Linda Benedict | 3/6/2014 2:55:36 AM
Ashok K. Mishra, Hyunjeong Joo and Jeffrey M. Gillespie
The seafood industry has faced significant economic challenges over the past two decades, causing seafood businesses to search for cost reduction strategies, including those associated with labor. It has become difficult for seafood processors to recruit local workers, perhaps because of relatively low wages. Most workers have found better-paying jobs in the construction and oil industries. Local seafood businesses have tried creative recruiting measures, such as plant shifts during school hours for working mothers. Employee retention continues to be a problem despite such efforts, with high turnover rates and poor retention.
To fill the shortage of local workers in the seafood processing industry, Louisiana seafood businesses increasingly rely on H-2B workers (so-called nonimmigrant labor) despite substantial upfront costs to participate in the program. Since 2005, the Louisiana seafood processing and packaging industry has employed a considerable number of H-2B visa workers (more than 2,500 per year). They are temporary workers hired for seasonal industries from other countries, mainly Mexico and Central America.
This article provides insights into the hiring preferences by Louisiana’s seafood processing industry. This analysis may aid elected officials in supporting policies that can help smooth labor gaps; extension agents in targeting gaps in their parishes that can be addressed; and seafood processors in assessing which attributes are important in hiring and retaining productive nonimmigrant workers.
Data were collected from Louisiana seafood processors to determine wages and worker numbers and to shed light on the demand and supply of workers, both domestic and foreign (H-2B), and preferences for nonimmigrant workers by Louisiana seafood processors. A survey included questions dealing with the firm’s labor requirements, use of migrant workers and effects of federal regulations concerning labor and hiring preferences. All questions concerning labor use and firm productivity referred to 2011.
Respondents were asked to first consider a most preferred and a least preferred worker profile on the basis of three attributes – immigrant status, references and wages. They were to rate worker profiles on a scale of zero to 10, with 10 being most preferred and zero, least preferred. Consultation with the Louisiana Department of Wildlife and Fisheries confirmed that 70 seafood processing companies were operating in Louisiana. With 37 completed surveys, this constituted a 53 percent response rate.
Results of the study indicate that domestic employees were preferred to immigrant employees who were non-H-2B visa holders. A potential employee with excellent references was preferred to one with mediocre or poor references. As expected, paying lower wages was preferred to paying higher wages. Results in Table 1 indicate that, given the range of wages for consideration ($8 - $15), seafood processors were most concerned about wages, which accounted for 42.4 percent of the preference. The second most important attribute, at 30.2 percent importance, was references, followed by immigrant status, at 27.5 percent. Findings suggest seafood processors are most sensitive to labor costs. Therefore, new policies forcing increased wages for H-2B visa workers would have a significant negative effect on a processor’s well-being.
It is also striking, however, that both references, which are a proxy for perceived worker productivity, at 27.5 percent and immigration status at 30.2 percent are also quite important and are of roughly equal importance. While the wage to be paid is the most important, hiring non-H-2B immigrants and applicants with poor or mediocre references would reduce processor well-being significantly. Thus, when hiring migrant labor, H-2B status is highly important, as is perceived worker productivity – two results consistent in discussions with seafood processors. Finally, processors were clustered into two groups based upon the similarity of their preferences.
Findings in Table 2 from that analysis reveal that larger-scale processing firms in Group 2 placed greater emphasis on references while the smaller-scale firms of Group 1 placed greater emphasis on wages. Assuming significant economies of size associated with seafood processing, the greater emphasis smaller firms place on wages would be expected.
If the new wage of H-2B visa workers was higher than the current wage for a U.S. citizen and non-H-2B visa workers, then the new policy would lower the well-being of processors and reduce their use of H-2B labor relative to domestic and non-H-2B labor. Indirectly, one can surmise that if the U.S. Department of Labor forced seafood processors to pay higher wages to H-2B workers, then the increased wages would result in a burden for employers and in lower firm profit. This is of particular concern if wages for H-2B workers are lower than those for non-H-2B workers, as these data suggest.
Acknowledgment: Louisiana Sea Grant for funding this study.
Ashok K. Mishra is Donald Welge Endowed Professor, Hyunjeong Joo is a graduate research assistant and Jeffrey M. Gillespie is Martin D. Woodin Endowed Professor in the Department of Agricultural Economics and Agribusiness.
(This article was published in the 2014 winter issue of Louisiana Agriculture magazine.)