More to the story of worker shortage

2

To the Editor:

George Brennan’s July 8 article “Plenty of jobs; few workers” is but a ‘first pancake’ in the tall stack of questions that should be posed to Island business leaders and corporations within the food service/supply industry, particularly those leaders whose workforce relies heavily upon the J-1 and H-2B visa programs. A starting point for such an inquiry could begin with Mr. Abdelnour’s observation that “You see on the news that it’s the highest amount of unemployed people that the country has ever seen and then at the same time you can’t find anybody that wants to work at all.” Mr. Abdelnour, and other Island business leaders, are correct when they identify the cancellation of J-1 and H-2B visas as a reason for the shortfall in laborers, but it is certainly not the only reason, nor does it explain how, as Mr. Abdelnour noted above, there could be unprecedented unemployment yet a scarcity in those willing to work.

Perhaps a plain-terms examination of the basic economics behind the relationship between the food service/supply industry on Martha’s Vineyard and the J-1 and H-2B visa programs will lend clarity to how such a seemingly complex — seemingly contradictory — scenario could arise. Typically, the J-1 and H-2B visa programs allow workers to come to the Vineyard from foreign countries (Serbia, for example) in order to work on the Island during the summer season. Many Island businesses that rely upon J-1 and H-2B workers hire agencies to go abroad and screen candidates for the program, and then assist them with their applications. In many ways this process resembles standard job hiring practices, if you choose to ignore the peculiarity of searching the globe to fill positions that require little experience and specialization. Nevertheless, what is most crucial in order to understand why corporations and businesses go abroad in search of J-1 and H-2B workers (and why such workers exist) is the fact that the countries from which these workers come typically do not use the euro as their form of currency. Currently, the euro holds an overwhelmingly more competitive exchange rate with the U.S. dollar (1 USD = .88 euro) than other countries. Serbia, for example, uses the dinar, which has an exchange rate of 1 USD to 104.18 Serbian dinar. When conducting a basic search to discover the purchasing power of the U.S. dollar versus the dinar, this favorable exchange rate begins to take on more meaning. Here are some examples of the purchasing power of the U.S. dollar in Serbia: In Belgrade, Serbia’s capital, a one-bedroom flat costs about $325 a month. A two-bedroom flat costs $530 a month. A liter of milk costs 87 cents. A loaf of bread costs 52 cents. So coming to Martha’s Vineyard from Serbia and working even a $12 per hour (current state minimum wage) job at 40 hours a week for, say, 12 weeks would gross $5,760 — the equivalent of nearly 18 months rent for a one-bedroom flat in Belgrade. It is this massive disparity between the purchasing power of the U.S. dollar within the U.S. versus the U.S. dollar within Serbia that allows J-1 and H-2B workers to tolerate workweeks that far exceed 40 hours, as well as housing conditions that are sometimes squalid and often substandard. It is also this massive disparity, not simply the J-1 and H-2B visa programs, that Mr. Abdelnour and other business leaders — perhaps unknowingly — hope will continue to serve their advantage in the future.

But what about U.S. workers? At the beginning of Mr. Brennan’s article, Stop & Shop somewhat boasts in a press release that they are now offering “up to $17 an hour” in order to fill the nearly 100 part-time openings that they have at their Edgartown and Vineyard Haven stores. In a full-time position, $17 per hour at 40 hours a week for 52 weeks a year equals an anticipated yearly gross income of $35,360 a year, which is less than 50 percent of the average median income for Dukes County. Ostensibly, anticipated gross yearly income is even less for those working part-time. Additionally, part-time workers likely do not qualify for the benefits offered to full-time employees. It should then come as no surprise that U.S. workers who, according to anecdotal reports, are making more on unemployment than they did while employed (this does not speak to the generosity of the current unemployment system so much as the sorry state of the wage labor market), are not clamoring to fill seasonal positions in a locale that has costs of living comparable to many major metropolitan areas.

What should trouble everybody the most, however, is that business leaders in the food service/supply industry seem aloof (or perhaps indifferent) to the above facts. To put it crudely, the ability of corporations and many Island businesses to import cheap foreign labor, or to rely upon “families coming to the Island to vacation and bringing their children looking for summer work,” seems to be a major weakness in their organizational structure. Of course it is a weakness created by the unwillingness of corporations and business leaders everywhere to pay higher wages. And so, in lieu of paying U.S. workers higher wages, corporations and certain Vineyard businesses continue to rely upon indirect subsidies from foreign countries that have a significantly weaker currency than the U.S. Either that, or else they rely upon teen- to college-age laborers who are subsidized by their parents, who pay the cost of their rent, health insurance, and food.

All of this then begs the questions: When will corporations and local business leaders concede that a living wage on Martha’s Vineyard is closer to $25 per hour (as was suggested in this very newspaper back in 2015)? When will restaurant industry leaders forgo the antiquated “tip economy” in favor of the so-called “European model” they so quickly adopted for their current dining arrangements? This model, adopted in countries like France, pays a living wage to all restaurant staff members, dignifying their positions and providing many of them benefits typically reserved for jobs that require a college degree. Finally, what will the more vulnerable local businesses do when Serbia is granted membership in the European Union in 2026, and the U.S. dollar loses yet another country over which its currency can call itself king?

 

Garri Saganenko

Oak Bluffs

2 COMMENTS

  1. Good thoughtful article but veers off a bit at the end in not distinguishing between restaurant workers and a no tip policy as in Europe, with other retail workers who dont get tips and are hourly or salaried and need 25dollars an hour to live here. (lets assume that is correct). Corporations and small businesses–mostly the later are not paying what he thinks is required because they dont have to when they can import. That has ended and they have a dilemma. Raise wages and raise prices and reduce consumer demand. All destination resorts like MV and Aspen and Ski areas et al suffer this phenomenon and learn to deal with it. 17 dollars an hour is plenty in Cary NC but not enough on MV. Companies have no obligation to pay wages that pay for the cost of living and if they suffer for it that is the function of the invisible hand that Adam Smith wrote about in ”Wealth of Nations”, Entrepreneurs will sort this all out over time. That is what they are good at.

  2. Agree. Thoughtful. Begs the question – would small businesses here on MV be able to stay afloat were the minimum wage to rise to $25/hour ? Is there enough profit margin to allow this increase, perhaps with a subsequent rise in pricing, and still be able to pay the rent, etc ? Would higher prices translate to lower sales ?
    Empty storefronts (See – Vineyard Haven; banks and Real Estate offices where retail once was…) My uneducated opinion is that the costs of running a small business here on the island “require” suppressed wages. Experts – how do we fix this ?

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