From Booze Cruise to Silicon Sands

What Tijuana teaches us about immigration

If you’ve been to Tijuana, it was probably on a booze cruise. Known as the “Vegas before Vegas was Vegas,” the city holds a particular reputation. Only 15 miles from the US border, tourists have long headed south to escape the cold weather or for an inexpensive weekend getaway.

Tijuana is known for its tequila and tacos; however, there’s also a growing tech industry. The town is not just close to the US border; it’s Mexico’s nearest city to Silicon Valley. There are two other intertwined reasons to note why the Tijuana tech boom is hotter than a habanero. First, a shortage of tech workers in the US, and second, immigration policies that make it difficult for businesses to hire foreign-born workers. Together, these factors make Tijuana an excellent option for a satellite office for tech companies in the US.

Tijuana’s experience illustrates the unexpected ways that companies find to meet the needs of their customers by keeping costs low. Similar stories are playing out in agricultural industries throughout the US. Companies in all areas of the US economy need more workers. Adapting immigration policy by providing additional visa programs or expanding existing policies can meet the needs of US businesses and farmers. These are needed reforms that will lay out a path to the United States’s continued economic success.

Tech industries need workers

The US job market is tight right now. There are a lot of open positions, but relatively few people seeking jobs. Indeed’s Hiring Lab released an analysis in February of 2019 that showed that “tech has fewer job seekers relative to job opportunities compared to the economy overall.”

Indeed’s findings also suggest that some worries about the lack of tech jobs have been overblown. For example, the researchers argued that in 2018, it was easier to find workers than in 2014. That might be a sign of improvement. Tech skill training courses, like month-long boot camps, also expanded in the last five years, helping workers reskill and pivot into industries with more job opportunities.

At the same time, others have found that an increasing number of global IT professionals believe that skill shortages are slowing their organizations down. In 2015, for example, 58% of respondents in a Harvey Nash Technology Survey agreed that skill shortages were preventing them from “keeping up with the pace of change.” In 2019, however, that number grew to 67%.

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Source: Harvey Nash / KPMG CIO Survey 2019 reports that there are 504,199 current job openings in computing. By contrast, only 63,744 computer science students graduated and joined the workforce last year. That suggests an impressive gap between the labor market’s needs and US workers’ training.

In either case, Tijuana’s tech boom suggests that companies are finding alternatives. For an increasing number of tech companies, it’s easier and cheaper to hire workers and run an office in Tijuana than it is in an expensive and space-constrained city like San Diego or San Francisco. Instead of offshoring jobs overseas, jobs are nearshored because US companies can’t find the talent that they need within the US. The restrictions on immigrant workers drive part of this.

And this is only looking at tech. Since the height of the recession, the number of unemployed people per job opening has fallen in the US. Many of the jobs left open, it turns out, are actually in low-skilled positions.

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Source: Bureau of Labor Statistics.

Current policy is failing farmers, not just tech

The existing programs employers use to hire existing workers aren’t keeping up with demand. Take the state of Washington’s experience with the H-2A program, for example.

The H2-A program gives US businesses the option to hire foreign workers temporarily. For the agriculture industry, it is vital during harvest seasons when workers are desperately needed to prevent crops from spoiling in fields and orchards. The number of H-2A workers requested by employers in Washington has risen from 2,092 requests in 2009 to 24,658 in 2018.

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Source: Crosscut.

The increasing requests by Washington employers reflect the lack of available and well-suited US workers, not an unwillingness to hire US workers. For most farm work, US workers are over-educated and over-skilled in addition to already employed.

Many farms prefer to hire natives because, contrary to what you might think, H-2A workers are expensive. Besides the application costs, workers must be paid more than the minimum wage in Washington as part of the program’s rules and admitted workers are provided housing and transportation. All three of these factors make them much more expensive than US workers, who aren’t available.

Understandably, some farmers are unable to pay for housing or transportation. One farming family mused, “We would use it if we could.”

Similar conversations are happening on the east coast as well. Florida’s US Representative Ted Yoho, for example, recently wrote an opinion piece discussing the need for workers in Florida. Representative Yoho said that he would pursue reforms to the H-2A program to give more flexibility to farmers and create new avenues for businesses to bring in workers.

How to change the system

The kinds of reforms that Representative Yoho suggests are a good start. For the agriculture industry, they are just the kinds that should be pursued. Industries across the country in every state need workers, and more all the time.

For skilled workers in tech industries, similar immigration policy changes would make it easier for companies to hire the best talent. For example, raising or removing the limit on the number of green cards given out each year is a promising avenue. Another would be providing an additional visa program for highly skilled individuals, like the additional visa program for guest workers that Representative Yoho proposes.

Failing to reform immigration policies will mean a slower economy. It will mean that job positions remain open for longer than they should at some of the most innovative companies in the world. Or it may mean that the US loses those jobs entirely as companies decide to locate outside of the US where they can more easily access talented workers. For America’s farmers, the inability to hire enough workers could mean spoiled crops and millions in lost revenues.

That’s why immigration reforms are so necessary. Industries at every level of the economy need workers. Providing additional guest workers will help US companies compete in world markets. Although US immigration policy is depicted as a battle over US jobs, the combination of unfilled positions and low unemployment rates means that finding workers from outside of the country is the most promising opportunity for reform.

CGO scholars and fellows frequently comment on a variety of topics for the popular press. The views expressed therein are those of the authors and do not necessarily reflect the views of the Center for Growth and Opportunity or the views of Utah State University.