Wash Post: Low-Wage Employers Struggle After ‘Cheap-Labor Bubble’ Bursts

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Neil Munro

Millions of Americans are walking out of tough, low-wage jobs, and many of their employers are surprised they cannot easily recruit cheap replacements, according to a Washington Post article about workers and wages in Liberty County, Ga.

“It was nothing personal,” hotel maid Monique Rolle told the Post. “Target was paying more, so I dropped [working at] the hotel.”

“The reason that so many of these companies are unable to find workers now is because they rely on a flawed business model that only succeeds when the payroll is artificially held low [by an inflow of] foreign workers,” said Rob Law, the director of regulatory affairs and policy at the Center for Immigration Studies.

Since 1990, the federal government has imported millions of cheap workers for business. This policy of inflating the labor supply  allowed many employers to launch many low-productivity companies that cannot survive a higher-wage economy, he added.

President Donald Trump’s popular migration curbs and the coronavirus disease together burst the cheap-labor bubble, Law said.

Hasit Patel is an Indian legal immigrant who operates the two-star La Quinta franchise budget hotel where Rolle worked for roughly $8.50 an hour before she took her $15-an-hour job at Target.

Patel’s business plan depended on cheap migrant labor, according to what he told the Washington Post:

[His] struggle to find [replacement] labor felt like a blow to his whole notion of what made America great. An immigrant from India, he believed that the health of the U.S. economy was protected by a constant refreshing of the workforce, an injection of striving immigrants willing to take on some of the unpleasant jobs that many Americans are loath to do — like cleaning [his] hotel rooms.

Patel’s expectation was rational: From 1990 to 2017, the federal government inflated the labor force by adding roughly one migrant — both legal and illegal — for every three Americans who joined the workforce.

That economic policy of inflating the labor supply slowed in the 2008 crash and came to a sudden halt in 2020 when President Donald Trump closed the borders to slow the spread of the coronavirus. Overall, the federal government imported 5 million fewer foreigners from 2010 to 2020 — including 3 million fewer from 2017 to 2020 — compared to prior decades, according to recent reports.

The Post report continued:

“I can’t compete with the warehouses for wages,” Patel said. “The government should let us get people from India, even just for six months. The government has to realize there are certain job categories that American people don’t want to do anymore.”

The Post did not explain how Patel would import temporary workers from caste-divided India, where half the workers earn less than $100 per week. But the B-1/B-2 visa is used by some Indians to legally visit for six months — and illegally work while they are in the United States.

So, without a supply of very cheap workers from his home country, Patel reluctantly raised Americans’ wages “from $8.50 to nearly $11 an hour and offered more flexible schedules,”  the Post reported.

The Post says Patel is a franchise operator. That effectively means he is an imported manager for La Quinta’s parent company, its board, and its investors.

The Post reported similar recruitment problems at a Liberty County nightclub, a barber, and a local restaurant where the headcount fell from 42 to 12.

Those county problems are mirrored nationwide.

For the last few decades, multiple industries used the flood of new legal and illegal immigrants to create immediate profits and stock values. They have minimized investments in productivity-boosting technology, cut blue-collar wages, slashed training of non-college Americans, and chewed up workers because they could be replaced with more young Americans and more migrants.

The meatpacking, trucking, home construction, agriculture, retail, and food services sectors all reshaped their businesses to maximize profit from a vast pool of powerless, low-productivity workers.

“We don’t like to say this much, but it has long been the practice of many restaurants to hire staff as inexpensively as possible and provide them with the fewest benefits that they can, often by restricting their hours so they don’t qualify as full-time employees,” Bret Thorn, the senior food & beverage editor for Nation’s Restaurant News, told a national industry meeting in October. “We all know this,” he added:

I guess that can be a good business plan when the labor pool is deep, which it’s not now and I doubt will be for the foreseeable future, but it’s also cruel, and a growing number of people who have worked in restaurants now see that they can do better, and that they deserve better.

“What’s going on in the industry today … is historic,” added Rick Badgley, an executive at Brinker International, which owns the Chili’s Maggiano’s Little Italy restaurant chains. He urged managers to reward and respect their once-disposable workers:

You’ve got to be receptive to feedback … The workforce that we’re dealing with now has high standards, high demands, and high expectations. Make sure you’re investing the time to listen, listen to your team members, they have invaluable feedback for you.

In Liberty County, some local leaders told the Post that the federal government should force people to work by reducing financial aid:

Any return to life as it was, said [Donald] Lovette, chairman of the County Commission, will require redefining the relationship between workers and the government benefits they expect. “It’s not that people are lazy,” he said, “it’s that some of them are better off financially by not paying for child care, staying home for a while, using their benefits to pay down some debt. It’s simple economics.”

But there are plenty of locals eager to work at high-productivity workplaces that can pay higher wages than the budget hotels and cut-price restaurants. The Post reported:

The warehouses that turned open fields into beehives of loading and shipping could afford to raise wages and keep the flow of new workers strong. Rick Haslett, the operations manager at a new Home Meridian furnishings warehouse, said he received 100 applications for the 50 jobs he had to fill this fall. He had to promise 50-cent hourly raises every six months to draw enough interest, but his $15 hourly wage for laborers was a big boost for people coming from smaller, minimum-wage businesses across the county.

Despite the loud claims of a worker “shortage,” the county’s workforce is slightly higher that the pre-coronavirus workforce, when 25,229 people were working.

But the county is still poor and has been for decades. The per-capita income grew by a little over one percent per year from 1975 to 2019. After-inflation income grew faster under President Donald Trump, by roughly 2 percent per year, and hit $36,969 in 2019, according to the Federal Reserve Bank of St. Louis.

Immigration gets some of the blame for the county’s poverty.

The federal government uses legal and illegal immigration to spike economic growth. But the vast majority of migrants have no roots in heartland America, so they settle in the coastal states, such as New York and Los Angeles. In turn, this massive coastal workforce means there is little pressure on investors in New York or Los Angeles to create factories and well-paying jobs in distant Liberty County.

So Liberty County remains under-developed and poor while people grow investment, jobs, and wealth in California, New York, Texas, and Florida. County-wide, less than 60 percent of people older than 16 worked during the 2015 to 2019 period, according to Census Bureau data.

Nationwide, politicians are facing pressure from companies who want the federal government to re-inflate the cheap-labor bubble that it started in 1990. In Washington, that business pressure has added three cheap-labor giveaways buried deep in the pending Build Back Better bill.

Biden’s deputies are trying to re-inflate the cheap-labor bubble. So far, they have imported roughly 1.5 million migrants — both legal immigrants and illegal migrants — during 2021.

This massive wage-cutting, rent-spiking inflow is being welcomed into the country even while Biden praises labor shortages and rising wages. So far, Biden’s 2021 wave of migrants has not reached Patel’s hotel, because most of them travel to cities where they can maximize their wages while saving rent by sharing apartments with other migrants.

But politicians know that voters really do not want government officials putting migrants into the jobs that Americans need.

For example, Wisconsin Gov. Tony Evers zig-zagged between business and the voters when reporters recently quizzed him about companies’ demand for cheap imported workers, according to a December 15 report in KenoshaNews.com:

“If at some point and time, we as a nation can figure out immigration issues, the entire country would be thankful for that,” Evers said. “There are a shortage of workers, people, all across this country. For some reason, we haven’t been able to figure that out.”

[…]

Evers said he spoke to a large employer Monday night who echoed the workforce concerns heard by many. Evers said she told him if possible, she’d head to the border and come back with as many workers as she could find. “She said, ‘I’d be glad to take two buses down to the border of Mexico and bring back people that are willing, who want to work and be good Americans, bring them back to Wisconsin. I’ll pay for there [sic] housing and pay them $20 an hour to work, too,’” Evers said.

“That tells me that the immigration policy has to be fixed,” Evers explained.

But Evers knows that he will face the voters next year, so he scheduled the event to announce his award of $60 million in training grants for Americans.

“We have people in the State of Wisconsin that have an opportunity now with these projects in different parts of the state to increase their job skills so they’re more marketable,” Evers continued. “This is the right approach to take.”

But many business sectors keep demanding the federal government re-inflate the bubble. “What they are currently doing … is just a bad business model, and that’s why immigration is being used as a way of propping it up,” said Law.

Few media outlets have admitted the federal government’s creation of the post-1990s cheap-labor bubble. Instead, elite media describe the current walkout and recruitment crisis as a “Great Resignation,” as if job-related decisions by millions of Americans are unaffected by the government’s multi-decade support for a low-wage economy.

The Washington Post delivers excellent yet episodic coverage of American poverty. But the newspaper is silent about one of the biggest causes of American poverty — the federal policy of extraction migration. The policy impoverishes millions of Americans as it pulls millions of people from poor countries to serve as workers, renters, and consumers for the U.S. Chamber of Commerce and Wall Street investors.

The Post‘s silence also hides the federal government’s incoherence about migration, and the huge inflow of foreign graduates into the careers sought by U.S. college graduates — including careers at the Post‘s adoptive parent, Amazon.

Many polls show that labor migration is deeply unpopular because it damages ordinary Americans’ career opportunities, cuts their wages, and raises their rents.

Migration also curbs Americans’ productivity, shrinks their political clout, widens regional wealth  gaps, radicalizes their democratic, compromise-promoting civic culture, and allows elites to ignore despairing Americans at the bottom of society.

For many years, a wide variety of polls has shown deep and broad opposition to labor migration and the inflow of temporary contract workers into jobs sought by young U.S. graduates. This opposition is multiracial, cross-sex, non-racist, class-based,  bipartisan, rational, persistent, and recognizes the solidarity Americans owe to each other.

 

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