Fragomen on Immigration: Report Finds Lack of H-1B Visas Causes Job and Wage Loss for U.S. Tech Workers

June 18, 2014

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By: Austin T. Fragomen, Jr.

A new report by the bipartisan Partnership for a New American Economy has found that the denial of H-1B visas for foreign computer technology professionals has caused a significant loss of job and wage growth for U.S.-born tech workers. The report, entitled “Closing Economic Windows: How H 1B Visa Denials Cost U.S.-Born Tech Workers Jobs and Wages During the Great Recession,” drew on data from a naturally-occurring randomized sample: the 2007 and 2008 H 1B visa lotteries. 

The large numbers of H-1B petitions filed in those years (and in all of the years since)—and the consequent need for U.S. Citizenship and Immigration Services (USCIS) to conduct a lottery to determine which petitions to process—resulted in what the study described as “a rationing of foreign-born, high-skilled immigrant workers that was both significant in size and randomly distributed among applicants.” This “H-1B shock” gave researchers the opportunity to measure the impact the lack of sufficient H-1B visas had on individual metropolitan areas across the country. While a sudden “shock” in the supply of H-1B workers might be expected to cause employers to hire U.S. workers instead, this is only true if there are sufficient numbers of U.S. workers with the skills employers need. In fact, what this study found is that H-1B shock is damaging to the U.S. economy because H-1B workers are complementary to U.S. workers, not substitutes for them. 
 
For example, those cities that experienced the greatest H-1B shock in 2007 and 2008 also experienced slower growth in the number of information technology jobs, both high-skilled and low-skilled, for U.S. workers. Specifically, the study found that “every time a city experienced a 1 percent [H-1B] shock … the growth in the number of jobs available for non-college educated U.S.-born workers slowed as much as 7.1 percent … [and that for] equivalent U.S.-born college-educated workers, it slowed by as much as 1.3 percent.” The report’s key findings included the following:
  • The high number of H-1B visa applications that were eliminated in the 2007-2008 visa lotteries represented a major lost opportunity for U.S.- born workers and the American economy overall.
  • The U.S. tech industry would have grown substantially faster in the years immediately after the recession if not for the large number of visas that didn’t make it through the 2007 and 2008 H-1B visa lotteries.
  • U.S.-born workers without bachelor’s degrees were disproportionately hurt by the H-1B visa lotteries in 2007-2008.
  • The H-1B visa denials from the lotteries in 2007 and 2008 greatly slowed wage growth for workers in computer-related industries. 
 
Looking at general wage and job growth data from the Department of Labor, America’s metropolitan areas added approximately 110,000 jobs for U.S.-born workers in computer-related fields from 2005-2010. Comparing these numbers with statistics from the 2007 and 2008 H-1B visa lotteries, the study concluded that this figure would have been at least 55 percent higher if there had not been so many H-1B denials in 2007 and 2008. 

When employers were unable to hire H-1B workers to whom they had made job offers, those employers did not create jobs in operations, sales and other support positions that expanded businesses would have needed. And contrary to the popular myth that all tech jobs are performed by high-skilled workers, many of these lost jobs would have gone to lesser-skilled support staff working in secretarial, administrative and other lower-level positions. Notably, these are the types of jobs that would have gone to precisely those workers who were hardest hit by the recession that began in 2007. 

The clear results of the detailed analysis set out in this report show that “[d]enying H-1B visas didn’t help the economies of America’s cities or their U.S.-born workers. Instead, it cost their tech sectors hundreds of thousands of jobs and billions in missed wages.” 

The report, available at the link below, is well worth reading in its entirety: 

http://www.renewoureconomy.org/wp-content/uploads/2014/06/pnae_h1b.pdf 

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