The Comprehensive Immigration Reform Act of 2006 (S. 2611): Potential Labor Market Effects of the Guest Worker Program

Publication Date: December 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Labor; Population and demographics

Type:

Abstract:

In the 109th Congress, the Senate passed S. 2611, the Comprehensive Immigration Reform Act of 2006, which would have created a new H-2C guest worker program. The 110th Congress may consider similar legislation.

The guest worker program included in S. 2611 would allow up to 200,000 foreign workers into the United States annually. An employer would have to pay an H-2C worker the greater of the "actual" wage paid by the employer to other workers who do the same kind of work and have similar experience or the "prevailing" wage. Employers would be prevented from hiring H-2C workers if the area unemployment rate for unskilled workers averaged more than 9% for the previous six months. The language in S. 2611 would allow employers to hire skilled, semi-skilled, or unskilled workers, but not agricultural workers or certain types of skilled workers. The kinds of jobs filled under the H-2C program could be similar to the kinds of jobs filled under an existing (H-2B) program, which is used mainly to hire lower-skilled workers.

Initially, an increased supply of lower-skilled foreign workers could be expected to lower the relative wages of lower-skilled U.S. workers. If the H-2C program were enacted, an increased supply of lower-skilled foreign workers may have the greatest impact on young, native-born minority men and on foreign-born minority men in their early working years. In 2005, lower-skilled U.S. workers were mainly white, non-Hispanic males under the age of 45. But a disproportionate number of these workers were young (16 to 24), minority (black or Hispanic) men. The unemployment rate among young, native-born minority men tends to be higher than among similar nonminority men. In 2005, almost a fifth of lower-skilled workers were foreign born, and a disproportionate number of these were minority (nonwhite or Hispanic) men in their early working years (25 to 44). Foreign-born minority men in their early working years tend to earn less than similar native-born workers.

In response to an initial decline in the relative wages of lower-skilled workers employers may hire more lower-skilled workers and fewer skilled workers. Thus, the initial widening of the wage gap may narrow over time. Other factors -- such as technological change, trade, saving and investment, education and training, demographic changes -- may also affect the wages of U.S. workers.

The H-2C program could be used by employers to meet seasonal demand, to hire foreign workers at full employment, or to fill jobs when there is a mismatch in a geographic area between the skills demanded and the skills available. In each case, U.S. workers may not be available at the wages offered. They may or may not be available at higher wages.

If employers are not able to hire qualified U.S. workers in high unemployment areas (i.e., more than 9%), there may be a mismatch between the skills available and the skills employers need. This report will be updated as warranted.