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Immigration

Why H-2B Changes Have Low-Wage Maryland Employers Crabby

Mexican workers on the U.S. H2B visa program for seasonal guest workers, process crabs at the A.E. Phillips & Son Inc., a crab picking house on Hooper’s Island in Fishing Creek, Maryland. (Jonathan Ernst/Reuters)

Crab processors in Maryland are desperate for more low-skill guest workers, and they are urging the Trump administration to issue more H-2B visas to accommodate them, according to a report in the Wall Street Journal. I am skeptical of the need for more H-2B visas, for reasons I will explain. But reporter Scott Calvert does a good job of laying out why the processors find it so difficult to recruit U.S. workers.

For one, the jobs are seasonal, lasting about eight months a year, and the work is grueling. Though the wages on offer represent a marked improvement for low-skill Mexican workers, they aren’t high enough to tempt many Americans to uproot themselves to settle in rural Maryland. Calvert reports that processors are required to pay their workers a minimum of $9.51 per hour, and the most productive among them can earn as much as $16.25 per hour once their piece rate is fully taken into account. Even if we assume that all workers are earning this top rate, they have to find suitable housing. The processors typically provide housing on the premises, for a modest free, but low-skill guest workers are willing to live in conditions that U.S. workers might find objectionable. The U.S. workers who are willing to take these jobs are often foreign-born. Calvert cites the example of several Cambodian-born green card holders working in one seafood processing facility. Others are native-born Americans who already live and work in the area, and who presumably don’t have many other attractive options. However, as more Americans leave areas for more opportunity-rich cities, this labor supply is dwindling.

Defenders of guest-worker visas thus insist that these workers aren’t displacing American labor. Rather, they complement higher-wage U.S. workers, such as the truckers who deliver products and the restauranteurs who depend on a steady supply of cheap crab. And they have a point. But there is another reason crab processors might prefer foreign seasonal workers over Americans that is mostly left unsaid.

As W. Kip Viscusi observes in Pricing Lives, while native U.S. workers are compensated for taking on dangerous jobs at a level that values their lives in the range of $9-$10 million, Mexican workers typically receive far lower wage compensation for facing the risk of death or injury. Maryland’s crab processors aren’t about to openly state that they are more worried about lawsuits from American workers than they are from guest workers who often can’t speak English, let alone navigate the U.S. legal system, but this is undoubtedly part of the story.

So why am I not more sympathetic to Maryland’s crab processors? I understand why Maryland’s crab processors might resent the suggestion that they adapt to a new way of doing business — in which labor costs are higher, and workers are more generously compensated for the risk of injury — just as I understand why taxi medallion owners in New York city are upset about the rise of Uber and Lyft. What is also true, however, is that there is more than one way to go about picking crabs. In rural Newfoundland, for example, local crab processors are experimenting with robots capable of extracting meat from crab shells, which promise to reduce reliance on low-wage seasonal workers while increasing productivity and boosting demand for higher-wage complementary workers. If crab processors were convinced that the Trump White House would not heed their pleas to increase the number of H-2B visas, or if they could only employ H-2B guest workers under conditions that would attract U.S. workers residing in depressed regions of the country, they would have no choice but to either revamp their business models or lose out to more nimble competitors, whether at home or abroad.

And at the risk of sacrilege, it must be said that there are substitutes for fresh lump crab meat, some of which are potentially less labor-intensive. In Japan, for example, imitation crab meat, made from a combination of whitefish, egg whites, and other ingredients, is increasingly considered a delicacy. Tastes change in response to changing economic conditions all the time, as demonstrated by the fact that lobster went from being a low-status protein, once memorably described as “chewable fuel,” to one of the most prized.

I say we let the economy run hot and allow creative entrepreneurs to make do with rising wages.

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