The Trump Administration’s immigration policies have been stark, swift and extensive. While we clearly needed to shut the border and we need to arrest and deport those immigrants who pose a danger, not enough has been said about the long-term implications of other aspects of the current immigration programs.
Ostensibly, the immigrants are costing us a fortune and are taking away jobs from Americans who are unable to find work. This conclusion is controversial, but clearly, several industries face serious consequences from the administration’s immigration policies.
The Wall Street Journal recently published an article entitled, “Haitians’ Loss of Job Status Hits Employers in Florida.” The article focused on the businesses that had to significantly reduce or curtail operations because the Trump administration ended the Temporary Protected Status of Haitian immigrants. Home-care agencies and assisted living facilities (“ALFs”) are among those businesses most affected.
My sister and sister-in-law both live in ALFs. Until his recent death, my brother also lived in one. During my career, I served a number of companies who financed and operated ALFs. ALFs are expensive to operate and are costly to the residents. My brother and his wife paid over $20,000 per month in Ventura County.
My sister’s monthly costs, much of which are paid by Medicaid, amount to about $8,000 in Ohio.
Many people think that ALF owners and operators are getting rich. The truth is that these facilities operate on tight margins.
Their operating margin is typically 20%-40% for stabilized properties. Once financing costs, taxes and operating reserve requirements are considered, the average overall profit drops to 3%-15%.
Many of my former clients who operate ALFs are marginally profitable. Because of this, financing is relatively expensive to obtain and is unconventionally funded.
Those high financing costs inevitably result in hiring low-paid workers, a substantial portion of whom are immigrants who are willing to work for a lower wage. Labor costs approximate 50% of revenue and are probably the largest single cost faced by operators.
The operating margins of those in the medical home health care business face even tighter economic constraints.
Medicare home health payments have been cut significantly in recent years. A report issued by Medicare Payment Advisory Commission concluded that medical home health care agencies have healthy profit margins, but the industry vigorously disputes those claims.
Irrespective of who is right, labor costs amount to the lion’s share of operating costs. According to KFF (formerly known as the Kaiser Family Foundation), about one third of medical home health care workers are immigrants and about 14% are not U.S. citizens.
Both ALFs and medical home health care providers face severe economic challenges, and are heavily dependent on low-cost immigrant labor.
One of the arguments made for deporting immigrants is that they take jobs away from U.S. citizens because they are willing to accept lower pay to work. While that may sound like an appealing argument, if the immigrants who work for ALFs and medical home health care providers are deported, those entities may not be able to remain in business.
A shortage of qualified labor will inevitably result.
Whenever the demand for labor exceeds the supply, the cost of that labor inevitably increases. American citizens apparently do not want to work for the wages historically offered, so labor costs will have to increase, perhaps significantly, to attract them.
It would be difficult, if not impossible, to pass increased labor costs onto consumers.
A significant revenue component is Medicare and Medicaid, two programs where the government is trying to reduce what it pays for medical services.
Many current residents can barely afford to live in an ALF. If the ALF operators attempt to pass increased costs onto them, many residents will become homeless. Yet, if such increased labor costs are not passed onto consumers, the operators will go out of business.
The Trump administration is attempting to pursue ideological purity with respect to immigration. By attempting to deport as many immigrants as possible without considering their contributions, they are throwing the baby out with the bath water.
Whether we like it or not, we need immigration to fill certain jobs that Americans do not want to perform at an economically acceptable cost. Eliminating those immigrants will be an economic drag and will result in unnecessary disruptions of essential services.
What the Wall Street Journal reported about Florida’s experience with its Haitian population is a prime example of what happens as a result of pursuing such ideological purity.
Jim de Bree is a Valencia resident.
