Service Industry Struggles Under Immigration Crackdown

Congress' failure to pass a guest worker program creates problems for employers.

By Elizabeth Banks, Intern, The Kiplinger Letters

July 17, 2007

Businesses are feeling an immigration pinch as a result of the Senate's failure to pass comprehensive legislation that includes a guest worker program. As federal officials tighten border controls and states pass more laws penalizing employers for hiring illegals, many companies are finding it difficult to fill jobs.

Hardest hit is the service sector, particularly hotels and restaurants in remote areas that depend on seasonal help. The permanent population in these areas is too small to meet the need, and it's increasingly difficult to bring in workers from abroad.

Take the case of the Grand Hotel on Mackinac Island, Mich., a town with a population of a little over 500. The Grand looks to hire American workers from urban areas, if possible, to meet summer demand, but with no easy commute from nearby cities, seasonal workers have to move into the area. American workers, especially those with families, do not want to, given that unemployment is low and comparable jobs can be found closer to home. That forces the hotel to look internationally, particularly to Jamaica. But with only 66,000 H-2B visas available for unskilled, nonfarm workers this year, the Grand couldn't fill its need for 300 foreign workers.

The wait for an H-2B visa is now several months longer that it was just a few years ago. That makes it almost impossible to fill positions in a timely fashion. The Basin Harbor Club in Vergennes, Vt., began this year hoping for 50 to 70 H-2B visas to help fill out its employment rolls, but the cap had already been reached by the time its applications cleared bureaucratic hurdles. That meant the company had to find workers who had been in the U.S. before and therefore didn't count against the cap. That took more time, with many employees not starting until two months after they were needed. The hotel had to make adjustments, leaving one of the dining venues unopened for a month and putting some workers on double or triple shifts, costing the family resort in overtime wages and lost revenue.

Bureaucratic snafus are hardly uncommon, especially this year. The general manager of the Aspen Lodge, part of the Grand Marais Hotel Co. in Minnesota, says that his company has been using the H-2B program for the past seven years, but that this year, it faced problems never seen before. The company first filed paperwork on Feb. 6. Four weeks later federal immigration officials told it for the first time that it had to supply workers' names before visas could be issued. The company submitted the names and was told four weeks later that the cap had been reached. When the company argued that it wanted return-visa workers, as opposed to new ones, it was told to provide proof that those workers had been in the U.S. before. More time passed, and the company eventually learned that its application had been lost. This meant that during the important July 4th holiday period, almost five months after the company originally filed for the visas, the hotel was still understaffed.

The construction industry is also hurting, with firms constantly looking for new hires, often unsuccessfully. The situation is particularly bad in states -- Colorado, for one -- that have passed laws imposing requirements on employers that go beyond federal regulations.

Gould Construction in Glenwood Springs, Colo., ran into problems when it couldn't bring in the 15 workers it wanted because the cap on H-2B visas had been reached. That left the firm short of unskilled workers and pipe layers, forcing it to cut back on the number of projects it accepted.

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