For a PDF version of this report, click here.
A market-based approach to issuing temporary guest worker visas will harm workers by driving down wages for all workers in the U.S. The Hamilton Project, in its report, Rationalizing U.S. Immigration Policy: Reforms for Simplicity, Fairness, and Economic Growth, proposes that the U.S. auction visas and citizenship to the employers who pay the highest price and remove what little protection foreign and domestic workers have under the current skilled visa system.
Workable proposals to reform our immigration system must include an evaluation of labor market needs and market wage minimums. The Hamilton Project proposal lacks both of these features. Former U.S. Secretary of Labor Ray Marshall has proposed an immigration reform plan that protects workers and provides employers with needed workers.
The Hamilton Project report ignores flaws and proposes dangerous changes
The Hamilton Project proposes that employers be permitted to purchase work permits for guest workers at auction. The work permit can be used by the employer to hire a temporary guest worker for up to five years after the worker obtains a visa. Employers would be free to pay the guest worker any wage. The prices of the permits would be determined at auction, but it is estimated for skilled workers, the auction price would be around $7,000. The goal of the auction system would be to create a market-based immigration system.
A virtually unfettered free-market immigration system is an extremely poor substitute for sensible immigration policy that balances the needs of employers and workers. The auction scheme includes no protections for wages or workers, but instead grants employers extensive access to the global labor pool. Free markets tend to lower worker wages, which is accomplished by flooding the market with low-cost labor.
The report acknowledges that immigrants negatively affect wages of U.S.-born workers (Peri, 24). However, it suggests that the auction price of the permits would ensure that employers have no incentive to hire temporary guest workers. This assertion ignores the fact that current fees and expenses for H-1B visas would be almost equal to the auction price for a permit. There would also be no prevailing wage minimums as under current law and employers would be free to pass on the cost of the permit to the employee. This would significantly undercut U.S. citizens and permanent residents.
Flooding the labor market with workers in just a few sectors, including computer-related and engineering occupations, puts guest workers in direct competition with domestic workers. Guest workers should be used to complement the domestic workforce in the event of labor shortages, rather than displace them.
If the goal of skilled immigration is to recruit the best and brightest workers as many claim, then the Hamilton Project proposal falls short. The auction scheme continues many aspects of the current system, including allowing employers to directly hire guest workers regardless of labor market needs. Under today’s skilled temporary immigration system, employers are hiring average, low-wage workers, not the best and the brightest.
The report repeatedly states that skilled guest workers and recent foreign graduates from U.S. education institutions are forced to leave the U.S. because of the limitations of current immigration laws (Peri, 7, 8). This is simply untrue. The H-1B visa provides a path to U.S. citizenship. However, the employer must be willing to sponsor the worker for citizenship. If the employer does offer to sponsor the worker for citizenship, the work visa can be extended indefinitely until permanent residency is received. In 2010, only 18 percent of guest workers were sponsored for permanent residence by their employers. Recent foreign graduates can also gain access to the U.S. labor market for up to 29 months through the Optional Practical Training program, which can then be converted into an H-1B visa. Proposals to reform our immigration system should not be based on misrepresentations of the current immigration system.
Numerous problems plague the current immigration system
The current temporary guest worker system is plagued by several problems that harm workers. A labor shortage is not required before an employer can hire a temporary guest worker and the wage minimums are too low.
Currently, most employers hire temporary guest workers even when qualified domestic workers are available. This has angered many workers who have struggled to find work in the down economy. Employers repeatedly profess that they are unable to hire qualified workers, but they balk at the idea that they should demonstrate what steps they took to find qualified U.S. workers. To date, millions of temporary workers have been hired, despite strong evidence that there is an ample supply of U.S. workers.
Employers often argue that temporary visas are needed to hire the best and brightest workers. However, the evidence shows that most guest workers are entry-level, paid the lowest possible wages, and their employers refuse to sponsor them for permanent residence. The best and brightest workers in the world are not low-paid, entry level workers who are purposefully kept in temporary status.
The H-1B program, the temporary visa program used by most employers to access the global labor force, is used by employers to drive down labor costs. Corporate-side supporters who use the H-1B program have repeatedly stated that the program is used and should be used to reduce labor costs. Numerous studies have found that temporary guest workers have lowered wages, especially in occupations that have a high concentration of guest workers, including among computer programmers, system analysts, and software engineers. The Hamilton Project recommendations would add to the wage competition and decline by eliminating the prevailing wage requirement.
The Ray Marshall plan offers a balanced approach to immigration reform
The system for allocating employment visas – both temporary and permanent – should be de-politicized and placed in the hands of an independent commission. The commission would be served by a professional staff of economists, demographers, statisticians, and immigration specialists to assess labor market needs on an ongoing basis, based on a methodology approved by Congress. In designing the new system, and establishing the methodology to be used for assessing labor shortages, the commission would be required to examine the impact of immigration on the economy, wages, workforce, and business. This would ensure that guest workers complement, rather than displace domestic workers.
There must also be minimum wage standards for guest worker visas. The minimum wage should be set at the 75th percentile of the market wage for a given occupation. Establishing a minimum market wage would ensure that employers truly recruited the most talented employees, instead of depressing wages by recruiting low-wage, entry-level workers.
Congress should reaffirm the dynamism of the U.S. labor market by allowing guest workers to work for any employer after 18 months, so long as an independent commission has determined there is a labor shortage. This would end the indentured nature of our current guest worker visa programs. Greater movement for guest workers would allow them to more freely engage in union activities, negotiate higher wages, access health and safety laws, and benefit from other worker protections without fear of retaliation and deportation.
Workers must have confidence that their government is acting in the interest of workers and business. The imbalance between these sometimes competing interests has led to the unpopularity of skilled guest worker visa programs, especially among the workers in the affected industries. The Hamilton Project scheme does not remedy the flaws, nor move toward instilling confidence, in our skilled guest worker visa system. An independent commission to assess and manage future flows of labor would address the shortcomings of the current skilled immigration system.
The Department for Professional Employees, AFL-CIO (DPE) comprises 21 AFL-CIO unions representing over four million people working in professional and technical occupations. DPE-affiliated unions represent: teachers, college professors, and school administrators; library workers; nurses, doctors, and other health care professionals; engineers, scientists, and IT workers; journalists and writers, broadcast technicians and communications specialists; performing and visual artists; professional athletes; professional firefighters; psychologists, social workers, and many others. DPE was chartered by the AFL-CIO in 1977 in recognition of the rapidly growing professional and technical occupations.
Paul E. Almeida, President
For a PDF version of this report, click here.
 Peri, Giovanni, Rationalizing U.S. Immigration Policy: Reforms for Simplicity, Fairness, and Economic Growth, The Hamilton Project (May 2012).
 Marshall, Ray, Immigration for Shared Prosperity—A Framework for Comprehensive Reform. Washington: Economic Policy Institute, 2009.
 See: Gaming the System 2012: Guest Worker Visa Programs and Professional and Technical Workers in the U.S. Washington: Department for Professional Employees, AFL-CIO (April 2012).
 See: Gaming the System 2012: Guest Worker Visa Programs and Professional and Technical Workers in the U.S.
 Tambe, Prasanna and Hitt, Lorin M., H-1B Visas, Offshoring, and the Wages of US Information Technology Workers (April 14, 2009).
 See: Immigration for a Shared Prosperity: A Framework for Comprehensive Reform.