've had a genuine labor shortage), the Majkas go back to 1917 as the point when Big Ag started to become a major force in immigration politics. That year, unions like the newly formed American Federation of Labor managed to push Congress to install two curbs on unskilled immigration: a literacy exam and a head tax. But as they recount in their book, "Immediately upon passage of the law, Southwestern growers besieged the Department of Labor (which handled immigration at that time) with accounts of severe labor shortages," a campaign that successfully pushed agency officials into waiving both measures outright.

Later in the early '20s, the AFL's Samuel Gompers took a giant swipe at open borders and almost singlehandedly secured passage of the quota acts: pro-labor and pro-assimilation laws that limited a foreign nation's allotment of immigrant visas according to its nationals' proportion of America's population at the turn of the century. Industrialized farming interests, however, made certain that one country would be made exempt: Mexico. As the Majkas write, that exemption "insured a vast amount of Mexican workers," enough to "keep labor costs at a low level."

American unions and small farms opposed the loophole, but with no success. To insure against future attacks, however, Big Ag shipped in workers from the Philippines, a U.S. possession at the time and therefore outside the quota acts. This also created an "added bonus" for employers: inter-ethnic strife. As a report from the California Department of Industrial Relations noted at the time, Big Ag intended the move to produce a "mixture of laborers … not accustomed to mingling with each other" which would avoid "labor trouble" that'd result "from having a homogenous group of laborers."

When the Roosevelt administration initiated Bracero as a "temporary" wartime measure, it was only made renewable at two-three year intervals. To ensure a steady stream of foreign labor, Agribusiness adapted by having an army of labor contractors on hand who could secure illegal alien labor at a moment's notice. But as the illegal alien population later mounted, so did taxpayer-funded work site raids and repatriation drives (most of which were voluntary, say the Majkas).

And just as with today, Big Ag lobbyists at the time made sure that Bracero's U.S. labor protections were always easily avoidable and rarely enforced. By 1950, long after wartime shortages were history, President Truman belatedly created a commission to study Bracero's effects on American workers. Investigators concluded that such protections as the prevailing-wage standard were "worse than meaningless." As for requirements that alien labor be replaced with American workers once they could be located, one interim report concluded that not a single Mexican worker could be found that was replaced under the measure.

Seventy-five years on, nothing's changed. As an investigative report from Buzzfeed in 2015 showed, H-2A and H-2B protections from Congress, created to ensure American workers would not be discriminated against, remain little more than administrative annoyances for employers.

On Bracero's anniversary, we need to ask ourselves: Are these programs necessary, and is America really suffering from a 75-year-old labor shortage? Because if not, Bracero and its progeny can only be one thing: a 75-year-old corporate subsidy.

Ian Smith is a research associate at the Immigration Reform Law Institute.

  1. congress
  2. foreign-workers
  3. guest-workers
  4. immigration
  5. insourcing
  6. legal-immigration
  7. visas
  8. work-visas
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