The Impact of the H-2B Visa Program on the Employment and Wages of U.S. Workers

This study examines the impact of an increase in the hiring of seasonal foreign guest workers through the H-2B visa program on the employment and wages of domestic workers in the U.S. The estimates of the program’s impact in this study improve on estimates in previous studies in several ways. First, by making use of relatively large recent changes in the number of H-2B visa workers entering the U.S. per year, the program’s impact is estimated from changes in labor market outcomes before and after a substantial policy change. Second, this study examines the local effects of the H-2B program rather than more aggregated geographic areas. The study presents evidence that the H-2B program allows employers to fill gaps in the supply of seasonal workers that are unlikely to be filled by domestic workers. This not only allows businesses to continue operation but also benefits other workers employed in these businesses, and the customers who rely on the products or services provided by them. This empirical evidence is bolstered by survey evidence that was collected for this study.

While previous studies have attempted to estimate either the state-wide or nationwide impact of the H-2B program, our empirical analyses focus on the local impact of the program in the areas that rely most on H-2B workers. Because the H-2B program is small relative to the overall size of the U.S. workforce, and seasonal labor shortages mitigated by the hiring of H-2B workers tend to be localized in nature, estimates based on larger geographical areas could understate the true impact of the program because they include areas that have little, if any, demand for seasonal guest workers. In general, there have been strict limits on the number of H-2B visas issued each year. Our estimates rely on policy changes in recent years, that increased the effective H-2B visa cap, to assess the local impact of possible future changes in the number of H-2B visas issued.

This study finds no empirical evidence that the increase in annually issued H-2B visas had a negative impact on the employment and wages of U.S. workers between 2015-2019 and 2023. In fact, we find that areas that were able to hire more H-2B workers due to the increase in H-2B visa cap experienced more2 employment growth and higher wage growth among U.S. workers. Our baseline empirical analyses show that:

• Across all workers in the local area, each additional H-2B worker in a local area is associated with the employment of 2.7 to 4.9 additional full-time-equivalent U.S. workers.
• For workers with more than a high school degree, each additional H-2B worker in a local area is associated with the employment of 3.5 to 4.1 additional full-time equivalent employees.
• Across all workers in the local area, wages grew 1.6% more, on average, in areas that hired more H- 2Bs.
• For workers with more than a high school degree, wages increased by about 2% more, on average, in areas that hired more H-2Bs.

Importantly, we find no significant effects of an increase in H-2B workers on the wages or employment of workers with a high school degree or less. H-2B seasonal guest workers do not appear to take away the jobs or depress the pay of workers with a high school degree or less. Instead, H-2B workers appear to be hired for positions that otherwise would not be filled by U.S. workers. Our results are consistent with the view that an increase in the H-2B cap would allow businesses in certain areas to more efficiently address the problem of seasonal labor shortages. The ability of businesses to more efficiently address seasonal labor shortages during their peak season appears to benefit full-year employees in the area, especially those with relatively more formal education who are complementary to seasonal workers.

This view, that the H-2B program is used by employers to fill gaps in the labor market that are unlikely to be filled by the domestic workforce, is reflected in the responses to a survey undertaken for this study. Respondents shared the efforts they take to hire domestic workers, prior to turning to the H-2B program, and their limited success in this before hiring foreign workers. They shared that, without the ability to fill seasonal job vacancies, they would likely need to limit operations, pass costs on to their customers, reduce investment, and cut sales. Finally, the survey gives insight into the challenges faced by employers going through the H-2B process that they rely upon; not only is the cap on H-2B visas a constraint on their3 operations, even following the program’s visa cap increase, but the bureaucratic process often results in workers arriving late for the season. This further disrupts their operations.

The final section of the report shows that the way in which H-2B prevailing wages are set further limits the potential positive impact of the program on economic growth in areas that tend to face seasonal labor shortages. First, H-2B wages are typically higher than the market wage of a seasonal or temporary worker, with prevailing wages set above the wages earned by more than half of the workers in an occupation and area. Prevailing wages in the current system that are above the market wage discourage the use of H-2B visas which harms seasonal business. Finally, the current system for setting prevailing wages introduces substantial uncertainty about prevailing wage increases and results in a pay system that is not characterized by the common area pay differences and common occupation pay differences that are typical of the pay systems of large organizations including the federal government.

Read the full report here.