“Ask the Economist” – H2B “Guest Worker” Visas for Michigan Resorts

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A man of the left shares his letter to Congress members with the Mackinac Center today, in which he urges halting all H2B visas for “importing workers that the Michigan ‘Resorts for the Wealthy’ use.”

 

He contends that, “besides being paid sub-standard wages, these import workers do not know their rights and are basically ‘indentured servants’ for these rich resorts –  resorts for the richest of the rich can well afford to pay a living wage and they should.”

 

I responded as follows:

 

 

Dear Mr. Left:

 

The other side could make valid case that these H2B visas are good public and economic policy. You argue for the equally valid view that they are not good public policy.

 

Those in favor would argue that, economically, eliminating the visas would impose a “deadweight loss” on the economy – the economic benefits from increased wages that presumably would be required to employ U.S. citizens would be more than canceled by the net reduction of overall economic activity caused by the higher prices resort visitors would have to pay. In advance of actual data, which side is correct is a judgment call.

 

Visa proponents would correctly observe that when wages drive resort prices higher, the supply/demand equilibrium is found at a lower point on the supply curve. That is, fewer customers would visit the resorts, which means fewer resort jobs, fewer jobs at related attractions, lower returns on investment for the owners of those resorts and attractions, less future investment – a lower level of overall economic activity in general.

 

You would correctly observe that more money in the pockets of the workers who remain may also add to economic activity. Presumably you would argue that this more than makes up for less business at resorts, and so there is no “deadweight” economic loss.

 

One side would be right and the other side wrong, but without “running the experiment” it’s not possible to say with certainty which is correct. Even after the “experiment” the results would be ambiguous, because there are so many other variables.

 

Economic theory and history are on the side of net “deadweight loss,” but that can’t be predicted with certainly in any particular instance.

 

Separate from the empirical economic considerations, there are “normative” or value judgements: The rightness or wrongness of foreigners getting these jobs instead of natives; the rightness or wrongness of policies that force business owners to pay wages above the free market equilibrium. 

 

On the latter, I would argue that the presence of a multitude of such policies do impose a deadweight loss on the overall economy, with effects that fall disproportionately on those at the lower end of the economic spectrum: Who suffers most from a lousy economy? So the “moral” case for benefitting a few in in that lower income group – very likely at the expense of the many – is less a “no brainer” than its proponents would like to believe.

 

That said, I share your concern that in the present era the relative value of a strong back and willing hands has fallen, and this represents real challenges for a society that doesn’t want to be divided by permanent class differences (even if standards of living have risen across the board). My favorite proposal for addressing this is contained in a proposal and short book by Charles Murray. I am also not unfriendly to Earned Income Tax Credits.

 

Sincerely,

 

Jack McHugh

 

 

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“I have found, over a long time, that some people are natural economists. They don’t take a course, but they understand–the principles seem obvious to them. Other people may have Ph.D.s in economics, but they’re not economists. They don’t think like an economist. Strange, but true.” 

 Milton Friedman

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2 Responses to ““Ask the Economist” – H2B “Guest Worker” Visas for Michigan Resorts”

  1. Colon Grandy, Jr. Says:

    The watermen who make their living here on the coast of North Carolina catching hard crabs are taking a hit because the crabmeat picking houses cannot get the H2-Bs to pick the crabs. Just goes to show you the Congressmen doesn’t care about working people.

  2. znakomstva Says:

    jFqTvD http://agency76.110mb.com/
    seks znakomstva kiev

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