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January 2018, Volume 24, Number 1

Labor; H-1B

The US added over 200,000 jobs a month in 2017, and the unemployment rate ended the year at 4.1 percent, the lowest rate since December 2000. As of December 2017, there were 87 consecutive months of job growth. The 2.1 million jobs added in 2017 were less than the three million added in 2014.

The major puzzle remains slow wage growth in a tight labor market. Some employers say they are not offering higher wages because workers seeking raises do not have the skills needed to justify the wages they want.

Some nine million US men between 25 and 54 were not working in Fall 2017; only 86 percent of men in this age group are employed, down from 96 percent in the 1950s. The drop is sharpest for men with a high-school diploma or less, where wages have fallen, competition from immigrants has increased, and arrest and prison records limit employability. Some five million men 25-54 are ex-prisoners.

Projections. Department of Labor projections for 2016-26 forecast that the labor force will expand by a million a year over the next decade, increasing from 159 million to 170 million (www.bls.gov/opub/mlr/2017/article/projections-overview-and-highlights-2016-26.htm). About 61 percent of the 278 million US residents 16 and older are expected to be employed or looking for work, down from the peak labor force participation rate of 67 percent in the late 1990s. The median age of workers, now 42, is projected to rise slightly.

GDP is expected to grow two percent a year, up from 1.4 percent a year over the 2006-16 decade.

Employment in 2026 is projected to be 168 million, up from 157 million in 2016. There are expected to be 136 million workers employed in services, 20 million in goods-producing industries and 2.3 million in agriculture.

In 2016, there were an average of 850,000 self-employed persons in US agriculture and an average of 1.5 million wage and salary workers there. The average number of self-employed persons is expected to shrink to 825,000 in 2016, while the number of wage and salary farm workers is projected to be stable at 1.5 million.

Hired workers are expected to be two-thirds of average employment in agriculture. Their share of average employment may rise as fewer and larger farms rely more on hired workers and less on the labor of farm operators and their families.

Some 156 million US workers were assigned to one of 22 broad categories in 2016, including 1.1 million to farming occupations (45-0000). There are expected to be 168 million workers in 2026, including 1.1 million in farming occupations.

The fastest occupational growth is projected to be in health care support, where the number of jobs is forecast to rise by a million to 5.3 million in 2026, personal care, up 1.2 million to 7.6 million, and healthcare practitioners, up 1.3 million to 10 million. Many of the detailed occupations projected to grow fastest offer relatively low wages, including home and personal care aides, doctors' assistants and physical therapy assistants.

The largest occupational group, office and administrative support, is projected to have stable employment at 23 million, while sales and related occupations are projected to grow slightly to 16.3 million.

Manufacturing is projected to lose the most jobs. Production jobs are projected to fall to nine million by 2026 due to globalization that increases imports of goods and automation in US factories. There could be similar declines in some service sector occupations as data entry and administrative jobs disappear.

Facebook, Google and LinkedIn offer employers seeking workers the ability to target recipients of their job ads, raising questions about bias and discrimination. If employers target Facebook users who are 20 to 35, are they engaged in age discrimination, since users outside this age range do not see the ad? Some firms stopped targeting particular age groups after being contacted by journalists, but several class-action suits have been filed against employers and Facebook. LinkedIn is the most popular site for job ads, but Facebook is growing fast.

H-1B. Candidate Trump promised to crack down on abuses in the H-1B program that gives most US employers easy access to college-educated foreigners who fill jobs requiring college degrees. DOL approves over 99 percent of the required employer attestations that the employer is paying prevailing wages and that there is no strike.

Most US employers do not have to try to recruit US workers before receiving permission to hire H-1B guest workers, who can stay in the US up to six years and be sponsored by their employers for immigrant visas.

After DOL gives employers permission to hire H-1B workers, the employer petitions USCIS for permission to employ a specific foreigner. USCIS in 2017 began to request more information from employers and foreigners to ensure that the job in question required specialized skills and that the foreigner had specialized skills. USCIS issued requests for further evidence for 25 percent of employer H-1B petitions in 2017.

USCIS is undertaking a "thorough review of employment-based immigration programs" to ensure that they "benefit the American people to the greatest extent possible." USCIS may eliminate the right of spouses of H-1B workers who are waiting for immigrant visas to get US work permits and reduce the time that foreign graduates of US universities can stay in the US to engage in paid Optional Practical Training.

HR 170, approved by the House Judiciary Committee in November 2017, would raise the share of H-1B workers that would cause an employer to be defined as H-1B-dependent from 15 percent to 20 percent. H-1B-dependent employers have since 1998 been required to try to recruit US workers before receiving permission to hire more H-1B foreigners, but are exempt from this recruit-US-workers requirement if they pay H-1B workers at least $60,000 a year. HR 170 would raise the minimum wage that H 1B-dependent employers must pay to avoid recruitment to at least $90,000 or the average wage of persons in the occupation in that area.

The Indian government opposes HR 170, calling it a protectionist attack on successful outsourcers such as Infosys and Tata that sometimes take over the IT work of US firms and use H-1B workers to replace US workers who lose their jobs.

Unite Here Local 11 in Fall 2017 alleged that the 102-acre Terranea Resort was using J-1 visa holders to replace US entry-level cooks in its restaurants. An Indian couple paid $15,000 to International Educational Exchange for a year-long internship that ends with a certificate. Terranea paid $1.1 million in 2011 to settle a suit alleging that it did not pay overtime wages, and was sued in October 2017 for requiring some kitchen employees to buy their own cooking equipment.

The world's 20 largest global employers include five outsourcers or temp agencies, including the Netherlands-based Randstad with 658,000 employees and the UK-based G4S and Compass Group, each with about 560,000 employees. The next two are Ireland's Accenture, with 435,000 employees, and Denmark's ISS-AS, with 430,000.

The world's largest private employer is Walmart with 2.3 million employees, including 1.5 million in the US. Walmart will raise the minimum wage of its US employees from $9 to $11 an hour because of the Tax Cuts And Jobs Act signed in December 2017, which lowers the corporate tax rate from 35 to 21 percent. Walmart is the largest single US corporate taxpayer, and is expected to save over $2 billion a year due to the tax cut. The average full-time Walmart worker is expected to earn $14.50 an hour after the increase.

Walmart will also close 10 percent of its 660 Sam's Club stores, displacing 10,000 workers.

Outsourcers and temp agencies often provide workers who work alongside regular employees in IT, healthcare, security and other sectors but receive lower wages and limited benefits compared to regular employees of the firms to which they are assigned. Outsourcers cluster workers by skill, and such occupational sorting contributes to income inequality, since an outsourcer with only janitors probably offers lower wages and fewer benefits than a bank that hires janitors directly.

There are a million foreign students in the US, but the number of new arrivals declined in 2017-18, forcing budget cuts at second-tier public universities such as Kansas State that had come to rely on foreign students to pay higher tuition and fees. There are many reasons, from increased competition from universities in other English-speaking countries to the restrictive immigration policies of the Trump Administration.

Uber. The EU Court of Justice in December 2017 ruled that Uber should be regulated as a traditional transport company, even though its drivers use their own cars. Uber argued that it provides only the digital service of connecting passengers and drivers, but the EU Court countered that, if the drivers did not transport passengers, there would be no need for Uber's technology platform.

In addition to Uber, Airbnb, Dilveroo and other app-based firms that connect customers with providers may be subject to more regulation in the EU. Some Americans say that the EU approach of blocking innovations until all of their consequences are known helps to keep the US ahead in technology.

Health. Health care spending averages about nine percent of GDP in OECD countries. The US spent $3.3 trillion, or almost 18 percent of its $18.5 trillion GDP on health care in 2016.

One study found that Americans use about the same amount of health care as residents of other countries but pay much more for their health care. US hospital costs are 60 percent higher than average costs in Europe, arguing for single payer systems to regulate prices.