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October 2018, Volume 24, Number 4

Labor, H-1B

The US added 134,000 jobs in September 2018 and the unemployment rate fell to 3.7 percent, the lowest rate since 1969. Average hourly earnings rose 2.8 percent from a year earlier. The US labor market has returned to robust hiring as in the late 1990s.

Wages are rising more slowly a decade after the 2008-09 recession than during previous recoveries. There are many explanations, from declining union power to globalization and outsourcing that pits workers in high-wage countries against those in lower-wage countries. Some point to less competition in product and labor markets, where firms such as Boeing and Google dominate their industries.

Ames, Iowa had the lowest unemployment rate of any US city over the past two years, 1.5 percent in summer 2018. However, average weekly wages in Ames were $900 a week, less than the $1,050 US average. As a result of ever-more low-wage jobs and rising prices, a quarter of K-12 students in Story county are eligible for free or low-priced lunch.

The federal minimum wage has been set at $7.25 for almost a decade, although 20 states have higher minimum wages. Amazon announced in October 2018 that it would raise the minimum wage for 350,000 US workers, those hired directly as well as those hired via staffing agencies, to $15 an hour on November 1, 2018. Amazon says that the median annual wage of its full-time employees is $34,000. Target announced that it would raise its minimum wage to $15 an hour by 2020.

ZipRecruiter analyzed data on responses to posted jobs, and found that jobs requiring few skill requirements and offering good working conditions attracted the most applicants. There were 118 responses for each administrative assistant job posted, and 68 responses for each warehouse job posted. Jobs that required special licenses drew fewer responses, such as 12 for each truck-driving job and nine for each skilled nursing job.

New York City became the first to limit the number of Uber and other rise-share cars; the number medallions for regular taxis is already limited. The car caps are aimed at improving incomes for drivers, 90 percent of whom are immigrants and two-thirds of whom drive full time. The New York City ordinance says that drivers must earn an average of $17.22 an hour after expenses. There are about 100,000 taxis and ride-sharing cars in New York City in 2018, up from about 60,000 in 2015.

Job Corps. Job Corps, launched during the 1960s War on Poverty, enrolls 50,000 students a year in isolated residential centers to learn some 100 trades, from automotive repair to welding. Two-thirds of those who enroll did not complete high school.

Job Corps costs taxpayers $15,000 to $45,000 per student per year, far more than high school. Defenders emphasize that 87 percent of graduates get jobs, while critics note that most of the jobs are low-wage slots in fast food that the graduates could have gotten without training. Five years after graduation, the average earnings of graduates are $12,500. Jobs Corps enjoys bipartisan support in Congress, in part because its graduation ceremonies attract politicians.

Job Corps deals with difficult students who are often housed on old military bases. Training in 123 centers is provided by NGOs and for-profit firms who argue that taking youth out of dangerous neighborhoods is necessary to help them to succeed; six contractors operate over half of all centers. Others say that housing students increases costs and brings gang issues into student dorms.

Harvard. Harvard's service workers, both 1,100 direct hires and another 1,000 contract workers, are represented by Unite Here and earn $25 an hour or more. A husband-and-wife team who work in food services for contractors at Harvard have a combined income of $120,000 a year.

Average earnings in service jobs such as cooks and janitors are $25,000 a year. Many of these services are provided to firms by contractors who compete with each other by holding down labor costs. Some advocates want to mandate a living minimum wage that Harvard and other institutions would require their contractors to pay employees. Harvard since 2002 requires that contractors providing services on campus pay the same wages as Harvard pays to directly hired workers.

The SEIU and other unions would like to extend the Harvard model to airports and other quasi-government entities that often use contractors to provide services. SFO sets minimum wage and training standards for contractor employees at the airport, and unions are pressing New York airports to follow suit. Some economists believe that if wages for low-skilled workers are pushed up too fast, there will be a wave of labor-saving automation.

H-1B. Employers requested 190,000 H-1B visas for FY19 for foreigners with college degrees coming to the US to fill jobs that require college degrees. Some 85,000 H-1B visas are available to for-profit employers; there is no cap on the number of visas available for nonprofits.

Employers and their advocates complained in summer 2018 that USCIS was demanding additional information on requests for temporary foreign workers, slowing their arrival. Trump's Buy American and Hire American executive order of April 2017 ordered federal agencies to enforce immigration laws to protect US workers. DOL approves almost all employer attestations or assertions that the employer is paying prevailing wages to the desired foreign worker, but USCIS adjudicators are requesting more evidence that the job requires specialty skills and/or that the worker desired by the employer has specialty skills.

Over 20 percent of H-1B applications were rejected at the end of FY17, up from 15 percent the year before, which some say reflects President Trump's April 2017 Buy American and Hire American executive order.

Seven IT outsourcing firms including Tata are being sued by US workers who allege that outsourcers prefer to hire South Asian workers. Tata hired 3,000 US workers in FY17 and received 14,700 H-1B visas, and a trial on the discrimination charges is scheduled for November 2018. Tata and defenders of outsourcers note that Southern California Edison and Walt Disney World did not violate H-1B regulations when they laid off their directly hired US IT workers and replaced them with H-1B workers employed by outsourcers.

USCIS plans to rescind a 2015 regulation that allows the foreign spouses of H-1B visa holders to also receive H-1B visas. Over 90,000 spousal H-1B visas have been issued, most to women from India.

Health. The average cost of health insurance offered by employers to cover employees and their families was $19,600 in 2018; employers paid an average 70 percent of this cost. Health insurance for individuals cost an average $6,900.

Most economists believe that the consolidation of hospitals has increased their leverage with health insurers, allowing them to raise prices.

In a bid to reduce surging health care costs, many economists recommend that consumers pay more of the cost and shop around for lower prices for particular services. However, only a third of heath care is elective or shoppable, and studies show that few consumers compare prices even for non-emergency care.

For example, most US residents live within 30 minutes of 15 facilities offering MRIs, where prices range from $300 to $2,000, but fewer than one percent of those seeking elective MRIs in one study compared prices. The quality of MRI images is very similar regardless of price.

Rural. Rural counties are whiter and poorer than urban counties. The county?with the highest median income that is entirely rural is Elbert in Colorado, a suburb of Colorado Springs and Denver, each about an hour away. The county with the highest density of households earning $200,000 or more is Glasscock in western Texas.

There are 24 counties with incomes above the US median and a higher-than-average density of $200,000-plus households, including 14 in North Dakota and Texas in oil country.