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November 2002, Volume 9, Number 11

Labor: H-2B, H-1B

The US unemployment rate was 5.6 percent in September 2002; California's rate was 6.3 percent, but job growth has slowed- California had fewer jobs in September 2002 than a year earlier, when the unemployment rate was 5.7 percent.

Many of the jobless workers have college degrees. In February 2001, only 1.6 percent of college graduates in the labor force were unemployed, compared with 7.4 percent of workers who did not finish high school. In September 2002, the unemployment rate among college graduates had nearly doubled to 2.9 percent, while it had edged up only slightly, to 7.8 percent, among the dropouts.

The US had 16.5 million businesses with no paid employees in 2000; such businesses were 70 percent of the 23.6 million US businesses. Four economic sectors accounted for almost 60 percent of the total $709 billion in nonemployer businesses receipts: real estate and rental and leasing ($133 billion); construction ($108 billion); professional, scientific and technical services ($90 billion); and retail trade ($74 billion).

Almost 6,000 part-time supervisors at United Parcel Service Inc. in California were awarded $18 million in unpaid overtime wages in October 2002. They earned $1,500 a month for 25 hours of work a week, but were not paid extra for working more than their scheduled hours. In California, salaried employees must earn at least $2,340 to be exempt from overtime pay requirements.

Some 155 million US residents have earnings reported to Social Security each year, and 10 million will pay higher taxes in 2003, as the ceiling for the 6.2 percent Social Security tax rises to $87,000 (an additional 1.45 percent Medicare tax applies to all earnings). Employers match these contributions and the total tax is 15.3 percent.

H-2B. A maximum of 66,000 foreign workers a year may receive H-2B visas and enter the US to fill temporary nonfarm jobs for up to one year; the INS does not normally allow the admission of H-2B workers unless the US Department of Labor certifies that no qualified and willing U.S. workers are available to fill the jobs

The employer completes the 24-item ETA form 750A, which requires the employer to "describe fully the job to be performed" as well as to list the hours per day and week, and the wage, which must be at least the "prevailing wage." Local Employment Service (ES) offices review the forms, the employer attempts to recruit US workers, and the ES reviews the employer's recruitment report on why US workers who applied were not hired. DOL certification of the need for H-2B workers is attached to the employer's INS Form I-129, Petition for Nonimmigrant Worker.

For many years, fewer than 20,000 H-2B workers a year were admitted, e.g. there were about 14,200 admissions in FY95 . However, the number doubled by FY99, when 35,800 H-2Bs were admitted. DOL reports that the number of H-2B workers certified for admission has increased sharply, reaching 113,400 in FY01 (not all jobs certified result in the admission of an H-2B worker). About a fourth of the DOL H-2B certifications in FY01-02 were for landscape laborers, 10 percent for forestry workers, seven percent for housekeepers in hotels and motels, and four percent each for stable attendants and tree planters. About half of the H-2B certifications were for these occupations in FY01-02.

In Maine in September 2002, 14 Honduran and Guatemalan workers in the US with H-2B visas died when the van driven by their crew foreman went off a bridge on a private road into the water. The workplace was 2.5 hours each way from where the men lived, and the men paid $84 a week to ride in the van. The Liberty Mutual Group, the insurance company, said it would pay up to $150,000 in death benefits, reflecting 80 percent of the worker's after-tax average weekly wage, for a period of up to 500 weeks.

The men, some of whom had been returning to Maine for five years on six-month H-2B visas, were employed by Evergreen Forestry Services of Idaho to thin trees for $75 an acre, cutting brush with circular saw weed whackers so that trees grow faster. They were guaranteed the prevailing wage of $8.27 an hour to plant trees and $10.13 an hour to clear brush and thin woodlands. Evergreen had 340 of Maine's 5,800 H-2B workers in 2002. Labor Consultants International does much of the recruitment of H-2B workers for reforestry contractors.

After the accident, the Forest Resources Association said that its members would explore ways to provide housing in the woods where H-2B workers were employed to reduce lengthy commutes. Some suggested providing housing in RVs, since the workers move around doing forestry work. Unlike H-2A farm workers, H-2B nonfarm workers do not have to be provided with housing by their employers.

Maine's largest construction firm, Cianbro Corp, requested H-2B workers to help build an oil rig in Portland, offering $15.20 an hour and no benefits. Iron Workers Local 496 said that the prevailing wage for such workers was $20 an hour, plus $10 an hour for benefits.

H-1B. The annual limit on the number of H-1B visas that can be issued is 195,000 a year; it is scheduled to revert to 65,000 on October 1, 2003. The U.S. General Accounting Office is doing a study of whether US employers prefer H-1B workers to US workers. Lobbyists who want to maintain the 195,000 limit say that no study is needed, since the number of H-1Bs fell sharply in FY02.

Half of the foreigners with H-1B visas are from India, but 90 percent of the computer-related H-1Bs are from India. Unemployment among U.S. engineers doubled from two to four percent in 2002, and some blame the shift of tech work overseas. Infosys, Wipro Technologies and Tata Consultancy Services, all based in India, have aggressively marketed their ability to do software development and handle call centers, customer service e-mails and payroll processing, and are winning contracts.

Investors. In 1990, the US created an investor immigrant visa, offering up to 10,000 immigrant visas a year to foreigners who invest at least $1 million and create or preserve at least 10 jobs. The required investment is reduced to $500,000 in high unemployment areas.

Many former INS officials, including former INS commissioner Gene McNary, established firms to help foreigners, for a fee, to secure investors' visas. The McNary firm, American Immigration Services or AIS, urged INS rulings in 1993 and 1995 that allowed foreigners to pool their US investments and form limited partnerships. Immigrant investors could put up, for example $125,000, and the limited partnership would borrow the remaining $375,000. The result was a sharp increase in investor immigrant petitions, from 400 in FY95 to 1,500 in FY97.

The INS cracked down on the program on December 19, 1997, invalidating many of the AIS limited partnerships and leaving many immigrant investors in limbo. One lawsuit against AIS alleges that only $10,000 of the foreigner's $125,000 went to a US business--$10,000 went to McNary's law firm for legal fees; $15,000 was a finder's fee to the person who recruited the immigrant investor; $25,000 went to AIS for administrative and other fees; and $65,000 went into a trust account.

However, Congress approved legislation that will allow most of the immigrant investors to remain in the US.

Unions. After a 10-day lockout, President Bush obtained an injunction under the 1947 Taft-Hartley Act to require 10,500 longshore workers to return to work at 29 West Coast ports that were deemed "vital to our economy and to our military." The Pacific Maritime Association locked out the workers after accusing them of "working to rule", or a slowdown, which reduced the number of containers unloaded by 50 percent. However, the Pacific Maritime Association alleged in October 2002 that the workers ordered back to work were engaged in a "concerted, systematic work slowdown."

The Taft-Hartley Act has been invoked in each of the 11 disputes that closed US ports since 1947.

The major issue in the dispute was new technology. Scanners can be used to replace marine clerks in tracking cargo containers. The Pacific Maritime Association, which represents shipping lines and terminal operators, guaranteed lifetime employment for current clerks in 1960, but the International Longshore and Warehouse Union said that the language now offered by the employers would allow some of the new jobs created by technology to be non-union. The union, representing some of the highest-paid blue-collar US workers, whose earnings range from $60,000 to $130,000 a year, said that the Pacific Maritime Association, which represents shipping lines and terminal operators, was trying to shrink the union via technology.

The ILWU operates hiring halls to deploy workers, and issues "casual cards" to those who are hired when there are not enough ILWU workers available. Many casual card holders, who have unpredictable hours and no benefits, hope to join the ILWU. The ILWU was founded by Australian immigrant Harry Bridges, who led the union that emerged from the 1934 strikes in San Francisco until 1977. In the Modernization and Mechanization Agreement of 1960, the ILWU agreed to allow containers to move freight in exchange for guaranteed jobs and high wages.

The International Brotherhood of Teamsters in October 2002 ended a three-year strike against Overnite Transportation, which has 13,000 employees, without obtaining a contract. The Teamsters accused Overnite of numerous labor law violations; the National Labor Relations Board in October 2002 rejected the charge that Overnite was bargaining in bad faith. Overnite workers earn an average $19 an hour, plus benefits, and Overnite said workers at five of its 26 unionized terminals had recently voted to decertify the union.

Movies. Southern California film and TV production in Fall 2002 enjoyed a resurgence, as studios worked off their inventory of films that were prepared as insurance against a strike in mid-2001. In October 2002, some 17 movies, 34 one-hour shows and 34 half-hour programs were being shot in the Los Angeles area. In the past five years, many movies have been shot in Canada, and more are being filmed in Australia, Mexico, Ireland and New Zealand. The Los Angeles County Economic Development Corp. estimated that film and TV production employment in August 2002 was 229,100, down from 270,000 in 1998-99.

Hollywood usually produces 250 commercial films a year, compared to 800 to 900 a year in India.

Jennifer Bjorhus, "U.S. workers taking H-1B issues to court," San Jose Mercury News, September 26, 2002. Walter F. Roche Jr., "Indentured in America," Baltimore Sun, September 15, 2002.