Despite Rhetoric, Skilled Immigrants Drive Up Employment & Wages

Despite Rhetoric, Skilled Immigrants Drive Up Employment & Wages
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According to a recent report, “The Trump administration is preparing to roll out another set of restrictions on legal immigration, citing the impact of the coronavirus pandemic.” Pursuant to an April executive order, it is drafting new limits to be issued under a second order. Some experts speculate that a slate of visas are under consideration to be temporarily suspended, including L-1 visas for intracompany transfers, H-1Bs for high-skilled workers, H-2Bs for temporary non-agricultural workers and J-1 visas for exchange visitors.


Pandemic-driven unemployment numbers do not support the idea that foreign temporary workers harm the re-employment prospects of American workers who have been laid off (temporarily or otherwise). It’s a distortion of the many positive ways in which skilled immigration makes Americans better off. Just take a look at some of the empirical evidence.


The H-1B visa, created by Congress in 1990, has played a fundamental role in driving innovation and business growth in the United States for almost 30 years. Under the program, 65,000 new visas are issued every year, with an additional 20,000 available to workers with a U.S. master’s degree or higher. To put that number into perspective, 85,000 new annual H-1B petitions equals 0.05 percent of the U.S. labor force.


Welcoming this global talent not only drives greater innovation, it creates more jobs and higher wages for Americans. H-1B workers are often in key positions within a business or firm, so their skills translate to company growth. In fact, research shows that technology companies create five new domestic jobs for every H-1B visa they successfully sponsor. For tech firms with fewer than 5,000 workers, each H-1B position requested correlates with an increase in domestic employment of 7.5 workers.


During the last recession, an increase in H-1B visa denials significantly harmed job growth for American workers. According to one study, the number of jobs for American workers in IT-related industries would have otherwise grown at least 55 percent faster.


Academic research has also demonstrated that H-1B visa holders actually increase the wages of Americans. One study revealed “that a rise in the growth of foreign STEM [workers] by one percentage point of total employment increases growth in the wages of native college educated workers by a statistically significant 7-8 percentage points.” Similarly, another study released recently found that the presence of H-1B visa holders is associated with lower unemployment rates and faster earnings growth among college graduates, including recent college graduates.


What’s more, around two-thirds of H-1B beneficiaries are employed in computer-related occupations. Unlike occupations in the retail, hospitality, and airline industries, the information technology sector has not experienced an uptrend in unemployment these past few months. In fact, according to an analysis of the Bureau of Labor Statistics Current Population Survey, the unemployment rate for workers in computer occupations has actually declined, from 3 percent in January to 2.8 percent in April, and again to 2.5 percent in the most recent jobs report.


As for the argument that H-1B workers undercut American workers by taking less pay, a recent Cato Institute report using Department of Labor data revealed that the average H-1B worker is offered a wage that is on average 20 percent higher than the average prevailing wage for American workers. In 2019, the median H-1B worker received more than double the U.S. median wage and was growing twice as fast as all U.S. wages. U.S. companies are not paying “low wages to their H-1B employees” as some claim.


Finally, survey data of U.S. businesses reveal that 65 percent of U.S. employers now consider Canada’s more welcoming immigration policy to be more favorable than U.S. policy. This has implications for our ability to attract and retain both global talent and businesses themselves.


Despite the evidence, the H-1B program has become noticeably more restrictive under the Trump administration. This is in stark contrast to the president’s previously proclaimed ambition to move toward a merit-based immigration system that admits people who are skilled and want to work.


We need to ensure that United States’ talent-based visa system continues to attract the best and brightest that the world has to offer, so that innovation and economic growth do not falter. Instead of encountering more road blocks, skilled immigrants should be encouraged to come to a place where tech and health care markets are in serious need of talented workers.


Daniel Griswold is a senior research fellow and Jack Salmon is a research assistant with the Mercatus Center at George Mason University.

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