I have a client who runs a very well-respected landscaping company in a suburb of Philadelphia. He wouldn't like to be featured in the article, so I'll call him Rick. For years, Rick's company has hired foreign workers. He says he needs to do this. The landscaping business is very competitive. He has a difficult time finding people to do the very physical work required. The work is seasonal so he can't guarantee employment year round. The competition is so fierce (anyone with a lawnmower can call themselves a "landscaper" so the barrier to entry in this industry is very low) that he would find it very difficult to pay higher wages. And, worst of all, he has a very serious suspicion that a few his competitors uses and pays lower wages to illegal immigrants which allows them to undercut his pricing--a suspicion that he's never been able to prove.
Rick brings his workers in under the government's H-2B Work Visa program which was created mainly for non-agricultural jobs in which there is a shortage of United States workers. There are up to 66,000 H-2B Visas issued annually. And now, after the horrific terror attack in Paris there's a backlash against not only bringing refugees into this country but an increasingly intense national debate over foreign workers and immigration.
"Maybe I should just top using foreign workers altogether," he told me this weekend. He may have a point. If you're hiring foreign workers for your business, you're in the middle of a very passionate and public immigration debate which may not be a place where you want your business to be. But that's not the only reason why you may want to reconsider your decision. There are at least three others.
Since 2006, Federal rules have required companies to notify their local unions if they are applying for foreign workers. Michael Cunningham, for example, who leads the Texas State Building & Construction Trades Council was reported to have "...studied the rules for hiring foreign workers and challenged many applications on simple errors like timeliness and proper job posting language, or on whether the jobs really were temporary. He also asked union leaders to demonstrate that enough U.S. workers were available to fill the jobs. If a company wanted 100 foreign welders, union members would flood the company's fax machine with rsums. Cunningham estimates that during the past decade the coordinated effort has kept more than 50,000 foreign construction workers from obtaining temporary visas to work in the U.S., including thousands along the Gulf Coast." Unions are not in favor of replacing their own, more skilled and (more importantly) dues paying members with lower cost workers from overseas and can cause trouble for those companies that take this direction.
Besides the 66,000 H2B permits that Rick uses to attract seasonal workers to his company, the U.S. government issues 65,000 H1B work permits each year for foreigners who perform "specialty" work (i.e. STEM--science, technology, engineering, math). President Obama's executive actions for immigration has sought to not only grant legal citizenship status to many of those who came into the country illegally but to also increase the opportunities available to those foreign workers, particularly the ones with STEM qualifications, to also stay longer. A recent Federal court ruling rejected these actions and the appeals process is expected to ultimately take the matter to the U.S. Supreme Court. In the meantime, immigration law remains quirky and controversial, keeping attorneys that specialize in this field very busy. And the debate in Washington continues. Even as some GOP candidates support building a wall to keep out illegal immigrants, a bill was introduced just this month in Congress to increase the number of unskilled foreign workers that firms can bring into this country for temporary work. It's a very fluid issue where people are taking sides. For Rick, hiring foreign workers puts his company in the middle of this national debate. "I cut lawns and do flower beds," he grumbled. "This is not the kind of attention I'm looking for."
Finally, and more exasperatingly for small business owners like Rick is the competition they must face for foreign workers against some big, formidable opponents--particularly giant outsourcing firms that are hired by giant corporations and who, according to this New York Times piece, are gaming the system. "Of the 20 companies that received the most H-1B visas in 2014, 13 were global outsourcing operations, according to an analysis of federal records by a Howard University professor. The top 20 companies took about 40 percent of the visas available--about 32,000--while more than 10,000 other employers received far fewer visas each. And about half of the applications in 2014 were rejected entirely because the quota had been met." The problem has gotten so bad that legislation was introduced in Congress just this month to limit this kind of visa abuse by larger companies. But will this help small companies? Not according to Rick. "I don't have the money to hire attorneys and lobbyists to protect my interests," he says. "And I'm not sure it's worth the fight. Every year the process gets more difficult and tiresome."
To remain competitive Rick is increasingly finding himself reliant on a workforce that is subject to regulations and challenges which he cannot control. And this, unfortunately, is not a long term business model. More pressure from the unions, the government and public opinion, particularly in the wake of terrorism fears and immigration concerns could further limit his options. And corporate America will always have more resources to win more workers. Hiring foreign workers is becoming just too risky.
"My business needs to change," Rick agreed when we discussed this. "Or I think I'm going to find myself out of business someday sooner or later."