For Refugees, the US Labor Market Is Better Than Germany’s

For Refugees, the US Labor Market Is Better Than Germany’s
Since Germany first accepted more than a million asylees into its country, the successes and failures of the decision were bound to reverberate around the world. Yet despite this openness at the borders, Germany remained stubbornly closed inwardly, delaying the integration of the people it chose to accept. Most importantly, it retained employment restrictions that prevent asylum seekers from obtaining the jobs they need to survive. Fortunately, America has a much better system with much greater success.

 

In 2015, Germany waited the longest of any country in Europe to restrict the flow of asylum seekers from the Middle East. Yet once they arrived, the asylees who immediately sought work in Europe’s largest economy were greeted by bureaucracy. The law initially forbade asylees from seeking work for 9 months after their arrival, but was reduced to 3 months in November 2014. Then, inexplicably, at the height of the inflows, the German government banned working if the asylee was forced to stay a reception center, which could be up to 6 months.

“I am a dentist and could work, but what am I supposed to do? I am not allowed to work here!”

After the initial waiting period, asylees did not receive unrestricted employment authorization. Instead, they would have to find a “concrete” job offer—i.e. a firm must promise to hire them if the permit is granted—then apply for authorization. Even then, companies can only hire them during the first 15 months if the jobs are offered first to EU residents, and the federal labor department agrees that no one was willing to take. They also set asylee wages, which can price out low-skilled workers.

The hoops don’t end there. Asylees still have to get the approval of the immigration office at the municipal level. Under the law, it would take four years before they could compete equally with EU citizens.

On top of all these refugee-specific regulations, skilled workers are then tasked with proving that they can work in certain occupations. In order to obtain an occupational license, documentary proof of training—proof that’s often buried under bombed-out homes in Syria—is required. Some states in Germany allow asylees to demonstrate their skills in order to receive licensing, but others do not. “I am a dentist and could work, but what am I supposed to do? I am not allowed to work here!” one asylee told DW News.

US Labor Market – A Rigged System

Low-skilled immigrants haven’t avoided being targeted either. Germany introduced its first ever minimum wage in 2015—which disproportionately hits lower skilled migrants—and a study by the German government in August 2016 found that it had already cost 60,000 jobs.

The Cologne Institute for Economic Research in Germany produced a report in September 2015, calling for loosening the labor regulations, but it wasn’t until July 2016 that Germany passed a new law that suspended for three years the requirement that firms must offer jobs to EU residents first. Yet even so, the suspension will only apply in areas with low unemployment, and states and localities can still require discrimination against the asylee job seekers. They can also tell asylees where they must live—which could prevent them from following economic demand.

U.S.-bound refugees have no restraints on employment and can compete equally with U.S. citizens.

It is no surprise that this system has produced extremely high unemployment among the asylees in Germany—now almost a year after the bulk of the arrivals. Refugees generally in Germany show very slow economic integration, with less than half working after 5 years. Naturally, Syrians face many hurdles beyond bureaucracy in finding work, especially language and skill acquisition. But it’s clear that the restrictions play an important role in preventing employment.

“I’ve been waiting one year and three months for permission to work, everything is slow here. I was expecting it to go a little bit faster,” one Syrian engineer told the Financial Times, saying that his problem was “red tape, not language.” Robert Barr, co-founder of Jobs4Refugees, agreed with this assessment, telling the paper that the bureaucracy was “definitely too complicated,” and that “the sheer amount of paper work and the complexity of it is even difficult for Germans to understand.”

Opportunities in the U.S. Labor Market

By comparison, the United States rapidly incorporates refugees into the labor market. U.S.-bound refugees have no restraints on employment and can compete equally with U.S. citizens, except that certain states can limit occupational licenses for noncitizens and refugees for 1 year, although they may have difficulty getting recognition of their credentials even after that. They also face a crop of new state-level minimum wage laws that can make low-skilled employment scarcer.

Figure: Employment Rates in United States and Germany for Refugees (Ages 16+) By Years Since Arrival

US Labor Market

During the 2009 to 2011 period, all refugees in the United States were more likely to be employed than the overall population.

Despite these restrictions, after just one year, the majority of U.S. refugees were participating in the labor force, and after just three years, a majority had jobs. As Figure 1 demonstrates, they significantly outperform refugees in Germany in this regard. The employment rate after 5 years was much higher for male refugees than refugee women in both countries, which makes the overall better U.S. performance all the more surprising, given that Germany’s asylees are overwhelmingly young men while the United States flow is evenly divided.

In the long-term, the U.S. model proves successful. During the 2009 to 2011 period, all refugees in the United States were more likely to be employed than the overall population, according to a 2015 study by the Migration Policy Institute. Two-thirds of all refugee men were employed compared to only 60 percent for all U.S. men. Refugee women had the same employment rates as all U.S. women.

U.S. policymakers cannot base their estimates of how refugee flows will impact the labor market on the situation in Germany. Labor market institutions in the United States are better equipped to handle an influx of new workers. While Germany is attempting to improve its laws to better integrate asylees, much work remains. The United States can continue to accept and integrate refugees with the knowledge that we have the experience and markets to handle the flow.

Republished from The Cato Institute.

David Bier

David Bier is an immigration policy analyst at the Cato Institute’s Center for Global Liberty and Prosperity.

US Labor Market article was originally published on FEE.org. Read the original article.