A 21st-century version of slavery—captive labor—is rampant at the bottom of the U.S. economy, and Washington politicians and business lobbies want to keep it that way, or even expand it as part of the immigration reform talks now in Congress.

Under a system of “legalized slavery,” foreign workers are routinely thrown in massive debt, cheated out of wages, housed in squalid shacks, held captive by brokers and businesses that seize passports, Social Security cards and return tickets, denied healthcare, rented to other employers (including the military), and sexually harassed and threatened with firing and deportation if they complain, according to two detailed reports by the Southern Poverty Law Center and the National Guestworker Alliance. The reports are based on sworn testimony gathered for lawsuits.

The H-2B visa program that brought 83,000 foreign guestworkers to the U.S. in 2011 for non-farm work has become a stalking ground for some of the worst abuses in American capitalism, according to recent reports by anti-poverty law groups. These reports describe in excruciating detail how predatory capitalists in many manual labor-based industries (supplying national brands like Walmart) lure and prey upon foreigners whose jobs average less than $10 an hour with little regard for human rights, labor law or legal consequence.

“We called it modern-day slavery,” said Daniel Contreras, who borrowed $3,000 to come from Peru and whose story is told in the Guestworker Alliance report. He was one of 300 foreigners brought to New Orleans by a hotel chain after Hurricane Katrina. “Instead of hiring workers from the displaced and jobless African-American community, he sent recruiters to hire us. At around $6 an hour, we were cheaper. As temporary workers, we were more exploitable. We were hostage to debt in our home countries. We were terrified of deporation. And we were bound to [owner Patrick] Quinn and could not work for anyone else. We were Patrick Quinn’s captive workforce.”

“I was so devastated by our situation. I wanted to go home but couldn’t because I had no money,” said Julia, who paid $1,500 to come to the U.S. in 2009 from Jamacia to work as a housekeeper in Florida. “After nearly one month of working 40 hours or more a week cleaning hotel rooms, Julia and her coworkers had not received a single paycheck,” SPLC reported. Julia said, “I came to the United States to work and so I could help my family and save to go back to school. I had never been treated so badly before, and I felt like there was nothing I could do about it.”

Under the H-2B visa program, the foreigners are trapped. They’re not allowed to work for anyone else. “Unlike U.S. citizens, guestworkers do not enjoy the most fundamental protection of a competitive job market—the ability to change jobs if they are mistreated,” SPLC said. “They are bound to the employers who 'import' them. If guestworkers complain about abuses, they face deportation, blacklisting or other retaliation.”

“When the supervisor would see that a person was ready to leave the job because the pay was so bad, he would take our papers from us,” Otto Rafael Boton-Gonzalez, a forestry worker from Guatemala told the SPLC. “He would rip up our visa and say, ‘You don’t want to work? Get out of here then. You don’t want to work? Right now I will call immigration to take your papers and deport you.’”

These experiences are the tip of an economic iceberg that exists in many states and industries. The abused H-2B guestworkers in the report include housekeepers and desk clerks in hotels along the Gulf of Mexico, welders and pipefitters in Gulf shipyards, strawberry and sugar cane harvesters, environmental cleanup workers, garden and forest workers and even carnival employees.

More traditional agricultural guestworkers, who come under H-2A visas, have far more legal protections and are better paid. They must be paid for at least 75 percent of their contracts, whereas non-farm H-2B workers have no such guarantee. In fact, some H-2B contracts are little more than fabrications to obtain the legally required paperwork. The foreigners are "rented" by their visa sponsors to other businesses, which in turn deny knowledge of abusive treatment.

“We heard stories—some much worse than our own—of other guestworkers who were being stripped of their dignity by employers,” Contreras said. “Employers were holding workers captive in labor camps, confiscating their passports, subjecting them to surveillance, leasing workers for a profit in violation of morality and the law, and trafficking workers into conditions of imprisonment.”

Underbelly of the American Economy

These accounts are not isolated incidents. Last June, just weeks before Congress blocked the U.S. Department of Labor from implementing new H-2B rules that were designed to stop many of these abuses, the Worker’s Rights Consortium issued a damning report about abuses by a Louisiana seafood processor that supplied Walmart. The National Guestworker Alliance then reported that 12 other firms supplying Walmart with catfish, crawfish, sweet onions, flowers, herbs, vegetables, cajun food, strawberries, rice and lettuce not only had more than 600 federal safety violations, but were abusing their guestworkers. That treatment included:

• Restriction of movement, such as: confiscating passports, visas, and/or ID documents; constantly accompanying the victim; insisting on answering questions on behalf of the victim, and/or translating all conversations; isolating the victim by not disclosing her or her location or address; requiring the victim to live and work in the same location. • Harmful living conditions, such as: restricting access to food and appropriate clothing; forbidding access to medical care; not allowing time off or sufficient time to sleep. • Harmful working conditions, such as: in exchange for work opportunity, charging a large fee that is difficult or impossible to pay off; requiring unusually long work hours with few or no breaks; restricting days off; providing little to no pay or irregular pay.

These Walmart suppliers were from mid-sized companies across America: Mississippi, Louisiana, Georgia, Texas, Utah, Florida, New York, California, Pennsylvania, Virginia, Washington, Arkansas, Alabama and South Carolina. When the abuses reached the New York Times, Walmart’s spokesman blamed sub-contractors, saying the giant corporation bore no responsibility, and attacked guestworker advocates as pro-labor, union-funded groups that have “little to do with solving real issues.”

The multiple accounts by the guestworker advocates present a seemingly bottomless pit of bad behavior by businesses whose only priority seems to be making money—and not looking for American citizens to do the same work at a higher, living wage. Needless to say, the circumstances that women guestworkers face can be even worse, due to sexual harrassment and assaults. They are also often paid less than men for doing the same work.

Sexual harrassment and violence is real, the advocates say. SPLC cites a California-based federal government attorney who said that a generation ago many women told him that they “had to have sex with their supervisors to get or keep jobs.” While there have been efforts by the U.S. Equal Employment Opportunity Commission (EEOC) and some employers to educate guestworkers about sexual harassment, a 2010 SPLC report said “many, however, were not even familiar with the concept… Indeed, many were not aware of their rights and seemed to regard incidents of sexual harassment and sexual violence as yet another unpleasant aspect of their job that they had but no choice to endure.”

This litany of abuse is why guestworker advocates are saying the H-2 visa program should not become a model for anything if the Congress enacts immigration reform. “It is virtually impossible to create a guestworker program for low-wage workers that does not involve systemic abuse,” SPLC’s report said. “The H-2 guestworker program should not be expanded in the name of immigration reform and should not be a model for the future flow of workers to this country… It should be completely overhauled.”

“Although bad bosses exist, guestworkers and advocates are very clear the problem is not a few bad apples—the problem is the entire orchard is rotten,” the Guestworker Alliance said. “The structure of the visa outlines the elements of worker exploitation, creating the structure and incentivizing exploitive behavior on the part of employers. Guestworkers are clear that recruiters, subcontractors, employers and even the local police have a stake in the economic system which turns guestworkers into exploitable and disposable machines to be used, abused, and cast aside through deportation when no longer wanted or needed.”

However, the businesses whose profit margins rely on importing and abusing low-wage workers have powerful allies in Congress. After the Department of Labor spent a year on writing rules to stop some of the worst abuses, trade associations went to court last spring and temporarily blocked the new 2012 rules from taking effect. Then last July, Congress stripped Department of Labor funds to implement the rules. Two Democratic senators, Maryland’s Barbara Mikulski and Louisiana’s Mary Landrieu, led that effort.

These industries and their congressional patrons want to “maintain the H-2B program as a source of cheap, unregulated labor,” the SPLC said. It noted that under the federal laws that remain in effect, the non-farmworker visa holders—unlike agricultural workers with H-2A visas—are barred from seeking help from government legal aid offices, and have no minimum wage guarantees. “Employers, in a series of lawsuits, have asserted that the DOL (Department of Labor) has no authority ‘to regulate employers’ use of the H-2B program at all,” SPLC said.

But what especially worries guestworker advocates now is that Congress is being lobbied by business interests to expand the H-2B program as part of any immigration reform.

“You have many businesses saying that an expansion of guestworker programs is a big deal—we don’t know what that will mean,” said Jennifer Rosenbaum, legal director of New Orleans Workers’ Center for Racial Justice. “Will it mean a raising of the cap with the number of H-2B visas? We know that is what businesses want. That’s what makes this very important to think about.”

“This is not a small business problem—despite what you hear from Senators Mikulski and Landrieu,” she continued. “There is a business model that is welcomed by multi-national corporations where the supply chain is dependent on captive labor.”

Why They Come, Why They Can’t Leave

The reason foreign workers come to the U.S. though the legal visa program, where their first interaction with the federal government is an interview at an American Embassy, is because they cannot get decent-paying work at home. The minimum wage in Mexico, for example, where most H-2B workers are from, is $5 a day or less.

“The vast majority of H-2B guestworkers are basically good people who are in the United States to work and save money to improve the lives of their families at home,” wrote David Seminara, an ex-U.S. Foreign Service officer who opposes the H-2B program because he believes Americans would take these jobs if employers paid living wages. “An American in a lower-wage hourly job knows that his income puts him in the low end of the socio-economic status spectrum; whereas the wages many H-2B workers earn puts them near the top of the wage-earning spectrum in their home countries, and they can return home as conquering heros, highly valued in their extended families and wider communities, and often prized as prime marriage candidates.”

Seminara’s contention may well be true, but the thousands of dollars many H-2B workers have to borrow at home at rapacious interest rates to cover their costs of coming here—to recruiters, for paperwork, for travel—puts almost unbearable pressure on them not to report employer abuses.

Most eyebrow-raising, according to the SPLC report, is that job seekers also have to put up collateral, such as the deed to their homes.

“This tactic is enormously effective at suppressing complaints about pay, working conditions or housing,” SPLC said. “U.S.-based companies deny knowedge of the abuse, but there is little doubt that they derive substantial benefit from their agents’ actions. It is almost inconceivable that a worker would complain in any substantive way while a company agent holds the deed to the home where his wife and children reside.”

“Guestworkers don’t report abuse because they are afraid that they will lose everything and be deported if they come forward,” Hemant Khuttan, a 26-year-old from India, told the Guestworker Alliance. “They have huge debts to get the visa. If they go back, they might have to work their whole life to pay off these debts.” Serman Morales, a 35-year-old from Bolivia, said, “Yes, we ought to report our problems to the U.S. government, but the fear of losing everything is greater than our rights.”

“The focus on retaliation is really critical,” said Rosenbaum. “They face retaliation from recruiters and employers. You can be blacklisted from ever coming back. You can be jailed and deported. You can have your family threatened in Mexico.”

Institutional Exploitation

Capitalism has always had bosses and owners who exploit workers. But the H-2B program, which brought 83,152 foreigners to the U.S. in 2011, invites lies and abuse from the start of the visa application process. On one hand, there is an endless supply of foreign workers willing to leave their homes to try to earn more money for themselves or families. And on the other hand, there are many American businesses that don’t want to hire American citizens because they would have to pay them higher wages.

The federal government has many visa programs to help American businesses. The best-known is one that brings in software engineers and computer scientists to the technology field. There also have been farmworker visa programs since the 1940s, which led to the farmworker rights movement of the 1960s led by Cesar Chavez.

The H-2B program is at the bottom of the guestworker spectrum. It was designed to help non-farm businesses find temporary workers for jobs that could not be filled locally. To apply, the businesses have to certify to the Department of Labor that they cannot fill the jobs with citizens. They must then clear a bureuacratic process where they are given permission to bring in a certain number of workers. Workers are supposed to be given contracts specifying the work and paid prevailing wages, but sponsors can also charge workers for housing and other work-related costs.

The Department of Labor reported in 2011, its most recent statistics, that the fields seeking the most H-2B visas were industrial and commercial groundskeepers, forest workers, landscape laborers, housekeepers and cleaners, amusement park workers, landscape gardeners and specialists, animal caretakers, production helpers and meat trimmers. The top 10 states with the most H-2B visa workers were Texas, Louisiana, Florida, Maryland, Virginia, Colorado, New York, Pennsylvania, North Carolina, Massachusetts and Mississippi.

The businesses that seek H2-B workers usually are not mom-and-pop operations trying to hire seasonal employees, because those businesses usually cannot afford to hire lawyers and recruiters, Seminara said. His scathing 2010 report for the Center for Immigration Studies said, “most of the businesses filing H-2B petitions for foreign workers are ‘body shops’ that have no actual ‘seasonal or temporary’ need for labor.” Instead, they are medium-size or bigger businesses that want labor for less they’d pay Americans. His list of H2-B visa applicants included high-end hotels, such as the Four Seasons in Jackson Hole, the Biltmore in Asheville, North Carolina, the Ritz Carlton in New Orleans, and Nantucket Island Resorts.

The businesses seeking "temporary workers" must certify to the Department of Labor that they cannot find Americans for these jobs. Seminara said that many do that by placing ads in low-circulation publications where Americans looking for work won’t see them. Many businesses seeking hundreds of H-2B guestworkers were in regions with double-digit unemployment rates at the height of the recession, his report noted.

The workers are supposed to be paid the local prevailing wage and housed—although they can be charged for housing. What often ends up happening is a job is promised on a contract, but upon arrival that job does not exist. Instead, a lower-wage job is offered or sometimes the guestworker has to wait weeks for it to start. In the meantime, they are charged above-market rates for housing and other costs, such as work supplies. If they languish with no work and their visas expire, they can be charged more than $1,000 by sponsors and job brokers for an extension. There also have been situations where they were not paid at all or were not paid for overtime. These variables collectively create a vicious cycle where guestworkers will almost never pay off their debt.

One of the most egregious examples concerned a Mississippi shipbuilding company, Signal International. The company saw a bonanza after Hurricane Katrina and hired job brokers in Mississippi and Mumbai, India, to provide 590 Indian welders. The Mumbai firm “collected between $11,000 and $18,000, and sometimes more, from each person recruited to work for Signal,” SPLC reported. These fees are equal to two to three years salary for welding in India. “The guestworkers were housed on Signal’s work site in guarded labor camps, housed in cramped 24-by-36 foot trailers, each holding 24 men who shared two toilets. Signal deducted $1,050 per month from each worker’s paycheck for room and board, further heightening the workers’ stress over whether they could afford to service their debts. Worse yet, Signal eventually announced that it would not apply for the permanent residency visas the workers had been promised.”

The nightmare at Signal did not end there, SPLC said. Some workers spoke up and demanded better treatment. The company retaliated by pulling four of the most outspoken Indians out of line before work with the intention of setting an example by deporting them. Federal immigration officers told Signal how to do this, SPLC said. “Signal’s goal was to make an example of these workers so that guestworkers understood they were not to make trouble,” SPLC said. “The plan was disrupted only when one of the rounded-up workers attempted suicide, and the police responded to the ensuing uproar.”

But the Signal case was not unique. Moises Moreira Santos was a welder from Brazil who came on a H-2B visa to work for another Mississippi firm, Five Star Contractors LLC. “When I arrived, I was shocked. We were forced to live in storage containers on a concrete lot—and were charged $75 a week for it. And there was no work,” he told the Guestworkers Alliance. “We learned that Five Star was a job contractor that rented workers out to shipyards in the area. I asked when would I start working, and the company said it would be soon. Every week they say, ‘You will start work soon,’ but we never did. What could we do? We just waited. Before I came to the United States, I had to borrow about $7,000 from a loan office to pay all of the recruitment and travel costs. As time passed, my debt grew to almost $10,000.”

Another example concerned the Arkansas-based company, Candy Brand. SPLC reported that recruiters in Mexico had taken their workers’ passports and would not give them back unless they paid an additional $1,000. Once in Arkansas, “their U.S. employer failed to reimburse the workers for their travel and visa expenses and did not pay them overtime or the applicable wage in accordance with the law.”

In some of these cases, lawsuits brought by SPLC and other civil rights groups won legal settlements exceeding $1 million. But in the Candy Brand case, the company changed its name; the Department of Labor continued to certify the company’s visa requests, and “SLPC clients who still work at the farm report that the company continues to violate wage and hours laws.”

More at Stake Than Guestworkers

The guestworker advocates say the stakes are much greater than the appalling conditions faced by many foreigners in the underbelly of the U.S. economy. The way employees are treated at the bottom of the economic ladder affects citizens and non-citizens alike.

This month’s strike by foreign students working at McDonalds over pay, job conditions and housing underscores how many American businesses build up their balance sheets by treating employees poorly. Last year, foreign exchange students in a State Department exchange program walked off the job at a Hershey’s chocolate plant in Pennsylvania for much the same reasons. They were paid less than half of what was previously earned by Hershey’s unionized employees for the same work.

The Obama administration’s immigration reform blueprint issued last year is mostly a pro-business proposal, although it briefly mentions increasing guestworker “protections” and increasing “enforcement.” While Obama’s Labor Department has been stopped from enacting new H-2B rules for employers, guestworker advocates say their best hope for reforming the system and minimizing future abuses might lie in reminding Congress that the 13th Amendment that ended slavery also included a ban on “involuntary servitude.”

Moreover, landmark U.S. Supreme Court rulings, such as 1944’s Pollack v. Williams, held, “The undoubted aim of the Thirteenth Amendment, as implemented by the Anti-peonage Act, was not merely to end slavery, but to maintain a system of completely free and voluntary labor throughout the United States.”

“Is there a 13th Amendment problem?” asked Rosenbaum, legal director of New Orleans Workers’ Center for Racial Justice. “What kind of immigration reform do we need for captive workers?”