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January 2019, Volume 25, Number 1

Labor, H-1B

The unemployment rate was below four percent in 2018, as the US added 2.6 million jobs, an average 220,000 jobs a month, up from 182,000 a month in 2017 and 195,000 a month in 2016. The labor force participation rate, which was 66 percent before 2008-09, remains at 63 percent. Some of the decline is due to an aging population; 80 percent of persons 25 to 54 are in the labor force.

Wage growth has been restrained, rising 3.2 percent between December 2017 and December 2018, slower than the 4.2 percent rate of 2000. Explanations for slow wage growth in 2018 range from more workers who are not in the labor force and slower productivity growth to more employer power in labor markets as private sector unions decline in strength.

Seattle raised its minimum wage to $13 an hour in 2016 for large employers, prompting speculation about the effects of higher wages on workers. Initial studies suggested that restaurant employment was not changed by the higher minimum wage, but employers replaced less- with more-skilled workers who were attracted by the higher wage. Subsequent research suggests that workers who were employed longer (over 600 hours in nine months) benefitted most from the higher minimum wage.

The Trade Adjustment Assistance program has since the 1960s provided two years of unemployment benefits and up to $10,000 for retraining for workers whose lost jobs due to trade, as when US factories close and jobs move to China or Mexico. About three-fourths of displaced US workers who participate in TAA find new jobs, but most earn at least 20 percent less than they did in their old jobs.

New service jobs often offer fewer benefits than previous factory jobs; older workers suffer the largest decrease in wages and benefits. Critics of TAA say that its generous benefits encourage especially older workers to maximize their benefits rather than find new jobs. The Trump Administration may revise TAA to stress getting workers into new jobs more quickly, and emphasizing on-the-job rather than classroom training.

H-1B. USCIS in November 2018 began to require IT outsourcers who place H-1B workers at third parties to list the names and addresses of their clients on their applications for H-1B visas. USCIS will use a lottery to award H-1B visas for FY20 if employers request more than the 85,000 available when they can apply beginning April 1, 2019.

Tata Consultancy Services was found innocent in California in November 2018 in a class-action case that featured three US workers saying they were fired because they were not South Asian. Mumbai-based TCS says that it hires and retains workers solely on the basis of their capabilities. About 12 percent of US IT workers are South Asian; TCS has a workforce that is 80 percent South Asian.

Since 2011, TCS fired 11 percent of its non-South Asian workers in the US, compared with less than one percent of its South Asian employees. Most of the US workers suing TCS were fired when they were on benched status, which means they were between assignments to US firms to provide IT services.

Licenses. Wages have been rising slowly since the 2008-09 recession, and economists cite labor-saving technologies, trade and other factors for the failure of hourly earnings to rise faster as unemployment falls. Some economists say that slow wage growth reflects government and employer behavior, such as state and local laws that require workers in many occupations to have licenses.

Some employers are monopsonists, hiring such a significant share of a particular type of worker so that their hiring decisions affect the wages paid to all workers in that occupation, such as a hospital hiring nurses. A monopsony hospital that has sufficient nurses to staff weekdays and regular hours may find it cheaper to pay higher-than-average wages to foreign and visiting nurses for night time and weekend work rather than raise wages for all nurses to attract more.

Many employers have non-compete clauses that prevent their employees from switching to similar jobs with other employers. Non-compete clauses were originally limited to professionals who could pass on company secrets, but have been extended to many jobs, including fast food and janitorial services. Amazon requires new warehouse employees to sign non-compete agreements. By one estimate, 20 to 40 percent of US workers are covered by non-compete agreements, including a seventh of workers without college degrees.

Cushman & Wakefield sued a former janitor for taking another job in the same building with a different firm that offered higher wages. Studies find that non-compete agreements hold down wage growth, since most workers do not want to be sued by their former employers.

College. Harvard was sued by Asian Americans alleging that they were discriminated against when seeking admission; Harvard admits about five percent of applicants. Testimony during the three-week trial showed that children of Harvard alumni and faculty, donors and recruited athletes, about five percent of applicants, are 30 percent of admitted students.

Harvard argued that it needed to discriminate against Asian Americans to provide continued legacy and donor preferences and to provide opportunities for Blacks and Hispanics. Students for Fair Admissions countered that discriminating against one group to favor another is unlawful.

A federal judge is expected to rule in Spring 2018. The US Supreme Court's most recent decision, in a 2016 University of Texas case, concluded that colleges could use race as one factor in considering applicants and creating a diverse student body.

The number of international students in the US fell 10 percent over the past two years, reflecting tighter visa standards and competition from English-speaking universities in Australia and Canada. There were 1.1 million foreign students in the US in 2018, a third from China. Some 333,000 US students are enrolled abroad.

The US has 24 percent of all foreign students, followed by the UK with 11 percent. China, with 3,000 universities, has become the third leading destinations for international students.

Population. The US population was over 328 million at the end of 2018, and is projected to be almost 390 million by 2050. The number of non-Hispanic whites is projected to be 185 million in 2050, less than half of the total population.

The US population rose 0.6 percent between July 2017 and July 2018. There were 3.9 million births, 2.8 million deaths and 979,000 net immigrants.

In 2050, there are projected to be 100 million Hispanics, 57 million Blacks, and 35 million Asians; 20 million people are projected to have two or more races. Americans designate their race and whether they are of Hispanic origin on government forms, raising questions about whether children of mixed-race parents are white or minority. The Census Bureau considers most people who have both white and minority ancestry to be minorities.