Summer 2013 Will Be a Lot Less Enjoyable Without Seasonal Workers
With 60 miles of pristine beaches, 100 plus championship golf courses, and a wide array of amusements, attractions, dining, shopping, and entertainment options, Myrtle Beach, South Carolina, is a major tourism mecca, attracting 15 million visitors and year.
But visitors to those beaches might have a hard time buying an ice cream or renting a lounge chair. Or they might find that hotels have slightly fewer available rooms. Or that the pro-shop at the golf course has closed its doors for the summer.
That’s because a recent Department of Labor (DOL) change to how it calculates the wages paid to foreign, temporary seasonal workers in the United States on an H-2B visa has caused unexpected, unnecessary holdups in the H-2B application process, impacting thousands of seasonal small businesses throughout the country.
“While our local industry needs more H-2B visa workers this year than in previous years, I expect the actual number of positions filled will be at or below last year’s level, leaving jobs unfilled in 2013,” said Brad Dean, president and CEO of the Myrtle Beach Area Chamber of Commerce. Dean testified before the House Small Business Subcommittee on Economic Growth, Tax and Capital Access on June 12.
The hearing examined the H-2B visa program and its use by small tourism businesses, and the discussion quickly focused in on the impact of a March ruling by a federal judge ordering the DOL to stop issuing new prevailing wages because of an allegedly flawed methodology that had been used successfully since 2008.
DOL and Homeland Security Departments responded by freezing all pending applications for up to 45 days. This stopped the H-2B application process in its tracks and created a major approval backup at U.S. embassies worldwide. Businesses could not get their H-2B staff approved and were left without help at the start of this season.
“Today, 25 to 30 of my small business clients still wait for final approval while the season is in full swing,” according to Jane Nichols Bishop, president of Peak Performance Workforce in Massachusetts. “Because we are experiencing delays now, some small tourism-based businesses are taking extreme measures to survive. These include turning business away because of staff shortages.”
When the Labor Department finally resumed this year’s approvals, businesses were told flat-out to pay their H-2B workers higher wages in order to continue with the program, Bishop noted. For most businesses, the new mandated wages went up 10% to 34% per hour. “In dollar amounts, we saw an increase of $3 to $8 per hour per employee, including American workers. Businesses cannot survive with this type of sudden labor cost increase. Tourism businesses already have set their budgets for the year and fixed their rates for their services,” Bishop said.
That is precisely the predicament facing Sarah Diment, owner of The Beachmere Inn in Ogunquit, Maine. In February, DOL told Diment that the prevailing wage for housekeepers was to be $9.39 an hour. Then in May, DOL revised the figure to $10.54 per hour. “We determine our room rates in December of the year prior, rates that we provide to our guests, and rates our guests expect us to honor. We cannot change the room rates to accommodate a wage increase in the largest department at our inn now that the season has already begun,” Diment says.
Instead, Diment will have to pull staff members from other departments in to assist housekeepers, thus delaying work that should be done in their own departments and increasing the likelihood of injuries for those who are not accustomed to such physical work.
In the long term, Diment said she will have to cut back on the benefits she offers employees, including contributions toward health insurance and retirement plans, and hold back on improvements to her 73-room facilities.
“We didn’t get to celebrate 75 years of operation by not employing Americans and do not plan on continuing to operate without our valued local employees at the helm. However, operating without proper seasonal staffing will force us to make drastic changes,” Diment said.
This could be devastating to small businesses and the communities like Myrtle Beach, said Dean. “We are in the service business. Our local economy depends on it. Our jobs depend on it. Because of the importance of tourism as a tax generator, our teachers, police officers, firefighters and infrastructure depend upon tourism as well.”
Watch the video below where Dean explains why small seasonal businesses in the tourism industry need H-2B visas.