August Unemployment Numbers: The Guestworker Pause is Still Necessary

The Department of Labor released the unemployment report for the month of August, finding that the economy continues to improve, albeit very slowly. While the 8.4 percent unemployment rate is significantly lower than the 14.7 percent at the height of the COVID-19 economic crisis, it remains far above the pre-virus level of 3.5 percent. These developments lend weight to the president’s continued pause of some guest worker admissions in an effort to protect American workers.

Millions of Americans remain out of work despite some modest economic recovery since April, the peak of the COVID-19 economic crisis. The virus remains an everyday part of our lives, particularly around major population centers and cities. And while many people begin reporting back to their old jobs, that is not the case with some of the industries hit hardest by the COVID-19 shutdowns. The Federal Reserve noted in a September 2 report that “some Districts also reported slowing job growth and increased hiring volatility, particularly in service industries, with rising instances of furloughed workers being laid off permanently as demand remained soft.”

As the unemployment rate continues to slowly decrease, there will inevitably be calls from the powerful business lobby to resume guest worker admissions in the H-1B, H-4, H-2B, L-1, and J-1 programs, which President Trump’s executive order halted. The U.S. Chamber of Commerce already sued the administration over the executive order, charging that businesses needed these foreign workers even when millions of Americans remained unemployed at the height of the crisis.

Companies in the service industries use many of these programs to fill jobs, particularly the H-2B and J-1 programs. As long as the unemployment rate remains significantly higher than it was prior to the COVID-19 economic collapse, then there is no reason to lift the executive order barring guest worker admissions. The order expires on December 31, 2020. Whoever wins the November 2020 presidential election should strongly consider continuing the executive order past the end of December and into the new year.

Guest worker programs are not ideal even when unemployment is low. These programs negatively impact wages and reduce the positive effects of a tight labor market. During times of widespread unemployment and low labor force participation, these programs do real harm to Americans looking for gainful employment. The August gains are something to cheer about – but they are hardly a sign that we should relax the restrictions on guest workers.

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