An Economic Analysis of Guest Workers in Maryland's Blue Crab Industry

The region’s blue crab industry faces more than declining crab stocks and tight regulations, according to a new analysis by the University of Maryland’s Sea Grant Extension Program. Restrictive controls on foreign guest workers, who have become key in the crab picking industry, are causing an adverse economic impact on both revenues and domestic jobs.

The U.S. guest worker program (H2-B Visa) allows foreign workers to come to the United States temporarily and legally. H2-B visas provide a critical labor source for the Maryland seafood industry, bringing foreign workers to the U.S. on a seasonal basis to assist with jobs like crab picking and oyster shucking, jobs which have had trouble attracting a domestic workforce. In 2007, 56 percent of Maryland firms relied on H2-B visa workers –– and these firms produced 82 percent of Maryland’s crabmeat, according to data from an annual industry survey mailed to processing plants (http://www.mdsg.umd.edu/crabs/).

University of Maryland resource economist Douglas Lipton, who conducted the study, found that guest workers provide a boost to the local economy in Maryland, yielding over 2.5 domestic jobs for every foreign guest worker.

H2-B visas are hard to come by. The guest worker program caps the number of H2-B visas at 66,000 annually, with a fixed application allotment set in October and April. These visas are scooped up quickly. In previous years, seafood processors received help from an exemption that allowed guest workers in good standing, those already skilled at crab picking or oyster shucking, to return to the country, even if the total numbers exceeded the cap. But in 2008, the exemption failed to pass in the U.S. House of Representatives and processors again find themselves facing the national cap. Many processors, including those in North Carolina and Virginia, got few or no guest workers this year, according to Jack Brooks, President of the Chesapeake Bay Seafood Industries Association.

Lipton found that the domestic workforce would suffer greatly from the loss of guest workers in the crab industry. From data drawn from the annual survey, he evaluated the production of the H2-B visa workers over the past five years. He found that the loss of these workers would result in a $9.5 million loss in direct revenue, which accounts for about 46 percent of the crab industry’s average revenues over the 2003-2007 period.

Domestic workers would feel the effects of this loss as demand dropped for services and businesses that support the seafood industry, as well as a drop in spending in the local economy, or directly through the closure of businesses that depend on H2-B workers. According to Lipton’s calculations, every H2-B visa job lost is estimated to lead to a loss of 2.54 domestic jobs. That means the estimated loss of an average of 376 H2-B visa workers in Maryland’s crabmeat processing industry would lead to the loss of 955 jobs throughout the Maryland economy.


For more information: contact Doug Lipton at dlipton@arec.umd.edu

Download pdf of results of the study here.