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April 2010 Volume 17 Number 2
Unemployment, Projections, H-1B
The unemployment rate fell to 9.7 percent in January 2010, and remained at 9.7 percent in February and March 2010; the rate was 10 percent in December 2009. The number of unemployed, 15 million in March 2010, included 6.5 million workers without work six months or more, 44 percent of all the jobless. The unemployment rate was higher in 1981-82, but only a quarter of the unemployed then were without a job for six months or more.<< back
Employment rose by 162,000 in March 2010 as temporary help and health care services added jobs; the federal government hired 50,000 workers to help with the census. Some workers who had dropped out of the labor force resumed the search for jobs.
President Obama's budget proposal for FY11 projected an average 10 percent unemployment rate in 2010, falling to nine percent in 2011 and remaining above five percent through 2020. The budget projected an average gain of 95,000 jobs a month in 2010.
Women were more than 50 percent of employed persons during four months of 2009 and in January 2010; in 1964, women were a third of employed workers. During the 2008-09 recession, male employment declined by over seven million, while female employment fell by four million. Over 8.4 million jobs were lost in 2008-09, four times the job losses during the 1981-82 recession. The sectors hardest hit by job losses were manufacturing, which lost 2.2 million jobs in 2008-09, and construction, which lost 1.9 million jobs.
The unemployment rate of foreign-born workers in 2009, 9.7 percent, exceeded the rate for US workers, 9.2 percent, for the first time since 2003. Foreign-born workers earned, on average, 79 percent of what US-born workers earned. The 24 million foreign-born workers were 50 percent Hispanic and 22 percent Asian. Hispanics are eight percent of the US-born labor force and Asians are one percent of the US-born labor force.
About 80 percent of foreign-born men 16 and older, compared to 70 percent of US-born men, were employed or looking for work in 2009. About 55 percent of foreign-born women, and 60 percent of US-born women, were in the labor force.
President Obama said that jobs would be his number one domestic priority in 2010, prompting another federal stimulus bill to create and preserve jobs. President Bush signed a $700 billion stimulus package in 2008 and President Obama signed a $787 billion package in 2009. The 2010 effort, the Hiring Incentives to Restore Employment (HIRE) Act, is expected to cost $15 billion; it gives employers payroll tax breaks if they hire unemployed workers who have been jobless at least 60 days. Employers can receive a $1,000 tax credit if they retain such newly hired workers at least a year.
UI Benefits. Unemployment insurance (UI) is a federal-state system under which states set levels of benefits for workers who lose their jobs and the federal government sets minimum requirements for benefits and pays administrative costs. Early in 2010, average weekly benefits for jobless workers were $325, and over 11 million jobless workers were collecting $10 billion a month; about $120 billion was spent in UI benefits in 2009. Employers cover the cost of UI benefits by paying a tax that is based on how many of their laid off workers receive UI benefits.
Most states provide unemployment benefits for 26 weeks, and finance them with a payroll tax on employers that reflects how many ex-employees file claims for UI benefits. Employers in cyclical industries and high-benefit states can pay UI taxes equivalent to five or six percent of the first $7,000 of each employee's earnings. The federal government normally covers the entire cost of extended UI benefits beyond 26 weeks from general tax revenues. During past recessions, UI benefits were extended to 70 weeks; in 2009, UI benefits were extended to an unprecedented 99 weeks.
The New York Times reported April 3, 2010 that the Talx Corporation works for employers to contest up to a third of worker applications for UI benefits. Laid-off workers apply for UI benefits at local Employment Services offices, which notify their ex-employers. These employers may ask ES offices not to pay UI benefits because, for instance, the worker was fired for cause. Critics charge that Talx routinely opposes worker requests for benefits, and appeals ES decisions to grant workers UI benefits. Some states have enacted laws limiting the ability of firms such as Talx to hold up UI benefits for jobless workers.
Projections. The US Bureau of Labor Statistics makes biennial projections of the US labor market. The projections begin with the macro-economy. In its 2008-18 projections, BLS assumed that real or inflation-adjusted Gross Domestic Product (GDP) would increase by 2.4 percent a year between 2008 and 2018, about the same rate as during the 1998-08 decade.
BLS first estimates the supply of labor, assuming full employment, and then demand, which is the number of jobs needed to produce the projected economic output. Labor supply and demand both depend on wages, which BLS does not project. Instead, BLS relies on "expert assessments" of productivity trends in particular industries and occupations to estimate the number of jobs.
US labor force growth is expected to slow from 1.1 percent a year between 1998 and 2008 to 0.8 percent a year between 2008 and 2018, adding 12.6 million workers, down from 16.6 million added between 1998 and 2008. The labor force participation rate, the share of those 16 and older employed or looking for work, is expected to fall from 66 percent in 2008 to 64.5 percent in 2018 due to more retirements in an aging population.
US employment is projected to rise from 151 million jobs in 2008 to 166 million in 2018, adding 10 percent or 15 million jobs (note that some workers hold two or more jobs). Many of the fastest-growing occupations are health-related. The number of RN jobs is projected to increase by 582,000 and the number of home health aides by 461,000. An additional 34 million job openings are expected because of retirements.
H-1B. There are 65,000 H-1B visas available each year for for-profit firms seeking to hire foreigners with at least a BA degree. Another 20,000 H-1B visas are available for foreigners who have advanced degrees from US universities, and an unlimited number are available for H-1Bs employed by universities and non-profit research institutions.
Only H-1B dependent employers, generally those at least 15 percent or more H-1B visa holders among at least 50 employees, must try to recruit US workers before hiring H-1B workers. Most employers may lawfully terminate US workers and replace them with H-1B workers. There are four skill-based prevailing wage levels specified by DOL for each occupation; most H-1B workers are classified in the lowest entry-level wage category. Many H-1B visa holders hope that their employer will sponsor them for an immigrant visa, which usually ties the H-1B to a particular employer until the visa is delivered.
USCIS announced that it received 13,500 employer requests for the 65,000 visas, and 5,600 requests for the 20,000 visas, in the first week of April 2010, when H-1B visas became available for FY2011, which begins October 1, 2010. USCIS received 163,000 employer requests for H-1B visas in the first five days of April 2007 when FY08 visas became available, but it took from April 2009 to December 2009 to exhaust the 65,000 visas available for FY10.
The American Recovery and Reinvestment Act of 2009 included a provision that requires financial institutions receiving government aid to attest that they sought US workers before hiring H-1B workers and did not lay off US workers 90 days before and after applying for permission to hire an H-1B worker. In recent years, Indian outsources Infoys, Wipro, Ttaa, Satyam, Cognizant, and Patni have been among the major users of H-1B visa holders.
The Oak Ridge Institute for Science and Education in January 2010 reported that 60 percent of foreigners who earned PhDs in science and engineering at US universities in 1997 were still in the US in 2007, as were 62 percent of those who earned such degrees in 2002; foreigners earned 13,000 or 30 percent of all science and engineering PhDs awarded in 1997 and 16,000 or 46 percent of the total in 2002. There had been speculation that more foreign PhD holders would return to their countries of origin because of fast economic growth in China and India. Over 40 percent of science and engineering PhD holders working in the US were born abroad.
The "2010 Index of Silicon Valley" report noted that 60 percent of the region's scientists and engineers are foreign-born. Immigration to Silicon Valley decreased in 2009; the report blamed US immigration policies and more opportunities in China and India.
Department of Labor in March 2010 issued regulations implementing the 2006 Nursing Relief for Disadvantaged Areas Reauthorization Act, which allows 14 health care facilities located in areas with a shortage of health professionals to hire foreign registered nurses for up to three years. Employers must attest to DOL that they are trying to recruit RNs in the US, and that the employment of foreign nurses will not adversely affect the wages and working conditions of other nurses working at the facility.
Other. A February 2010 report estimated that 568,000 food service and drinking places employed 13 million workers; most have relatively low earnings and few employer-provided benefits. In 2008, private sector workers earned an average $45,800; those employed in restaurants earned an average of $12,900 (www.rocunited.org/what-we-know).
David Wessel, "US Keeps Foreign PhDs," Wall Street Journal, January 27, 2010. Bartsch, Kristina. 2009. The employment projections for 2008?18. Monthly Labor Review. Vol. 132. No 11. November. Pp 3-10. www.bls.gov/opub/mlr/2009/11/home.htm