An American Visa for Domestic Workers

Taking a Lesson from Singapore

I'll be a participant in an immigration conference in Michigan organized by Shikha Dalmia of the Reason Foundation later this week. As part of the conference, Dalmia asked the participants to write essays on specific immigration subtopics that she would later assemble into a book (if I recall correctly). Dalmia asked me to write an essay on Singapore's immigration policy – a challenging assignment as I only had the vaguest impressions of their immigration policy from a few readings over the years and a lunch meeting with Singaporean officials from the Ministry of Manpower five years ago.

Singapore's immigration system has two main tiers. The first tier is for highly paid professionals and their families who are encouraged to become permanent residents and eventually citizens. The second tier is for skilled and semi-skilled temporary migrant workers who eventually return to their home countries and cannot become Singaporean citizens. I ended my essay with recommendations for marginal improvements to Singapore's immigration system that would maintain the two-tier system while increasing the benefits to Singaporeans and foreign workers.

Singapore is a Southeast Asian city-state with the world's fourth-highest GDP per capita (PPP adjusted). Singapore gained its independence in 1965 and developed rapidly since then. From 1965 to 2017, Singapore's average annual GDP growth rate was 7.5 percent, averaging 9.1 percent before 1998. Immigrants and temporary migrant workers have been important to Singapore's economic growth since the nineteenth century. In 1965, 28 percent of Singapore's resident population was foreign-born. In 2017, about 47 percent of Singapore's residents were foreign-born – a figure that dwarfs the 13.7 percent in the United States. To compare how liberal Singapore's immigration policy is, none of the top ten largest American cities had an immigrant percentage of their respective populations above 40 percent.

The United States can learn much from Singapore's immigration system, but one lesson is worth highlighting: The United States should create a visa for domestic workers based on Singapore's Foreign Domestic Worker (FDW) visa.

The FDW visa is Singapore's most interesting and distinct second-tier visa for workers who labor in the home, providing domestic services, elderly care, and childcare. Singaporean law tightly regulates FDWs. Among other requirements, they must be female, 23–50 years of age, be from an approved country of origin in South or East Asia, and have a minimum of 8 years of education. Once in Singapore, the FDW cannot start a business or change employers. The employers of FDWs must also meet stringent regulatory requirements. For instance, the FDW must work at the employer's home address, cannot be related to the employer, the employer must put up a $5,000 security bond, pay for medical exams, and cover most other costs of living – with fewer restrictions on FDWs from Malaysia. According to government surveys, FDWs have high levels of job satisfaction, and most intend to apply again for work as an FDW.

The United States should adopt a visa like the FDW for at least three reasons.

First, the FDW visa likely increased the native Singaporean skilled female labor force participation rate (LFPR). From 1990 to 2017, Singapore's female LFPR rose from 48.8 to 59.8 percent, while the male LFPR dropped from 77.5 to 76 percent. Some of that increase in the female LFPR can be attributed to FDWs because they specialize in domestic production, allowing Singaporean women to enter the workforce. There is some evidence in the United States that additional lower-skilled immigrants slightly increased female time in the workplace, but that focuses on immigrants working in the highly regulated and expensive childcare market in the United States. Although more research is needed to analyze how FDWs affected female LFPR in Singapore, an FDW visa in the United States would likely allow more women with children to work if they want to.

Second, an FDW visa would put downward price pressure on childcare providers by reducing demand for their services. If an FDW visa were available in the United States, many American households would take their children out of daycares and other childcare arrangements and hire FDWs instead. High-earning American households would especially be interested in the FDW as they are also the ones most likely to employ ­au pairs on the poorly-designed J‑1 visa. Taking many high-earning American households out of the daycare and childcare market would initially lower prices, thus allowing Americans with lower incomes to afford those services for the first time. Americans who would continue with daycare and childcare services would also gain in the form of lower prices.

Third, a large and robust FDW visa program could increase the fertility rate of highly‐​skilled native-born American women. Over time, there is a strong negative correlation between female LFPR and fertility, but that relationship has weakened substantially in the United States. Economists Delia Furtado and Heinrich Hock found that the weakening relationship is partly explained by low-skilled immigrants lowering the cost of childcare, resulting in an 8.6 percent increase in fertility and a 2.3 percent increase in female LFPR (for native-born skilled women in cities in prime birth years). Although I do not support fertility subsidies in the United States, the FDW is a wise policy that would improve the livelihood of Americans and achieve the same end more cheaply than an expanded child tax credit. Reformicons should love it.

Singapore's FDW visa has many problems that an American version should avoid. For instance, an American FDW visa should allow FDWs to live on their own if they want, move between FDW employers without legal penalty or ex-ante government permission, be open to both sexes, have a wider age‐​range, and allow FDWs to sign longer-term labor contracts. Such a visa would help many migrants, American households, and American women who are looking for an increased range of choices to balance work and family life.

This substack is a slightly updated version of a blog post that appeared on Cato-at-Liberty.